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The U-Shaped Productivity Dynamics of French Exporters

Author

Listed:
  • Lionel Nesta

    (Observatoire français des conjonctures économiques)

  • Flora Bellone

    (Observatoire français des conjonctures économiques)

  • Patrick Musso

    (Groupe de Recherche en Droit, Economie et Gestion)

  • Michel Quéré

    (Groupe de Recherche en Droit, Economie et Gestion)

Abstract

Sunk costs due to entry into foreign markets are used as the main justification of the relationship between firm productivity and exports. We use a large-scale dataset on French manufacturing firms to evaluate how sunk costs affect the productivity of new exporters. We find that the typical productivity dynamics of a new exporter is U-shaped. Prior to entry into export markets, firm productivity temporarily decreases. It recovers contemporaneously with entry, as the benefits from sales to foreign markets are harvested. This pattern is more pronounced for intensively exporting firms and for firms operating in capital intensive or high technology sectors.

Suggested Citation

  • Lionel Nesta & Flora Bellone & Patrick Musso & Michel Quéré, 2007. "The U-Shaped Productivity Dynamics of French Exporters," Sciences Po publications 2007-01, Sciences Po.
  • Handle: RePEc:spo:wpmain:info:hdl:2441/6128
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