Compared performances of French companies on the domestic and foreign markets

Résumé éditeur

In France, the balance of trade has deteriorated almost continuously since the late 1990s tothe early 2010s. Many studies have focused on losses in export market share. But how doesthe performance of French companies stand up on the domestic market?An examination of the macroeconomic data shows that the performance of companies inFrance has declined fairly sharply in exports, but that this decline has been rather smaller onthe domestic market. At the firm level, a given company's export performance and domesticmarket performance have a tendency, albeit slight, to move in opposite directions. This maybe due to factors such as a deliberate company strategy to target a specific market or thepresence of production constraints. However, our analysis shows that a positive demandshock in the domestic market in which the company is present, resulting in a rise in domesticsales, then leads to an increase in exports. This complementarity seems to be driven bysmall companies and could reflect the existence of liquidity constraints. Increased sales inone market could lessen these constraints, by facilitating funding for company developmentin the second market. Strong domestic demand during the pre-crisis period in France istherefore not an explanatory factor of losses in export market share.