Term Paper on "French Economic System From 1981"

Term Paper 6 pages (2252 words) Sources: 1+

[EXCERPT] . . . .

French Economic System since 1981 until now France had a comparatively fragmented capitalist economic system prior to the Second World War which normally operated under the classical economic principles of laissez-faire. The small family owned companies were not sometimes as dynamic and productive as that of the large industrial groups of Germany and United States. The Second World War devastated French infrastructure through aerial bombardment and sabotage. The Nazi Germany had seized the industries, for a long period of time the population had to live with rationing. Such a prelude necessitated quicker reconstruction of the French economy. The French governments during the post war periods, irrespective of their political affiliation aimed at rational, efficient, economic development with the long-term objectives of highly developed, technologically advanced economy of the United States. (Dirigisme)

The indicative central planning was taken to be their major device devised by Commissariat au plan in contravention to the governments of Soviet Bloc. Irrespective of this the French Government had never seen to own more than a few industries and never strived to enforce its economic directions in an authoritarian way. Rather it applied several incentives. On the other hand France never ceased to be a capitalist country in a broad sense. However, the two areas where the French government sought more regulation were the infrastructure and the transportation system. Government owned the national railway company, the national electricity utility, the national natural gas utility, telephone, postal services, autoroute -- the motorway.

The emergence of the French dirigisme is seen along with the development of meritocratic technocracy: the www.economicexpert.comecole Nationale d'Administration with high level administrators. During the period 1945 to 1975 the France experienced unprecedented economic growth of 4.5% on average and a demographic boom giving rise to the term Trente Glorieuses. Dirigisme signifying a system with strong governmental directive influence has been flourished under the center-right governments of Charles de Gaulle and Georges Pompidou. The election of Francois Mitterland to the post of President during 1981 promised more state intervention in the economy marked by nationalization of industries and banks. The bad economic performance during 1983 compelled the government to abandon dirigisme and began the era of rigueur. (Dirigisme)

The demographic features of France ranks it twentieth in the World having 60,424 million people in 2004. The density of population is 111 persons per sq. km. In 2004. Life expectancy of France is comparatively more about 79 years. As per the UNDP report of 2004, about 8% of population of France lives below poverty line. In terms of human development index France is ranked 16th among the 177 countries of the World. France and Britain claim for the fourth rank in the world's largest economy category. Since the Gross National Income of the France fell short of the income of UK by $1,523,025, it was placed at 5th position during 2003. The per capita Gross National Income in 2003 was about $27,460 during 2003. During 2003, the average growth rate of Gross Domestic Product was estimated to be at 0.1%. (Economy of France)

The economic structure of France is characterized by considerable agricultural resources, a large industrial base and a highly skilled labor force. The contribution of service sector in the GDP was closer to 71% in 2003. The economy is exceptionally diversified. The Agriculture and the agro food industry have comparatively a larger contribution in the economic activity than that of in many other west European nations. In manufacturing sectors France excelled primarily in the field of motor vehicles, pharmaceuticals, transport equipment and aerospace. The construction sector accounts for about 5% of GDP. During the past two decades significant reforms have been introduced into the regulatory governance system in France. The influence of the State in the economy has been declined considerably and the State ownership of companies has also reduced prominently. Free market forces played intensely and many products are subjected to fierce competition.

Irrespective of continuous reforms and privatization during the last two decades government continues to regulate a large portion of economic behavior. This is no more confined to the field of health care and education but also economic activities like banking and energy generation and distribution. Railways are apparently state monopoly and the telecom sector is having maximum state equity.

The government economic policy has the objective of fostering investment and growth in a stable monetary and fiscal regime. The government of France has effectively declined unemployment rate from 12% to 9.7% in 2004. The structural revolution in France has undergone severe transformation paving the way to the foreign trade. The main exports of France are machinery and transport equipment, agricultural products and wine. About 75% of the export is constituted by manufacturing and exports constitute about 27% of the French GDP. (Economy of France)

France ranks as the second largest exporter of services and farm products and fourth largest exporter of goods. Primarily France has the trade relationships with Germany, Italy, the UK, Belgium and Spain, including United States. During 2004, the French exports amounting to Euro 341 Billion increased by 5.6%, the imports constituted about Euro 349 Billion enhanced by 8.6% that showed a negative balance of Euro 7.8 Billion. The trade deficits have never called upon to counterbalance the dynamism of its exports that has reached the pinnacle during 2004. The economic success at the end of 1990s has also revealed a gloomy picture in terms of recent slowdown in GDP growth rates. The per capita growth of GDP was not sufficiently stronger to narrow down the gap in comparison to United States. Besides, France also confronts the problems of an ageing population as with the other western nations.

Irrespective of the fact that the reforms essential to confront this problem have been initiated additional measures are felt essential to sustain the progress of the French economy and assist in strengthening its growth prospective. Creation of more jobs and more employment opportunities is felt to be another problem. Irrespective of the enhanced employment rates, unemployment remains to be higher. In comparison to the OECD nations the minimum labor cost in France is more in comparison to the average cost. This has an adverse impact on demand for labor particularly for certain groups like young and low skilled workers. (Economy of France)

The key requirement of the French economy among others is to bring down obstacles to entry in network industries that generate higher prices and limit choice. Infusing competition in rail transport and secure non-discriminatory third party access in telecommunications and air transport can perform this. Moreover, the necessity to effectively address the pollution, organize the natural resources and biodiversity remains to be a major problem. France has adhered to a successful environmental policy and progress has been made with regard to the legislation and management in respect of natural and technological risks. Moreover, effective water management in terms of a basin-level strategy has attained considerable achievements. (Economy of France)

France appeared to have fully integrated into the global capitalist economy however; it still does not appear similar to capitalism. The inherent philosophy of the liberty of the Market must be confined is widespread through out the whole political spectrum, right-wing parties incorporated. The French economic system is much influenced by the formula once applied by former socialist Prime Minister, Lionel Jospin, 'Yes to Market Economy, no to Market Society'. In one direction the free private economic initiative, competition and the liberty to personal enrichment is acknowledged as the basic mechanism of wealth generation. In another sphere there is an intense refusal of Market as a prospective hegemonic path of living and acting together. If this mood is to be recognized as seriously, the risk is not only to solve the inequalities generated by the Market, but also to safeguard social interaction and in a broader sense the marketing society from its inherent adversities. (Which French Third Way? Administrative and Social Empowerment: Lessons from the Second Left in Power)

The philosophy of Market containment is more often split into first, an economical regulation agenda and secondly an equity agenda that is fight against poverty, exclusion and inequalities. Thirdly, there is an ecological agenda sustainable development. These are key concerns however, required to be dealt with in a more radical and systematic way. Against this background it is worthwhile to firstly to comprehend the real nature and reasons of the crisis of Social-democracy, in association with the crisis of the Fordist socio economic coherence secondly, the way this crisis places on the agenda the question of the new collective action models, formulated here in terms of empowerment, thirdly, the second left governmental action between 1988 and 1991 have been suggested to have brought some valuable elements of response to the crisis of the French State centered social model and some milestones on the road toward a French Third way.

The philosophy behind Rocard's social and administrative reform policy continues to inspire and also relevant in the present context. The regulation school French economists narrated socio-economic system of post-war… READ MORE

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