Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/38909
Authors: 
Égert, Balázs
Kierzenkowski, Rafal
Year of Publication: 
2010
Series/Report no.: 
CESifo working paper Trade Policy 3047
Abstract: 
France has seen a marked deterioration in its export performance in the last 10 years or so. Previous empirical research pointed out that weak export performance was due to i) vigorous domestic demand; ii) lower mark-ups due to head-to-head competition with Germany; iii) low non-price competitiveness of French export goods; iv) offshoring of entire production processes (especially in the automobile sector); and v) difficulties of French manufacturing firms to reach critical size for exporting. This paper adds an additional explanation to this list. We argue that resource reallocation from the exporting to the construction sector triggered by fast rising property prices hindered France to meet world export demand vis-à-vis its products. Our econometric analysis shows that the resource reallocation argument helps explain French export performance between the early 2000s and 2007, unexplained by traditional models. This result is confirmed for a set of OECD countries that experienced a marked decline in their export performance and sustained real-estate boom after 2000.
Subjects: 
OECD
France
competitiveness
exports
export performance
construction
house prices
resource allocation
JEL: 
F10
F14
O14
O52
Document Type: 
Working Paper

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