What are the prospects for the foreign trade of France’s overseas territories?
Bulletin no 260, article 1. The foreign trade of France’s overseas territories is atypical due to their regional environment and is characterised by a marked dependence on mainland France, to the detriment of the territories’ regional integration. In this bulletin, we use a gravity model to estimate the untapped trade potential of these overseas economies at aggregate and sectoral levels. The results show that Guadeloupe and Martinique could as much as double and triple their exports to the United States, respectively, if they shared the same constraints as their neighbours. The estimates also reveal that French Guiana, Réunion and Martinique could significantly increase their imports from surrounding territories, which could help to combat the high cost of living. Lastly, due to their remoteness, New Caledonia and French Polynesia stand out, with imports from major regional markets closer to their trade potential than other overseas territories.
The issue of the high cost of living remains a core concern in the French overseas territories, as the social unrest in Martinique in September 2024 showed. The protesters’ demands highlighted a series of structural barriers that constrained the purchasing power and the economy of the overseas territories. One of the levers identified in Martinique’s Protocole de lutte contre la vie chère (protocol to combat the high cost of living) is the boosting of trade with neighbouring countries. However, this objective necessitates a better understanding of the current situation in the French overseas territories in terms of foreign trade and potential room for improvement.
The aim of this bulletin is to profile the international trade of French overseas economies, compare it with that of their regional environments, and then estimate, using a gravity model, the untapped trade potential of certain sectors or with certain markets.
1 Geography, a major constraint on internationalisation
Geographically, the French overseas territories are mostly made up of small island developing states (SIDS), which face a certain number of common challenges that restrict their access to international markets. SIDS have limited domestic markets that prevent them from exploiting potential economies of scale and thus hamper their ability to develop competitive industrial production. In addition, their geographical remoteness from the world’s major economic centres and their poor connections to the main shipping routes act as a barrier to their integration into global value chains.
Like other SIDS, French overseas territories’ exports are concentrated on a limited number of products (Chen et al., 2014; and Didier, 2014), as shown in Chart 1. Territories that have an abundance of natural resources focus on those resources. For example, the nickel industry accounts for almost all of New Caledonia’s exports and gold makes up a significant proportion of exports from French Guiana. And many economies exploit their comparative advantages in the agricultural and agri food sectors. For example, sugar cane accounts for 60%, 39% and 37%, respectively of the exports of Réunion, Martinique and Guadeloupe, while the French West Indies export bananas and rum, and more than half of French Polynesia’s exports are of cultured pearl farming products. The presence of a refinery in Martinique or storage facilities also explains the mineral product exports to the Antilles zone. …
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Updated on the 2nd of December 2025