The effect of the euro on aeronautic trade: A French regional analysis

Fabien Candau () and Serge Rey

Economic Modelling, 2014, vol. 41, issue C, 345-355

Abstract: After describing the spatial distribution of the aeronautic industry in France, this study analyzes the determinants of French regional bilateral exports and imports, according to a trade gravity model, for the period 2003–2010. The appreciation of the euro has a negative impact on exports and a positive effect on imports, confirming the fears of European politicians and managers in the aeronautic sector. The gravity equation, extended to integrate factor complementarities among partners, also shows that labor productivity levels in France and its partner countries are significant determinants of trade, supporting O-ring theory applied from Kremer (1993) to explicate trade in the aeronautical sector. The spatial organization of this sector is also analyzed via the impact of foreign military spending on French trade. Finally, by distinguishing French imports and arrivals of products manufactured in Europe and in France, supplementary estimations reveal that outward foreign direct investment FDI affects the imports and arrivals of European products negatively but has positive influences on the imports and arrivals of French products.

Keywords: French regional clusters; Aerospace industry; Aeronautic trade; Gravity model (search for similar items in EconPapers)
Date: 2014
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Related works:
Working Paper: The Effect of the Euro on Aeronautic Trade: A French Regional Analysis (2014)
Working Paper: The Effect of the Euro on Aeronautic Trade: A French Regional Analysis (2013)
Working Paper: The Effect of the Euro on Aeronautic Trade: A French Regional Analysis (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:41:y:2014:i:c:p:345-355

DOI: 10.1016/j.econmod.2014.05.017

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