Recent French Export Performance: Is there a Competitiveness Problem?

Abstract

This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the authors and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.Recently, the export performance of France relative to its own past and relative to a major trading partner, Germany, deteriorated. That deterioration seems related to the geographical destination and product composition of trend exports. Faced with an increase in unit labor costs or in its terms of trade, France adjusts relatively less via price and wage changes, and more via employment changes. Given that SMIC convergence resulted in a significant increase in unit labor costs, foreign sector difficulties might be structural. Trade flows relevance and euro area policy constraints highlight the importance of structural reforms that increase markets flexibility. JEL Classification Numbers: C33, F42

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Rising Powers and Economic Crisis in the Euro Area

“…Thus, France's weaker performance should be sought especially at the export side, having been relatively unable to capitalize on the rise of EMEs. Indeed, Kabundi and Nadal De Simone ( 2009 ) have noted that French export performance in the 2000s lagged behind its own past record and compared with that of Germany over the same period. They concluded that '[t]raditional variables that explain international trade, such as the exchange rate, relative unit labor costs, and demand pressure seem insuffi cient to illuminate the recent decline in France's export performance' ( 2009 : 3) but that rather 'France's weaker export performance in the 2000s is refl ected both in terms of geographical destination and in terms of product composition ' ( 2009 : 13).…”