Competitiveness and External Trade Performance of the French Manufacturing Industry

IMF Working Papers, December 1, 1995

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Competitiveness and External Trade Performance of the French Manufacturing Industry

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Bibliographic details

• Authors: Pierre-Richard Agénor
• Published: December 1, 1995
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451855869.001

Summary and main finding

• The paper provides an assessment of competitiveness and external trade performance of the French manufacturing industry during the 1980s and early 1990s.
• The analysis indicates that the manufacturing sector appears to have maintained its competitive position in recent years.
• Variance decompositions suggest that fluctuations in price and nonprice competitiveness account for about two-fifths of fluctuations in manufacturing trade flows.

Competitiveness indicators reviewed

• A broad range of competitiveness indicators are reviewed (price and nonprice measures are emphasized).
• The paper concludes that, based on these indicators, the French manufacturing sector maintained its competitive position in the period analyzed.

Export market shares and trade performance

• The second part of the paper discusses developments in export market shares (detailed numerical developments are presented in the paper).

Econometric analysis: vector error correction model

• The third part estimates a vector error correction model relating the trade ratio to:
  • relative unit labor costs,
  • domestic demand,
  • foreign demand,
  • nonprice competitiveness.
• Variance decompositions from the model indicate that price and nonprice competitiveness jointly explain about two-fifths of fluctuations in manufacturing trade flows.