Insee Analyses · October 2023 · n° 89

What are the consequences of producing in France instead of abroad?

Made in France, defined as the French value-added content of the French final domestic demand, fell by 11 points between 1965 and 2019, from 89% to 78%. This downward trend was common to European countries and reflects the increasing globalisation of recent decades, particularly the rise of Chinese trade since the early 2000s. The decline in made in France was especially pronounced for manufacturing products, with a fall from 82% to 38%.

Locating a production facility in France has repercussions throughout the value chain. These knock-on mechanisms via suppliers increases the favorable effects of setting up a new plant on economic activity and employment in France, relative to the creation of a similar facility abroad. The knock-on effect, defined as the total value added of the new plant and its suppliers compared to the value added of the new plant alone, and simulated here under the strong assumption that the supply chain of the new plant is similar to those of existing firms, would be around 2.0 in manufacturing industry and 1.6 in market services.

As the greenhouse gas (GHG) intensity in production is currently lower in France than in the rest of the world, producing in France rather than abroad, assuming unchanged consumption, also has a potentially favorable effect on global GHG emissions. This increases domestic emissions but reduces the country's carbon footprint.