Home .Globalization winners Is France a globalization winner?
Is France a globalization winner?
Tuesday, 11 November 2008 09:51

Is France a globalization winner?  What a question!  Everyone knows that a majority of French people are anti-globalization.  And yet, as usual, we must take a look at the facts.  France might be more of a globalization winner than it imagines.  It might also be letting many opportunities slip through its fingers.

First, we have to hand it to them, France is a rich country.  Among the rich countries of the OECD, France comes in as the number five economy, behind the US, Japan, Germany and the UK.  When we look at GDP per capita, a measure of citizens' average material welfare, the French situation looks a lot less rosy.  France ranks number 17 among the 30 OECD countries, behind a long list of Luxembourg, Norway, US, Ireland, Switzerland, Netherlands, Canada, Iceland, Austria, Denmark, Sweden, Australia, Belgium, Finland, UK and Japan.

The jobs situation in France is no more reassuring.  At 9 per cent, French unemployment is well above the OECD average, with over 40 per cent of them being unemployed for over one year.  But more significantly, only 64 per cent of of working age French have a job, compared with over 70 per cent in countries like Canada, Denmark, Netherlands, Sweden, US and UK.  In the French job market, it does not pay to be young, old, of migrant extraction or a women!  While over 80 per cent of those in the 25-54  age bracket are in employment, only 38 per cent 55-64 year olds have a job.  Youth unemployment is around 20 per cent, and migrants and their offspring also fare much less well.

Is globalisation responsible for France's mediocre performance?  Or would things be worse without globalization?  A quick look at a few globalization indicators suggests that France is a globalization champion.  According to the WTO, France is the world's number 5 exporting nation, behind Germany, China, US and Japan, and similarly the number 6 importer.  What is perhaps even more impressive is that Frances holds the same rankings for services trade.  France has for a long time been the world's number one destination for tourists, even though China is quickly catching up.  For revenues from international tourism, Frances comes in at number 3 behind the US and Spain.

France is also a major investing nation, with massive inflows and outflows, being number 3 among the OECD countries on both scores.  French companies are global leaders, figuring very high in the Fortune 500.  Total, AXA, BNP Paribas, Crédit Agricole, Carrefour and Société Générale are all ranked in the top 50.  But, let's not forget that, despite large scale privatization, the French government still has substantial interests in many enterprises.

Foreign enterprises also make a major contribution to the French economy, acounting for around one-third of manufacturing turnover and employment, much higher than the cases of UK, Germany, US or Italy.  And what's more, these foreign enterprises account for over 20 per cent of French manufacturing R&D.

And while much noise is made in France about migration, only 12 per cent of its labour force is born overseas.  The real migration issue for France is the exodus of its youth and talent to other countries in search of better opportunities.  Some 400,000 French citizens reportedly live in the UK, with about 300,000 in London alone.

All things considered, France seems to be doing pretty well out of globalization.  But is it doing as well as it could?  Participation in globalisation is basically determined by a cocktail of open markets, human development, innovation and good governance.  So, let's now dig into this one.

Although France's trade policy is run by the European Commission in Brussels, France does have a big say.  It is after all one of the staunchest supporters of agricultural protection through the Common Agricultural Policy.  The CAP provides over 130 billion in support of European farmers!  Some 43 per cent of the EC budget is spent on agricultural protection.  Should this money not be spent on education and R&D -- all the more so, given that agriculture now represents only 2 per cent of the French economy, down from over 3 per cent a decade ago!  In reality, France is a world leader in services which now represent some 77 per cent of GDP, higher than any other OECD country except Luxembourg.

How easy is it to do business in France?  Could red tape be part of France's problems?  It certainly seems so.  According to the World Bank, France is only the 31st easiest country in which to do business.  It comes in behind not only a string of OECD countries, but also emerging economies like Singapore, Hong Kong, Thailand, Georgia, Saudi Arabia, Bahrain, Malaysia, Estonia, Korea, Mauritius, Lithuania, Latvia and Israel!  The Heritage Foundation also ranks poorly in terms of economic freedom (48th in the world) the country of "Liberté, Égalité, Fraternité".

In the coctail of factors that enable a country to exploit global markets, education is key.  So, how does the land of Molière rate in the OECD's PISA study which ranks 15 year old students in terms of reading, mathematical and scientific abilities -- again, not so well, 17th out of 30 for reading, 17th for mathematics and 19th for science!  When it comes to universities, the Shanghai Jiao Tong University conducts an academic ranking of the world's universities, where only three French universities appear in the top 100.

These are perhaps some of the reasons why France's innovation performance is rather modest, despite its well known strengths in nuclear energy, aerospace and transport.  In recent years, R&D expenditure has been stagnating, particularly in the business sector.  The R&D that does take place is largely funded by government, and benefits from generous forms of tax relief.  At the end of the day, innovation is of course key to capturing new markets.

So, after all that, what is the conclusion?  Globalization seems to be helping France stay afloat.  But if France wants to get the most out of globalization, it has a long list of challenges before it.

References -- the websites of all the organisations mentioned in this article.     


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