Economy of France

By | April 29, 2022

The economic evolution of France in the 2nd half of 20th century characterized by an unusually wide scope of state activity. This intervention, which allowed France to overcome the historical backlog in the economic sphere, to ser. 1960s was relatively efficient. But subsequently, attempts to expand the participation of the state in production, to maintain the “redistributive economy” and the “welfare state” were an anachronism that led to the deterioration of the French economy and a decrease in the dynamics of its development. With the transfer of executive and legislative power to the center-right, liberalization reforms began in the economic and social sphere.

French GDP 1520 trillion euros (2002). According to cheeroutdoor, France ranks fourth in terms of share in world GDP and exports. However, the share of F. in the GDP and exports of developed countries in the 1980s and 90s. decreased: respectively from 6.9 to 6.04%, and from 8.86 to 8.11%. Per capita GDP 25.50 thousand euros (2002). Unemployment 9.1%, annual increase in consumer prices 1.8% (2002).

Economic growth of the 1980s – early. 2000s characterized by unevenness. Major macro indicators grew slowly at the beginning of both decades, especially in 1991-95; favorable conjuncture developed in the 2nd half. 1980s and in 1996-2001. A new decline was noted in 2002 and was largely due to a decline in world demand and rising energy prices. The way out of the crisis was outlined in the middle. 2003.

Shifts in GDP in manufacturing consisted of a decrease in the importance of agriculture and industry, while at the same time increasing the service sector. The share of the agricultural sector decreased in 1980-2002 from 3.7 to 3.1%, industry, including construction, from 42.0 to 26.4%. Accordingly, services increased from 54.3% to 70.5%. The current structure of GDP in terms of production fully corresponds to similar proportions in other developed countries. This also applies to the French employment structure, where the changes were in the same direction. During the specified period, the proportions of employment were redistributed from agriculture and industry with construction (a drop from 8.7 to 4.5% and from 34.2 to 23.1%, respectively) to the service sector (an increase from 57.1 to 72.4% ).

French industry (excluding construction) accounts for 22.2% of GDP, 3.93 million employees, 20% of total investment, 94% of merchandise exports, 1/3 of foreign direct investment. The rather sluggish development of this sphere in the 1980s – ser. 90s in the last five years of the 20th century. was replaced by rapid growth (3.8% on average annually). Investments grew by 7-8%, incl. into intangible assets (training of specialists, research and development, purchase of computer programs, advertising) – by 10-12% per year. The acceleration was facilitated by a good global situation, an increase in domestic demand due to the absorption of unemployment, and a general improvement in the position of French private business, which had strengthened by the end of the century. Not the last role was played by the low exchange rate of the franc in the transition to a single euro currency. The French industry survived the crisis of 1997-98 without prejudice to itself. Worse was the reaction to the crisis early. 21st century

In the 1980s-90s. In the industry, deep structural transformations continued, consisting in the concentration of efforts on several advanced industries – the automotive industry, the production of telecommunications equipment, pharmaceuticals and perfumery, aerospace technology, and nuclear energy. The total share of these 5 sectors in the industrial turnover is 43.8%.

The leading position is occupied by the automotive industry (17.7% of the general industrial turnover). From con. 1980s the annual production of cars is steadily kept at the level of 3 million units. (2002 – 3.100 million, 5.4% of world production, 20.3% of Western Europe). Export of cars 42.6% of the total volume of their production. 99% of the industry’s production belongs to 2 groups – Peugeot-Citroen and Renault. They approximately equally control St. 60% of the national market and 23.8% of the Western European market, where they are still noticeably inferior to German manufacturers.

On the 2nd place in terms of production volume are pharmaceuticals and perfumery (13.2% in the general industrial turnover). In terms of the cost of manufactured pharmaceuticals, France is in 4th place in the world, and in terms of their per capita consumption, it is in 3rd place (after the USA and Japan). Export industry 30% of production. The main producers are the Rhone-Poulenc concerns (6th place in the world), Elf-Atoshem and Air Liquide.

Paris is the recognized perfume capital of the world, where such famous manufacturers of expensive cosmetics as Chanel, Ricci, Saint Laurent operate. More mass products are produced by L’Oreal – 13% of the world turnover of perfumery, 1st place in the world. French perfumers export 38.5% of their products abroad.

Quite a bit behind pharmaceuticals and perfumery is electrical and electronic engineering (13.0% of general industrial turnover). St. 1/2 of the industry’s products (54.6%) are office equipment and computers, equipment for long-distance communications and electronic components. 48.8% of products are exported (including electronic components 59.8%). The main manufacturer, the Alcatel concern, is one of the top three global manufacturers of telecommunications equipment. It accounts for 39.6% of the national industry market; for the Thomson group (the world’s 2nd manufacturer of military electronic equipment) – 23%.

In the field of aerospace production, France is a recognized Western European leader. Aerospatial is one of the leading members of the Airbus Industry Euroconsortium (the main supplier of civil aircraft to the European market), where it owns a 37.9% stake. It also owns a 70% stake in the Eurocopter association (1st place in the world in the production of civilian and 2nd military helicopters). The Arianspace concern controls approximately half of the world market for commercial launches of artificial earth satellites.

In the last decades of the 20th century nuclear energy has become the basis of the French energy industry, which now accounts for 10.5% of the total industrial turnover. This was facilitated by the presence of its own large reserves of uranium. With the growth in consumption of primary energy carriers in 1980–2002 from 56 to 134 million tons of standard fuel, the share of nuclear power plants in it was constantly growing: in 1980–2002 from 6.6 to 38% of national consumption. The share of other energy carriers either decreased over the years (coal from 18.1% to 4%, oil products from 54.4% to 36%, hydropower from 8.6% to 3%), or grew insignificantly (gas from 7% to 14%, alternative types of energy – up to 7%). In 2002, nuclear power plants generated 77% of electricity (1st place in the world).

As in other developed countries, the transition to the post-industrial stage of development was accompanied in France by a further decline in the share of agriculture in the main economic structures. The share of foodstuffs in national exports also decreased (9.6% in 2002). In absolute terms, during this period, the volume of agricultural production increased by 87%. And although French politicians no longer set the goal of turning the country into a “breadbasket of Europe”, as in the days of de Gaulle, France accounts for 23.7% of the agricultural products of Western Europe (1st place in the EU).

In the 1980s-90s. the industry continued to concentrate. France has traditionally, since Napoleonic times, been a country of small farms with fragmented land ownership. Although the average farm area has almost doubled compared to the beginning. 1980s (respectively 42 and 23 hectares), 49% of farms are small and smallest (including 29.1% – the area is less than 5 hectares). Only 1/3 of farms own agricultural areas of 50 hectares and more (including 100 hectares – 12.2%). It is these large landowners that provide 75.7% of agricultural products.

An important factor in the development of agricultural production is the growth of technical equipment. From con. 1980s the number of tractors in the French agricultural sector decreased, but mainly due to less powerful ones (up to 80 hp), while the share of more powerful ones increased from 16.2 to 33.8%. Many other machines and mechanisms are actively used. The industry is fully electrified.

Unlike most other European countries, whose agriculture is focused on animal husbandry, France’s agrarian sector is diversified. Crop production, which is considered the main activity of 39.8% of households, occupies half of the arable land and provides 48.9% of the total value of agricultural products. Its traditional specialization is the production of soft wheat. France is one of the great grain powers of the modern world (3rd place among developed countries and 1st in Western Europe, half of Western European grain exports). Wheat accounts for 64% of the production of grown cereals (55% – soft). In terms of wheat exports, France is in 2nd or 3rd place in the world (with Canada after the USA).

Other grain crops include oats, barley, rye, and corn. An important role is played by viticulture, oilseed production, horticulture and horticulture. 13.9% of farms operate in viticulture. Vineyards occupy 2.9% of arable land, but this industry provides 28.5% of agricultural products. France is the main world wine producer (shares 1st-2nd places in the world with Italy). The volume of production is 62.93 million hectoliters (2002). More than a thousand varieties of wine are produced, 1/4 of which are vintage. OK. 20% of wines are exported. The oilseeds sector provides 6.3% of agricultural production. France accounts for 39.2% of European oilseed production. Vegetable and horticulture products account for 10.5% of the total value of agricultural products. In terms of per capita consumption of vegetables, France is the leader in the modern world.

Animal husbandry provides 51.1% of the value of agricultural products, incl. cattle breeding – 16.1%. According to its livestock, France ranks 1st in Western Europe, 6th in the world (20.3 million heads). This is about 1/4 of the EU population. France also accounts for 10% of sheep and 12.9% of EU pigs (15.93 and 9.32 million heads, respectively). It is the leading European meat producer and is in the top five of the world meat producers (3755 million tons in 2002). Dairy farming is also developed (18% of the value of agricultural products). France is the world’s 2nd producer of cheese (over 2 million tons) and butter, the 2nd EU country in the production of whole milk products. Poultry farming is developing well: here France is the 2nd in the world after the USA and the 1st in Europe.

France is one of the most powerful transport powers in the world. Road and air transport, as well as rail transport, have reached a high level. These industries account for 7.3% of GDP and 7.9% of employees. In 2002, the total volume of land transportation reached 215.3 billion tkm; 79% of it (169.8 billion) was carried out by road transport. France has a dense network of paved roads (1.1 million km – 2nd in the world after the United States). In terms of the quality of the road surface, the equipment of signs with French roads in the continental part of Europe, perhaps only German ones are comparable. Cargo is transported by 9.2 million trucks, 10% of transportation is combined.

The length of the railways reached its maximum in the 1930s. and then reduced (2002 – 32 thousand km). Cargo turnover is 50.4 billion tkm. Passenger transportation 48.9 billion passengers/km. 2/3 of their volume in terms of the number of passengers falls on the Paris junction. Its exclusive dominance in the highly centralized railway network has been a characteristic feature of French railway construction since the 19th century.

The railways of France are being actively electrified. The length of electrified lines is 13,570 km. High-speed transport (350 km/h) is widely represented. France is one of the world leaders in its development and implementation. The first high-speed line was opened in 1981 between Paris and Lyon. Now such lines connect the capital with Marseille, Strasbourg, Nice, La Rochelle, as well as Brussels and London (tunnel across the English Channel). In the future, the extension of the branch to Brussels to Amsterdam and Cologne, La Rochelle – to Bordeaux, Lyon – to the territory of Italy and Switzerland.

In 2002, 79.6 million passengers and 1.9 million tons of cargo were transported by air. The bulk of traffic falls on the Paris complex, where 2 major airports operate: Roissy-Charles de Gaulle and Orly (together 67.3% of all national domestic and international passenger traffic and 89% of freight traffic). Le Bourget, formerly the main airport of the capital, now serves only business aviation. Regional airports – Nice, “Satola” (Lyon) and Toulouse – together carry 19.7 million passengers a year, 6.3% of the national cargo volume.

The importance of water transport in internal and external transportation is small. The tonnage of the merchant fleet is 4.5 million tons. France has 89 seaports with a total cargo turnover of 300 million tons. 90% of it falls on 6 ports, incl. 48% – to Marseille and Le Havre (respectively 113 and 47.4 million tons); the rest of the traffic goes through Dunkirk, Calais, Rouen and Bordeaux. The length of inland navigable routes is 8.5 thousand km, but only 5.5 thousand are used. The cargo turnover of river transport is 181.6 billion tkm (2001).

1990s became a period of extremely rapid development of the communications sector (more precisely, information and communication services); in 1996-2000, the average annual increase in its production was 20%. The growth was combined with huge qualitative shifts, which made it possible not only to eliminate the long lag in the field of telephony from other Western countries, but also to create by the beginning. 21st century one of the most advanced electronic digital communication systems in Europe. The shifts were driven primarily by the surge in mobile telephony and the increase in the number of Internet users. In 2001-02, the number of mobile subscribers increased from 31 to 37.3 million. This is 62.5% of the population – still less than in the UK, Italy, Spain, Scandinavian countries, but more than in the US (50%).

In 1997, there were 500 thousand Internet users in France, to the beginning. 2002 – already 19 million people, 31.9% of the population (among managers and people engaged in intellectual work – 73.1%, among students and students – 73.3%). Of the planetary number of users of the World Wide Web, France by 2002 accounted for 4%.

Trade plays an important role in the French economy (13.0% of GDP, 13.4% of employees). Major change since the 1980s — transition from a small retail to an integrated organization, to modern complexes: super- and hypermarkets. A supermarket in France is considered to be a store with a sales area of 400-2500 m2, a hypermarket – from 2500 m2, more than 1/3 of the turnover of which is traded in food products (unlike a “large store” with a similar area, but selling mainly manufactured goods). In the beginning. 1980s the share of integrated trade accounted for 27% of retail turnover, in 2002 – 51.4%. In 1986-95, 350-450 super- and hypermarkets were opened in the country annually, in 1996-97 – up to 200, and in 1998-2002 – up to 100. According to this indicator, France is one of the first places in the EU, lagging only behind Finland, Ireland and Denmark. Now the market share of integrated trade is 66.7% for food and 20.4% for manufactured goods. In the latter region, specialized (non-food) stores take the lead, although their share is gradually decreasing (from 41.9% to 40.4% in 1995-2002 alone).

France continues to be a classic country of petty trade. Retail outlets with an area of up to 40 m2, mainly selling food, account for at least 20% of the industry’s enterprises. But their number is decreasing (in 1995-2002, by an average of 6% per year), and the market share is falling (from 28.5 to 24.1%).

Between 1980 and 2002, the French economy experienced an abrupt increase in the share of the service sector. The dynamics of services between 1980-2002 exceeded the rate of economic growth by 1.2 times. Services to enterprises developed especially rapidly (+5.2% annually on average). The main part of this area is market services, incl. 60% – services to enterprises. These are two groups: consulting, which includes at least a dozen types of activities (legal, advertising, accounting, engineering, marketing, information, etc.) and so on. operating services – hire, recruitment, security measures, etc. 244.3 thousand enterprises are employed in consulting, 92.5 thousand – in operating services. It is clear that the main users of these services are companies (80% of consumption). But they are also large consumers of services to the population, especially those provided by travel agencies (57%), real estate firms (41%) and the hotel and restaurant sector (39%). The market for market services is growing mainly due to the expansion of their consumption by companies.

The credit and financial system is represented by the French Bank, 412 commercial banks and 531 financial companies. Since joining the eurozone, the Bank of France has played a limited role in monetary policy. Monetary gold reserves in 2001 amounted to 97.75 million troy ounces; refinancing rate – 4.23%, interest rates on loans were 6.7%, on deposits – 2.63%. Banks are characterized by a high degree of concentration: the 8 largest banks account for 86% of loans issued and 74% of assets. As elsewhere in industrialized countries, in France there is an active process of universalization of banking and financial services, which intensifies competition between various financial institutions.

France is the only major developed country where in the 1980s-90s. neither monetarist theory nor liberal economic practice were officially adopted. The economic policy of the socialists during their periods in power was based on Keynesian methods of regulation, i.e. to stimulate demand. The right showed attempts to stimulate supply, however, rather limited.

In economic policy, con. 20th century there are several milestones that mark these opposite trends. The first was the nationalization of the beginning. 1980s, unprecedented for the post-war period. A third of the industry, 2 leading financial holdings, 36 large banks, and many insurance companies were in the hands of the state. At the same time, active price and currency controls were introduced, as well as a strict tax on large fortunes.

Through huge budget injections, the socialists have achieved the recovery of state-owned companies. But the state budget deficit increased sharply, and business began to massively curtail production in France. The forced transition of the socialists to a policy of austerity swung the pendulum of electoral preferences to the right – and the ODA, which won the parliamentary elections, attempted to turn the economy “facing the market”, which became the next milestone in economic policy. The privatization of state-owned companies, the deregulation of the financial sector (the abolition of control over foreign exchange transactions, over the movement of capital, the removal of numerous restrictions on financial markets, the elimination of price controls) were launched. The socialists who seized power in 1988 did not return to nationalization and did not make any changes in the financial sector. However, they practically stopped privatization and again stimulated demand, operating on the expenditure side of the state budget. The increased tax burden has become a serious factor in reducing the profitability of enterprises. The inefficiency of this policy, especially in a crisis early. 1990s, contributed to the next transition of (legislative) power to the ODA. Formed from its representatives, the governments of E. Balladur, then A. Juppe again tried to “shift the steering wheel” to the right. But in the conditions of the ongoing crisis in the economy, the rightists were again given only a three-year term. In 1997, with the victory of the socialists in the parliamentary elections (the government of L. Jospin), a new milestone was outlined in economic policy: another long turn to the left.

Jospin’s economic policy was called dirigisme by foreign observers, although it looked like that mainly in comparison with the economic course of the Anglo-Saxon countries. The state no longer provided direct support to either individual companies or industries; state regulation was formally aimed at improving the general economic climate, indirect levers of influence were more often used. Jospin carried out a very large privatization (180 billion francs) in order to bring the budget into line with the requirements of the Maastricht Treaty. However, in France, large state property remained, state control over the prices of natural monopolies, tariffs for health services, rent dynamics and prices for 80% of agricultural products subject to European pricing provisions.

Redistributive measures, carried out under the slogan of “equalizing the incomes of labor and capital,” included a reduction in taxes from the population and an increase in them from companies. In 1997-98, companies were charged with additional fiscal payments: social income tax, a general tax on polluting industries, and a corporate tax surcharge for firms with a turnover of more than 100 thousand rubles. 50 million francs (practically for all, except for small businesses), etc. In total, the increase reached 4.5 billion euros. At the same time, the fiscal pressure on “rich” individuals was increased (additional taxation of income from operations with securities, from savings, etc.), under which income recipients of middle and upper groups fell.

Huge sums from tax revenues were directed to improve the situation of the poor (for 2000-01 their tax payments decreased by 21 billion euros), as well as to increase employment through increasing public sector jobs (3 youth employment programs) and increase the flexibility of the labor market (reducing of the working week from 39:00 to 35:00, while maintaining the same salary in exchange for the permission of previously prohibited overtime and Sunday work, night shifts, etc.). These measures, which coincided with the improvement in the world economic situation, had a positive effect: unemployment began to decline; the creation of 1 million jobs pushed the movement of domestic demand and the dynamics of economic growth; the growth of tax revenues contributed to the reduction of the budget deficit, and the national debt decreased. But government policy worsened the position of companies. The level of their taxation in France is still one of the highest in Europe: the corporate income tax rate is 42%, entrepreneurs pay 60% of total contributions to social funds (which is equal to 6% of GDP in volume). The profitability of companies was at a low level – 15.6% even in the prosperous 2000. The subsequent deterioration in the global environment contributed to its further decline and, as a result, the stagnation of investments, the cessation of employment growth in the business sector, and then in the public sector of the economy, where employment programs themselves exhausted. As a result of these processes, the volume of tax revenues to the budget decreased, the expenditures of which remained at the same level. They could be reduced by reducing social articles. The government attempted to reduce health care spending by tightening control over public hospital spending, but backed down in the face of a mammoth wave of health worker strikes. In the same way, the reform in the sphere of financing of higher and secondary education failed. The pension reform that had been debated for 5 years, the need for which was long overdue due to the progressive aging of the population, was never launched. To con. In 2002, the state budget deficit reached 2.7% of GDP, which in 2003 increased to 4.0%, thus surpassing the Maastricht maximum. The public debt also reached him (2003 – 61.2% of GDP). In the same way, the reform in the sphere of financing of higher and secondary education failed. The pension reform that had been debated for 5 years, the need for which was long overdue due to the progressive aging of the population, was never launched. To con. In 2002, the state budget deficit reached 2.7% of GDP, which in 2003 increased to 4.0%, thus surpassing the Maastricht maximum. The public debt also reached him (2003 – 61.2% of GDP). In the same way, the reform in the sphere of financing of higher and secondary education failed. The pension reform that had been debated for 5 years, the need for which was long overdue due to the progressive aging of the population, was never launched. To con. In 2002, the state budget deficit reached 2.7% of GDP, which in 2003 increased to 4.0%, thus surpassing the Maastricht maximum. The public debt also reached him (2003 – 61.2% of GDP).

The government of the representatives of the ODA (later SON), headed by J.-P. Raffarin, formed in June 2002, sees its primary task in the economic sphere in supporting entrepreneurship, which should help improve both the general economic and social situation (resorption of unemployment through the creation new jobs in the business sector). In this regard, motivating his actions by the need to streamline the state of the state budget, Raffarin curtailed state employment programs and began to change the taxation system. The first measure was a 5% reduction in income tax, which should be followed by an increase in the lower limit of the tax base on large fortunes. State-owned companies will be privatized, incl. natural monopolies.

The announced reforms cause extreme dissatisfaction among the population, which sees them as a threat to the standard of living. In 2001, the average monthly salary of a full-time worker in the private and semi-public sector, after taxes, was 1,700 euros. Hourly wages for full-time employees were about 20% higher than those for part-time employees. For managerial personnel and persons with higher education, the average monthly salary was 2.6 times higher than for workers and employees; this gap persists from the beginning. 1990s Discrimination against women’s work is just as stable: a woman in any position receives 25% less than a man. The income of the French also includes numerous and varied social benefits, which in total give an average of at least 1/3 of the increase in wages.

In 2002, 16.7% of the income received by the population was directed to savings, and 83.3% was spent. In the structure of consumer spending, 15.4% were the costs of maintaining and repairing housing, 12.9% – for food, 9.6% – for the purchase of clothes and shoes, 6.4% – consumer durables (incl. 2.9% for cars). 6.3% each was spent on electricity and health services. Leisure and telecommunications services were the largest item of expenditure (together 21.4%). More than 90% of families live in comfortable apartments or separate houses with all amenities. The same percentage of families own at least one car, almost 100% have a refrigerator, 67% have a freezer, 91% have a washing machine, 60% have a microwave, and so on. Every 9th family owns a country house or dacha.

The turn of the 20th-21st centuries. marked by a significant increase in the importance of the foreign economic sphere in economic life. The export quota in 2002 was 27.2%; 86% of exports and 79% of imports were to EU countries; 82.7% of exports are goods, incl. 69.7% – industrial products (machinery and equipment – 24.7%). Fast paced with ser. 1990s the export of capital grew, in which France had previously lagged far behind. In 2001, the total volume of foreign direct investment amounted to 197 billion euros. Accumulated foreign investments in 2001 exceeded 500 billion euros (1/10 of the world volume).

Economy of France