According to a note from Cepii economists, “the reduction in the export surplus generated by French multinationals essentially explains the deterioration in the trade balance”.
Offshoring by multinationals has contributed to widening France’s trade deficit over the past two decades, according to a note by economists published on Tuesday. The major French groups contribute positively to the trade balance, i.e. they always export more than they import, but their contribution fell between 2000 and 2018 from four to two points of gross domestic product (GDP) , a decrease of around 50 billion euros per year at the end of the period, explains the study by the Center for Prospective Studies and International Information (Cepii).
According to Cepii economists Pierre Cotterlaz, Sébastien Jean and Vincent Vicard, “the decrease in the export surplus generated by French multinationals mainly explains the deterioration in the trade balance“.
Decline in the contribution of large companies to exports
In France, French multinationals accounted in 2018 for almost half (46%) of exports and almost a third of imports (31%). This high proportion of French multinationals among exporters should not make us forget that this position “has eroded substantially over the past two decades“, according to the authors. Thus France’s market share has fallen more for products with a high content attributable to multinationals than for other products.
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The decline in the contribution of these large companies to exports was, however, offset by the increase in income derived from their investments abroad, the result of their relocations. Thus France’s trade deficit widened to a record 85 billion euros in 2021, but the country’s current account balance was still in surplus thanks to services and income from foreign direct investment, underlines the study.
“Offshoring has been central to the strategy of multinationals, resulting in more foreign direct investment, but fewer exports and more imports“, estimate the economists.
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