Trésor-Economics No. 118 - Do high-end goods represent a comparative advantage for Europe?

To cope with competition from emerging countries, developed countries have a tendency to specialise in the manufacture of high-end goods. This activity - which includes the very highest segment of so-called "luxury" goods - is strategic for these countries' exports, particularly at a time when domestic demand is weak.

It is difficult to accurately and objectively determine which goods should be considered high-end goods. To do so, we base our assessment on unit export values by country, for each exported good.

Most world exports of high-end consumer goods, which were estimated to have topped €53bn in 2011, are from developed countries. European countries alone represent more than three-fourths of this amount; the top spots are occupied by Germany, Switzerland, Italy and France, whose market share has remained relatively stable over the past decade.

Developed economies also dominate imports, which were estimated at 61% in 2011. However, the share of emerging and developing countries grew sharply, rising from 21% in 2000 to 39% in 2001. The BRICS, the Persian Gulf countries and Hong Kong have now joined the ranks of the major importing countries.

France exported €6bn worth of high-end goods in 2011, which represents an 11.2% share of the world market. The country's exports were buoyed by the agri-food industries (including wines and spirits) as well as by perfumes and cosmetics. France is the world leader in high-end goods in these two sectors, and can boast consequential market share (52% and 36% respectively). French exports are primarily directed at developed countries (70%, including 44% to non-EU countries), but exports to the BRICS (including Hong Kong) have grown at a good pace - roughly 26% annually since 2000.

Despite the overall trade deficits of certain developed countries, most of them can boast of trade surpluses when it comes to high-end goods. These surpluses are very often due to a single specialised sector (for example, transport equipment for Germany, or jewellery and watches for Switzerland). France is one of the rare countries whose high-end production is diversified in terms of sectors, all of which represent trade surpluses.