France Economy
A member of the G8 group of leading industrialised countries, it is ranked as the fifth or sixth largest economy by nominal GDP depending on source. France joined 11 other EU members to launch the euro on January 1, 1999, with euro coins and banknotes completely replacing the French franc (₣) in early 2002.
According to the OECD, in 2004 France was the world’s fifth-largest exporter and the fourth-largest importer of manufactured goods. In 2003, France was the 2nd-largest recipient of foreign direct investment among OECD countries at $47 billion, ranking behind Luxembourg (where foreign direct investment was essentially monetary transfers to banks located in that country) but above the United States ($39.9 billion), the United Kingdom ($14.6 billion), Germany ($12.9 billion), or Japan ($6.3 billion). In the same year, French companies invested $57.3 billion outside of France, ranking France as the second most important outward direct investor in the OECD, behind the United States ($173.8 billion) , and ahead of the United Kingdom ($55.3 billion), Japan ($28.8 billion) and Germany ($2.6 billion).
In the 2005 edition of OECD in Figures, the OECD also noted that France leads the G7 countries in terms of productivity (measured as GDP per hour worked). In 2004, the GDP per hour worked in France was $47.7, ranking France above the United States ($46.3), Germany ($42.1), the United Kingdom ($39.6), or Japan ($32.5).
Despite figures showing a higher productivity per hour worked than in the US, France’s GDP per capita is significantly lower than the US GDP per capita, being in fact comparable to the GDP per capita of the other European countries, which is on average 30% below the US level. The reason for this is that a much smaller percentage of the French population is working compared to the US, which lowers the GDP per capita of France, despite its higher productivity. In fact, France has one of the lowest percentages of its population aged 15-64 years at work among the OECD countries. In 2004, 68.8% of the French population aged 15-64 years was in employment, compared to 80.0% in Japan, 78.9% in the UK, 77.2% in the US, and 71.0% in Germany. This phenomenon is the result of almost thirty years of massive unemployment in France, which has led to three consequences reducing the size of the working population: about 9% of the active population is without a job; students delay as long as possible their entry into labour market; and finally, the French government gives various incentives to workers to retire in their early 50s, though these are now receding.
As many economists have stressed repeatedly over the years, the main issue with the French economy is not an issue of productivity. In their opinion, it is an issue of structural reforms, in order to increase the size of the working population in the overall population. Liberal and Keynesian economists have different answers to that issue. Lower working hours and the reluctance to reform the labour market are mentioned as weak spots of the French economy in the view of the right and lack of government policies fostering social justice by the left. Recent government attempts at adjusting the youth labour market, to combat unemployment, have met with fierce resistance.
With 81.9 million foreign tourists in 2007, France is ranked as the first tourist destination in the world, ahead of Spain (58.5 million in 2006) and the United States (51.1 million in 2006). This 81.9 million figure excludes people staying less than 24 hours in France, such as northern Europeans crossing France on their way to Spain or Italy during the Summer. France features cities of high cultural interest (Paris being the foremost), beaches and seaside resorts, ski resorts, and rural regions that many enjoy for their beauty and tranquillity (green tourism). Aside of casual tourism France attracts a lot of religious pilgrims to Lourdes, a town in the Hautes-Pyrénées département, that hosts a few million tourists a year. Popular tourist sites include: (according to a 2003 rankingvisitors per year): Eiffel Tower (6.2 million), Louvre Museum (5.7 million), Palace of Versailles (2.8 million), Musée d’Orsay (2.1 million), Arc de Triomphe (1.2 million), Centre Pompidou (1.2 million), Mont-Saint-Michel (1 million), Château de Chambord (711,000),Sainte-Chapelle (683,000), Château du Haut-Kœnigsbourg (549,000), Puy de Dôme (500,000), Musée Picasso (441,000), Carcassonne (362,000).
France has an important aerospace industry led by the European consortium Airbus, and is along with Sweden the only European power (excluding Russia) to have its own national spaceport (Centre Spatial Guyanais). France is also the most energy independent Western country due to heavy investment in nuclear power (Nuclear power in France), which also makes France the smallest producer of carbon dioxide among the seven most industrialized countries in the world. As a result of large investments in nuclear technology, most of the electricity produced in the country is generated by nuclear power plants (78.1% in 2006, up from only 8% in 1973, 24% in 1980, and 75% in 1990).
Large tracts of fertile land, the application of modern technology, and EU subsidies have combined to make France the leading agricultural producer and exporter in Europe. Wheat, poultry, dairy, beef, and pork, as well as an internationally recognised foodstuff and wine industry are primary French agricultural exports. EU agriculture subsidies to France total almost $14 billion.
Since the end of the Second World War the government made efforts to integrate more and more with Germany, both economically and politically. Today the two countries form what is often referred to as the “core” countries in favour of greater integration of the European Union.
