WORKING PAPER SERIES
NO 1720 / AUGUST 2014
EXPORT DYNAMICS
AND SALES AT HOME
Nicolas Berman, Antoine Berthou
and Jérôme Héricourt
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Acknowledgements
We thank the referees and the editor for insightful comments. We are grateful to Richard Baldwin, Juan Carluccio, Nicolas Coeurdacier, 
Matthieu Crozet, Anne-Célia Disdier, Peter Egger
Andrei Levchenko, Thierry MayerTesar, Gonzagu
Vannoorenberghe, Vincent V
anks 
the Agence Nationale de la Recherche (ANR) for  fi nancial support under grant ANR-11-JSH1 002 01. Berman thanks the Banque de 
France and the Fondation Banque de France for  fi nancial support and hospitality. This research does not refl ect the views of the Banque 
de France. Finally, any remaining errors are ours. ilable on 
the authors’ websites.
Nicolas Berman
Antoine Berthou
Banque de France; e-mail: antoine.berthou@banque-france.fr
Jérôme Héricourt
Université de Lille; e-mail: jerome.hericourt@univ-lille1.fr
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Abstract. UsingaFrenchrm-leveldatabase e thatcombines balance-sheet andproduct-
destination-specic export informationover the period 1995-2001,we study the intercon-
nections between n exports and domestic c sales. . We e identify exogenous s shocks that t aect
the rms’ ’ demand on foreign markets to instrument t yearly variations s in n exports. . We
use alternatively y as s instruments s product-destination n specic c imports s or taris s changes,
and large foreign shocks s such h as nancial crises or civil wars. . Our r results s show that
exogenous variations in foreign sales are positively associated with domestic c sales, even
after controlling g for r changes s in n domestic demand. . A10% % exogenous s increase in n exports
generates a a 1 to 3% increase in domestic c sales in n the short-term. . This s result is s robust
to various estimation n techniques, , instruments, controls, and sub-samples. . We e provide
empiricalevidencesuggestingthatthis positiveeect ofexogenous changesinexportson
domesticsalesisrelatedtoarelaxationofshort-runliquidityconstraints.
JELclassication: F10,F44,L20
Keywords:Exportdynamics,domesticsales,demandshocks,markets,liquidity
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Non-technicalsummary
Howdemandshocksinagivenmarketaectrms’salesindierentmarkets? Answerstothis
questionremainunclear,bothatthemacroeconomicandmicroeconomiclevel,althoughitmay
be a signicant determinant t of f rm-level dynamics and have important implications for the
transmissionofforeignshockstothedomesticeconomy.
Thispaperprovidesanempiricalinvestigationofthisquestionthroughthelensoftherela-
tionshipbetweenFrenchrms’exportsanddomesticsales,basedonayearlyrm-leveldataset
containingbothtrade datafromthe FrenchCustomsandbalance-sheetinformationoverthe
period1995-2001. Assalesdecisionsacrossmarketsarelikelytobesimultaneouslydetermined
bycommon-idiosyncraticoraggregate-demandandsupplyshocks,wedevelopastrategythat
identiesvariationsintheforeigndemandaddressedtothermstopredictexogenouschanges
inexports,andtest their eect ontherms’domesticsales. . Thedierent t dimensionsof our
dataallowsustobuildinstrumentsthatcapturethedemandspecicallyaddressedtoeachrm
initsforeignmarkets(destinationsandproducts),whilecontrollingforthedemanditfacesin
the domestic market. . Inour r baselineestimates, , weuse the sumof imports s intheproducts-
destinationsservedbytherms,weightedbytheshareofeachproduct-destinationintherm’s
totalexports. We e thentestthe robustness ofthis strategy byusing anumber of alternative
weightingschemesandinstruments,includingrm-specictarichangesandexposuretolarge
foreignshocks,suchasnancialcrisesorcivilwars.Ourmainempiricalndingisasfollows:we
ndthata10%exogenousincreaseinexportscomingfromforeigndemandvariationsisassoci-
atedwith1to3%increaseindomesticsalesintheshort-run. Thiscomplementarityisstronger
inrms that t are e more exposedto foreign shocks, due toa higher exports tototal turnover
ratio. Theseresultsarerobusttovariousestimationtechniques,combinations s ofinstruments,
sub-samples,andinclusions ofadditionalcontrols. . Variationsindomesticsalesarerelatedto
bothfactoraccumulationandchangesintotalfactorproductivity. Finally,ourresultsarevalid
forbothincreasesanddeclinesinforeigndemand,withtheeectbeinglargerinthelattercase.
Thisresultisatoddswiththeoreticalmodelsininternationaltradewheredomesticandforeign
salesareonlyconnectedthroughexogenousproductivity,asinMelitz(2003).Exogenousshocks
aectingdemandandrms’salesinagivenlocationhavenoeectonsalesinothermarkets.
Thisistrueaslongas productionprocessesareindependentacrossthedierentmarkets,i.e.,
thereare nocostlinkages betweenthem. . Inpractice,armrelies s onasingleprocessforthe
productionofagoodthat willbesoldindierentmarkets. . Butour r resultdoesnotteither
theconclusionsofaveryrecentbodyofliterature(Vannoorenberghe,2012;Blumetal.,2013,
Soderbery,2014)whichemphasizestheroleofcapacityconstraints,relatedtofrictionsonfac-
torornancialmarkets. Thoseframeworksimplyasubstitutionbetweensalesacrossmarkets:
increasingsalesinonemarket,consecutivetoapositivedemandshock,requiressacricingaway
somesales inother markets. . However,empiricalanalysesinthese e approachesdonotlook to
establishcausalrelationshipsbetweenexportsanddomesticsales. Whyarerms’domesticsales
positivelyrelatedtoexogenouschangesinexports? Thisisexpectedifforeigndemandshocks
alleviatecapacityconstraints. Forinstance,thesizeofarm’stotalproductionmaybelimited
bythepresenceofliquidityconstraints,whichimplythatfutureoperationscannotbenanced
throughtoday’sborrowing. Inthiscontext,rmsbecomedependentonexternalshocksaect-
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ingtheircash- owandtheircapacitytonanceinternallytheiractivity. Whenforeigndemand
expands,theincreaseinexports allows rms tonancetheirdomesticoperations,i.e. . topay
suppliers,hireworkersormakeinvestments.Theirorderbookcouldalsobeusedasacollateral
orasasignaltoobtainexternalnancing.Moreformally,apositiveshockonforeignsaleswill
shiftthemarginalcostdownwardifrms’liquidityincreasesas well,leadingtoanincreaseof
domesticsales. Ourresultsdonotexcludethepossibilitythatcapacityconstraintsareimpor-
tantinsomecases(forsomerms,insomesectors),butshowthattheydonotdominateother
channelsonaverageinoursample. Exogenous(orthogonaltorms’characteristics)changesin
exportsalesprovidermswithcheapliquiditythatrelaxesnancialconstraints anddecreases
marginalcosts. Whilethemainobjectiveofthispaperisnottoprovideadenitiveanswerto
themechanismunderlyingourndings,weprovideanumberofresultssupportingtheliquidity
channel. In n particular, we show that t thepositive eect of exogenous changes in n exports s on
domesticsales is strongerfor smallrms,andfor rms relyingmore ontheuse of short-run
liquidity,basedonthecomputationofseveralrm-andsector-specicindicators.Thisliquidity
channelis alsoconsistentwiththefactthatourresultis foundtobestrongerforsmallrms
than for r largeones. . Our r work has direct implications regardingthe channels throughwhich
internationaltradeingoodsmightleadtogreaterbusinesscyclesynchronization.Commonwis-
domgenerallyattributesthestrongcorrelationbetweentradeopennessandthesynchronization
ofbusinesscyclestoasimplemechanism:aseconomiesbecomemoreopen,exportsandimports
representalargershareofrms’totalsalesorinputpurchases.Thismakesrmsmoresensitive
tovariationsinforeigndemand,whichtendstopropagateshocks. Ourresultsimplythatfor-
eignbusinesscyclesmayalsobetransmittedtodomesticmarketsthroughthecomplementarity
betweenrms’domesticandforeignsales. Thisresult t hasmany implications,forinstance,in
termsoftransmissiontothedomesticeconomyofexchangerateandtradepolicies,orofnan-
cialcrisis. Inthecase e ofthe1997-98Asiancrisis,weindeedshow thatrmsthat weremore
exposedtothedestinationsthatexperiencedthecrisissueredalargerdropindomesticsales
duringtheevent. Aswearelookingonlyatasubsetofrmsamongthepopulationofexporters,
wearehoweverunabletodrawclearconclusionsabouttheimpactofforeigndemandvariations
onaggregate domestic sales. . Areallocationof f domestic marketshares towardnon-exporters
orrmslessexposedtotheforeignmarketexperiencingthedemandshockcouldindeedbeex-
pected.Ifnon-exportersareonaveragelessproductivethanexporters,thisreallocationcouldin
principledecreasetheaggregatewelfare. Finally,ourempiricalevidencealsohaspotentialinter-
estingimplicationsforthetransmissionofrealdemandshockstothenancialsystemthrough
rms’nancialhealth.LargenegativeshockssuchastheEurozonecrisiscouldmakeexporters
morenanciallyvulnerableandforcethemtodefaultontheirloans,whichinturnmayaect
thesolvabilityofthebankingsector. Exploringtheseaggregateindirecteectsinmoredetails
wouldbeaninterestingavenueforfutureresearch.
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1 Introduction
Thesalesofarmaredistributedacrossseveralmarkets,eachofthesemarketsbeingidentied
byaspeciclocationandaparticularproduct.Empiricalevidenceshowsthatlarge,productive
rms explore moremarkets andhave largeraverage sales. . Howsalesbetweenthesedierent
marketsinterplay,andinparticularhowdemandshocksinagivenmarketaectrms’salesin
theirother markets remains howeverunclear,althoughit maybeasignicantdeterminantof
rm-leveldynamicsandhaveimportantimplicationsforthetransmissionofforeignshocks to
thedomesticeconomy.
Thispaperprovidesanempiricalinvestigationofthisquestionthroughthelensoftherela-
tionshipbetweenFrenchrms’exportsanddomesticsales.Assalesdecisionsacrossmarketsare
likelytobesimultaneouslydeterminedbycommon{idiosyncraticoraggregate{demandand
supplyshocks,wedevelopastrategythatidentiesvariationsintheforeigndemandaddressed
tothermstopredictexogenouschangesinexports,andtesttheireectontherms’domestic
sales. The e dierent dimensions of our r dataallows s us s to o build instruments that capture the
demandspecicallyaddressedtoeachrminitsforeignmarkets(destinations andproducts),
whilecontrollingforthedemanditfacesinthedomesticmarket.
Our empiricalanalysisrelies ona rm-level l dataset t containing bothrm-leveltradedata
fromtheFrenchCustomsandbalance-sheetinformationovertheperiod1995-2001,atayearly
frequency.Inparticular,thebalance-sheetdatacontainsinformationaboutdomesticandforeign
sales,ourmainvariablesofinterest. Thecustomsdatareportsrm-levelexportsandimports
by product t and d destination. . This s information is used to identify variations s in n the e demand
addressedtormsinbothforeignanddomesticmarkets.Demandaddressedtormsinforeign
marketsisusedtoinstrumentforrms’exports,whilethedomesticdemandisusedtocontrolfor
homemarketconditions. Inourbaselineestimates,weusethesumofimportsintheproducts-
destinationsservedbytherms,weightedbytheshareofeachproduct-destinationintherm’s
totalexports. We e thentestthe robustness ofthis strategy byusing anumber of alternative
weightingschemesandinstruments,includingrm-specictarichangesandexposuretolarge
foreignshocks,suchasnancialcrisesorcivilwars.
Wendthata10%exogenousincreaseinexportscomingfromforeigndemandvariationsis
associatedwith1to3%increaseindomesticsalesintheshort-run,dependingonthespecica-
tion.Thiscomplementarityisstrongerinrmsthataremoreexposedtoforeignshocks,duetoa
higherexportstototalturnoverratio. Theseresultsarerobusttovariousestimationtechniques,
combinations ofinstruments,sub-samples,andinclusionsofadditionalcontrols. . Variationsin
domesticsalesarerelatedtobothfactoraccumulationandchangesintotalfactorproductivity.
Finally,ourresultsarevalidforbothincreasesanddeclinesinforeigndemand,withtheeect
beinglargerinthelattercase.
Whyarerms’domesticsalespositivelyrelatedtoexogenouschangesinexports?Inmostin-
ternationaltrademodels(e.g.Melitz,2003),domesticandforeignsalesareonlyrelatedthrough
idiosyncraticrmproductivityshocks,togetherwithlocaldemandconditions.Exogenousshocks
aectingdemandandrms’salesinagivenlocationhavenoeectonsalesinothermarkets.
Thisistrueaslongas productionprocessesareindependentacrossthedierentmarkets,i.e.,
thereare nocostlinkages betweenthem. . Inpractice,armrelies s onasingleprocessforthe
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productionofagoodthatwillbesoldindierentmarkets.
Averyrecent,yet ourishingbodyofliteraturehasemphasizedtheroleofcostlinkagesin
explaininghowexportsaectthevolatilityofrms’sales(Vannoorenberghe,2012,Nguyenand
Schaur,2011,Blumet al., , 2013,AhnandMcQuoid,2012, Soderbery,2014).
1
Thesemodels
assumethatthemarginalcostisincreasingwithquantitiesduetocapacityconstraintsrelated
tofrictionsonfactor(typically,regulations)ornancialmarkets(liquidityconstraints),which
impliesasubstitutionbetweensalesacrossmarkets:increasingsalesinonemarket,consecutive
toapositivedemandshock,requirestosacriceawaysomesalesinothermarkets.
Ontheother hand,therelationshipbetweenexportsanddomesticsalesis expectedtobe
positive{asourempiricalresultssuggest{ifforeigndemandshocksalleviatetheseconstraints.
Forinstance,thesizeofarm’stotalproductionmay belimitedbythepresenceofliquidity
constraints,whichimplythatfutureoperationscannotbenancedthroughtoday’sborrowing.
Inthiscontext,rmsbecomedependentonexternalshocksaectingtheircash- owandtheir
capacity to o nance internally their r activity. . Whenforeign n demand expands, the increase in
exportsallowsrmstonancetheirdomesticoperations,i.e. topaysuppliers,hireworkersor
makeinvestments. Theirorderbookcouldalsobeusedasacollateralorasasignaltoobtain
externalnancing. Moreformally,apositiveshockonforeignsaleswillshiftthemarginalcost
downwardif rms’ liquidity increases as well, leading toan increaseofdomesticsales. . This
mechanismallowsrationalizingthepositiverelationshipbetweenexportsanddomesticsalesin
theempiricalanalysisthatwepresentbelow.
Our results donotexcludethepossibilitythatcapacityconstraintsareimportantinsome
cases(forsomerms,insomesectors),butshowthattheydonotdominateotherchannelson
averageinoursample.Exogenous(orthogonaltorms’characteristics)changesinexportsales
providermswithcheapliquiditythatrelaxesnancialconstraintsanddecreasesmarginalcosts.
Whilethemainobjectiveofthis paperisnottoprovideadenitiveanswertothemechanism
underlyingour ndings, , we provide anumber r of resultssupporting the liquidity channel. . In
particular,weshowthatthepositiveeectofexogenouschangesinexportsondomesticsalesis
strongerforsmallrms,andforrmsrelyingmoreontheuseofshort-runliquidity,basedon
thecomputationofseveralrm-andsector-specicindicators.
Ourworkhasdirectimplicationsregardingthechannelsthroughwhichinternationaltrade
ingoodsmightleadtogreaterbusinesscyclesynchronization(withtradingpartners/withthe
restoftheworld). Commonwisdomgenerallyattributesthestrongcorrelationbetweentrade
opennessandthesynchronizationofbusinesscyclestoasimplemechanism:aseconomiesbecome
moreopen,exportsandimportsrepresentalargershareofrms’totalsalesorinputpurchases.
2
1
This recent literature follows s amore e ancient t research documenting the e relationship p between exports s and
domesticproductionatthecountrylevel(Balletal.,1966,Dunlevy,1980;Haynesand Stone,1983;Zilberfarb,
1980). Mostofthesepaperstestedthe\capacitypressure"hypothesis(i.e. thefactthatanincreaseinthehome
country’sincomeleadsrmstoadjusttheirforeigndeliveriestosatisfydomesticconsumers)usingaggregatedata,
and produced mixedresults. . Inanyevent,therstevidenceinfavorof f thecapacitypressurein thecaseofthe
United Kingdom m provided d byBalletal.,1966is later strongly contradicted by Dunlevy,1980or Haynes and
Stone,1983 usingdierent t empirical strategies. . In n both cases, capacity utilization or home incomeare either
uncorrelatedorpositivelycorrelatedwithaggregateexports.
2
Whetherinternationaltradecausestighter internationalbusiness cyclesynchronizationistheoreticallyam-
biguous. If f trade openness leads to o greater specialization, and d cycles are predominantlysector-specic, trade
opennessmayactuallydecreasebusinesscyclecorrelation. However,empiricalworkshavefoundstrongevidence
that trade openness amplies international business cycles correlation. . See, , amongmany others, Frankel and
Rose(1998)orBaxterandKouparitsas(2005).
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This makes s rms s more e sensitive to variations s in foreign demand, which tends to o propagate
shocks. Our r results imply that foreign n business s cycles may also be transmittedto domestic
marketsthroughthecomplementaritybetweenrms’domesticandforeignsales.
Implications regarding g the transmission of f foreign n trade e policy, exchange e rate e shocks or
nancial crises to the domestic economy are also potentially y important. . In n the case of the
1997-98Asiancrisis,weindeedshowthatrmsthatweremoreexposedtothedestinationsthat
experiencedthecrisissueredalargerdropindomesticsalesduringtheevent.Aswearelooking
only ata subsetofrms among the populationof exporters,weare however unable to draw
clearconclusionsabouttheimpactofforeigndemandvariationsonaggregatedomesticsales. A
reallocationofdomesticmarketsharestowardnon-exportersorrmslessexposedtotheforeign
marketexperiencingthedemandshockcouldindeedbeexpected.Ifnon-exportersareonaverage
lessproductivethanexporters,thisreallocationcouldinprincipledecreasetheaggregatewelfare.
Finally,our empiricalevidence thatforeignshocksare transmittedto domesticsales through
changesinrms’liquiditysuggeststhatrealforeigndemandshocksmightbetransmittedtothe
nancialsector. Forinstance,alargenegativeshockaectingmostFrenchexporters-suchas
theEurozonecrisis-couldmakethesermsmorenanciallyvulnerable,andmayforcethemto
defaultontheirloans,whichinturnmayaectthesolvencyofthebankingsector.
Beyond the above-mentionedpapersinvestigatingtherelationshipbetweensales s indier-
entmarkets,ourpaperisconnectedtoarecentliteratureinterestedinthein uenceofforeign
macroeconomicshocksonrms’activitiesthroughfactorutilizationandproductivity. Ofpar-
ticularinterestarethepapersbyEkholmetal.(2012)andHummelsetal.(2013).Ekholmetal.
(2012)showthatforNorway,rmsthatweremoreexposedtotheappreciationoftheKronain
theearly2000’s (throughhigher competitivepressureathomeor reducedcompetitivenesson
foreignmarkets)restructuredmore. Hummelsetal.(2013)usemicro-levelDanishdataanda
methodologysimilartoourstoshowthatpositiveexportshocksleadtoanexpansionofrms’
employmentandwagespaidtoalltypes ofworkers. . Ourresults s suggest thatthesegainsare
not only y directly y relatedto foreignshocks, , but may y alsobe the indirect t consequence e ofthe
complementaritybetweenexportanddomesticsales.
3
Finally,ourpaper isrelatedtotheliteraturelookingat theeect ofcreditconstraintson
exportingbehavior.Thelatterbuildsontheimportantstrandofresearchstudyingtheimpact
ofnancingconstraintsonrm’sinvestmentdecisions. Empirically,manypapershaveidentied
nancingconstraintsviathesensitivityofinvestmenttointernalorexternalfunds.
4
. Itisonly
quite recently that t a a comparable interest arose e regarding the relationship p between nancial
3
Toalesser extent, ourpaper alsocontributes tothevast literatureinterestedintheeectofinternational
tradeonrmperformance,which hasbeenamajorareaof research sincethelate1990’s. . Mostpapersfocused
onthelinkbetweenexportingand productivityat thermlevel,showingthat themost productive rmsself-
selectonexport markets. . They y provideonlymixedevidenceon the productivitygainsgenerated byentryinto
foreignmarkets,however(earlyworksincludeBernardandJensen,1999orBernardandWagner,1998;forrecent
contributionsseeDeLoecker,2007,VanBiesebroeck,2005,Parketal.,2009). Theseresultshaveledmanyauthors
toarguethattradeliberalizationmayaecteconomicgrowthmainlythroughtheprocessofresourcereallocation
across rms within sector,with littlecontribution ofproductivitygains within rms. . Our r resultssuggestthat
exportperformancemay aect domesticperformanceintheshort-term, eitherthrough factor accumulation or
TFPgains.
4
SeethesurveysbySchiantarelli(1995),Blundelletal. (1996),Hubbard(1998) andClaessensandTzioumis
(2006).Theintuitionisthatastrongerinvestment-cash oworinvestment-debtrelationshipre ectsmorepreva-
lentnancingconstraints. Numerousresultsandsurveyevidencesupporttheintuitionthatinvestment-cash ow
sensitivitiesareindeedare ectionoftheextentofnancingconstraints(Love,2003andBecketal.,2005)
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constraintsandtradebehavior(seee. g. Chaney,2013,Manova,2013orKohnetal.,2012for
theoreticalapproaches incorporatingnancialfrictions intointernationaltrademodels;recent
rm-level empirical works s include Greenaway y et t al., , 2007, Berman and Hericourt, 2010 and
MinettiandZhu,2011).Ourperspectiveishoweverquitedierentandbroader,aswearemore
generallyinterestedinthewayinwhichdemandshocksinagivenmarketmightbetransmitted
torm’ssalesinothermarkets. Ourresultssuggestthatapossiblemechanismunderlyingthis
transmissionisrelatedtothefactthatchangesinexportsaecttherms’liquidityandnancial
healthintheshort-run.
Thenextsectionpresents thedataandsomedescriptivestatistics. . Section3presents s our
empiricalmethodology. Section4reportsourbaselineresults,anumberofrobustness s checks,
andatest of our results using the 1997-98Asiancrisis as a naturalexperiment. . We e discuss
variouspotentialchannels of transmissioninsection5, , the liquidity y channelemergingasthe
mostplausibleone.Thelastsectionconcludes.
2 Dataandstylizedfacts
2.1 Data
Ourempiricalanalysisreliesontwomaindatasetsthatreportinformationatthermlevel.
TherstsourceisthebalancesheetdatasetBRN(BeneceReelsNormaux),whichrelieson
scaldeclarationsbydomesticFrenchrms. TheBRNdatabaseisconstructedfrommandatory
reports of French h rms to the tax administration, whichare e inturn n transmitted to INSEE
(theFrenchStatisticalInstitute). Thisdatasetreportsinformationincludingrms’totalsales
andexportsales,employment,capitalstock,valueadded,theindustry,year,andbalance-sheet
variables.Ourdatacoverstheperiod1995-2001,forwhichwehaveinformationonboththetotal
salesandexportsales. Thiscombinedinformationisusedtocomputedomesticsales.TheBRN
containsbetween650,000and750,000rmsper yearover theperiod,whichisaround60%of
thetotalnumberofFrenchrms.Importantly,thisdatasetiscomposedofbothsmallandlarge
rms,since nothresholdappliesonthenumberof employees.
5
Eatonet al.(2011)providea
moredetaileddescriptionofthedatabase.Becauseweareinterestedintherelationshipbetween
export owsanddomesticsales,weonly keeprmsthatexportat least onceovertheperiod
1995-2001.Wealsorestrictouranalysistormswhoseprimaryactivityismanufacturing.This
excludesinparticularwholesalers. Finally,wecleanthedataby y droppingthermsthathave
ashareofexportsovertotalsalesabove90%
6
,andthetopandbottompercentileintermsof
totalaveragesalesgrowth.
The second d source e of data a used in n this s paper corresponds s to o the French customs data
(Douanes),whichreportsexports owswithrm,destinationandproductdimensions. Both
thequantity(intons)andvalueofeach owarereported.Theproductclassicationsystemis
theEuropeanUnionCombinedNomenclatureat8digits(CN8). Thecustomsdatabaseisquasi-
exhaustive.
7
Balance-sheet andcustomsdatacanbemergedusingthermidentier(SIREN
5
TheBRNlescontainallrmswhichsalesareatleast763Keuros(230Keurosforservices). Smallerrms
arehoweverincludediftheychoosetobesubjecttothenormaltaxregime.
6
This drops s rms s located d in France e whose main n activity y is to sell goods s abroad. . Less s than 1.8% of the
observationsaredropped. Notethatourresultsarerobusttotheuseofthefullsample.
7
Onlysomesmallshipments areexcludedfromthisdatacollection. . InsidetheEuropean n Union(EU),rms
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number)andtheyear. After r mergingthetwosources,we areleftwith70%of the exporters
initiallypresentinthecustomsdata,thesermsrepresentingbetween90-95%oftotalexports
containedinthecustomsdatadependingontheyear.
8
Ourstrategyreliesontheestimationoftheeectofexportsalesondomesticsales.Weuse
therm-specicstructureofexports(bydestinationand byproduct)tocomputemeasuresof
theforeigndemandaddressedtoeachrm. Weuseeitherallproducts s exportedbytherms,
ortheirmainproduct.Thesevariablesareusedasinstrumentsforexportsalesinourempirical
analysis. Their r constructionisfurtherdetailedinthe nextsection. . Wealsobuildalternative
instrumentsusingtheAsiancrisisasaforeigndemandshock,taris,orcivilwars.
2.2 Descriptive e statistics
Thissectionprovidessomedescriptivestatisticsaboutthecharacteristicsofthermscontained
inoursample. Ournalsampleis s anunbalancedpanelcontaining29,221rmsexportingat
leastonceovertheperiod1995-2001.Onaverage,around21,000rmsreportexportseachyear.
Table1reportsinformationforthesermsregardingtheirnumberofemployees,theirdomestic
sales(inthousandsofeuros),theirexportsales(inthousandsofeuros),exportshare,whichis
measuredastheratioofexportsalesovertotalsales,andthelogchangeofexportsanddomestic
sales. Thesizeofthermscontainedinthedataisveryheterogeneous: itstartswithasingle
employeeforthesmallestrm,whereasthelargesthasalmost82,000employees.Moregenerally,
oursamplecontainsalargenumberofsmallandmediumsizeenterprizes,asthemediannumber
ofemployeesis32. Atthe25
th
percentilermsthereforesellaround1millioneurosinFrance
andabitlessthan100,000eurosintheforeignmarkets.
Table1:Descriptivestatistics: rmsize,salesandexportshare
Mean
1
st
Quartile
Median
3
rd
Quartile
S.D.
Numberofemployees
114.9
12.0
32.0
77.0
607.7
Domesticsales
16894.4
1138.0
3013.8
8602.2
137496.9
ExportSales
8949.6
97.6
435.0
2079.4
145433.2
ExportShare
0.22
0.04
0.13
0.33
0.22
lnDomesticsales
0.03
-0.07
0.03
0.13
0.25
lnExportSales
0.06
-0.20
0.04
0.30
0.88
Note: Source: authors’computationsfromBRNdata. . Exportanddomesticsalesareexpressedinthousandsof
euros. Exportsharecorrespondstoexports/totalsales. . Thenumberofobservationsif143,515,andthenumber
ofrms29,221.
Thedistributionofexportshareconrmsthat mostofrms’salescorrespondtobusiness
operationsonthedomesticmarket:halfofrmsinthesampleexport13%orlessoftheirtotal
arerequiredtoreporttheirshipmentsbyproductanddestinationcountryonlyiftheirannualtradevalueexceeds
thethreshold of 150,000euros. . Forexports s outsidethe EUall  ows arerecorded,unless their valueissmaller
than1000eurosoroneton. Thosethresholdsonlyeliminateaverysmallproportionoftotalexports.
8
Inournalsample,theexportvariablefromthecustomsandtheexportsalesvariablefromthebalance-sheet
dataarehighlycorrelatedat 0.97. . Yet, , theygenerallydier. . Thisismainly y due tothefactthatthebalance-
sheetreportstheactualturnover,whilethecustomsreportstheshipments. Duetodelaysinthepaymentofthe
shipments,itisnormaltoexpectdierences. Asarobustnesscheck,wehavereplacedtheright-handsidevariable
byexportsfromthecustomsandtheresultswereveryrobust.
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