France - Economic analysis of government policies, investment climate and political risk.

THE

McKEEVER INSTITUTE

OF

ECONOMIC POLICY

ANALYSIS

FRANCE: Economic Policy Analysis

This site presents an analysis of the French government's economic policies compared to a revised list of 34 economic policies as prepared by Guillaume LaFarge with the McKeever Institute of Economic Policy Analysis (MIEPA) in Fall 2011.

To read the analysis scroll through this site. To learn more about the background policies, click here: Introduction and Policy Recommendations

To learn more about MIEPA, click here Return to MIEPA's Home Page

The study is by Guillaume LaFarge, a French native who currently [December 2011] lives in San Francisco; this study presents the French government's economic policies as compared to the MIEPA list of policies as outlined above. The ratings herein are based on the following rating scale:

RATING SCALE

5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2011. Used herein with permission]

To read a disclaimer about the analysis in this file, scroll to the bottom of the file.

Return to MIEPA's Home Page

FRANCE - GUILLAUME LAFARGE

FRANCE: ECONOMIC POLICY ANALYSIS BASED ON MIEPA POLICY LIST

RATING SUMMARY

POLICY NUMBER      RAW SCORE   ADJUSTED SCORE    POSSIBLE   PERCENTAGE

        1               5.0          15.0             15.0       100 %

        2               5.0          15.0             15.0       100

        3               2.8           8.4             15.0        56

        4               4.8          14.4             15.0        96

        5               4.4          13.2             15.0        88

        6               4.3          12.9             15.0        86

        7               5.0          15.0             15.0       100

        8               5.0          15.0             15.0       100

        9               2.2           6.6             15.0        44

        10              3.8          11.4             15.0        76

        11              2.5           7.5             15.0        50

        12              3.8           7.6             10.0        76

        13              4.0           8.0             10.0        80

        14              5.0          10.0             10.0       100

        15              4.1           8.2             10.0        82

        16              3.8           7.6             10.0        76

        17              4.1           8.2             10.0        82

        18              2.1           4.2             10.0        42

        19              2.9           5.8             10.0        58

        20              3.9           7.8             10.0        78

        21              2.9           5.8             10.0        58 

        22              2.3           4.6             10.0        46

        23              4.8           9.6             10.0        96

        24              4.4           8.8             10.0        88

        25              4.5           9.0             10.0        90        

        26              4.3           8.6             10.0        86

        27              4.2           8.4             10.0        84

        28              4.6           9.2             10.0        92

        29              2.8           2.8              5.0        56 

        30              3.9           3.9              5.0        78

        31              4.9           4.9              5.0        98

        32              2.9           2.9              5.0        58

        33              4.3           4.3              5.0        86

        34              2.2           2.2              5.0        44

   TOTAL              131.5         286.0            365.0        79.0%
                      =====        ======            =====        =====

FRANCE: INDIVIDUAL POLICIES

1. Freedom from internal control. 5.0

In countries of the European Economic Area (EEA), the Free Movement of Workers is a fundamental right to the people from these countries to work in another EEA country under the same conditions as citizens of its country. France belongs to EEA. Thus, it is easy to move to and from France. Freedom of Movement emerged progressively since the vote of the Schengen Convention in 1995.

Furthermore, an authorization from the government is not required for French citizens in order to create a new business or a new enterprise inside the country.

In conclusion, French people are free to move about at their own discretion.

www.touteleurope.eu/fr/actions/citoyennete-justice/schengen.html; www.associanet.com/europe/payseee.html

2. Freedom of speech. 5.0

The origin of the freedom of speech dates back to the 18th century. This is a democratic, republican and secular tradition. In Europe, especially in France, freedom of speech is associated with the French Revolution. The National Assembly passed “la Déclaration des Droits de l'Homme et du Citoyen” (meaning the Declaration of Human Rights and the Citizen) on August 1789, where the declaration specifies in Article 11: “Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference, as well as the freedoom to seek, receive and distribute information and ideas through media.”

Therefore, France is a country with no restrictions on speech, unless it has a negative effect on French citizens.

http://www.un.org/en/documents/udhr/index.shtml#a19; www.slideshare.net/gsill/french-revolution-review

3. Effective, fair police force. 2.8

The “police Nationale” (meaning National police) is one of two national police forces and the main civil law enforcement agency of France, with primary jurisdiction in cities and large towns. The other main agency is the “Gendarmerie” (military police) with primary jurisdiction in smaller towns and border areas. Both police forces are efficient; they utilize equipment (weapons, vehicles, communication system, etc) in extreme situations. However, the bias misconduct sometimes practiced by police are issues that affect everyone in France. In 2005, two young men returning from a soccer game were deliberately chased by police into a metro station. In order to escape the police force, they entered a control room in the metro station, yet, unfortunately, were electrocuted to death.

In conclusion, France has, on one hand, effective police forces, but on the other hand, are often unfair to the population.

www.interieur.gouv.fr/sections/a_l_interieur/la_police_nationale; www.france24.com

4. Private property. 4.8

The French Intellectual Property Code is a corpus of laws relative to the intellectual and industrial property. It was created on July 1st, 1992 from former laws relative to industrial, artistic, and literature properties. Consequently, in France, people enjoy a high level of intellectual protection, thanks to this corpus. Recently, the Code was modified to include the Hadopi Law. The Hadopi Law was created in order to protect creative works of the Internet. Property protection is granted to the companies who create a mark for one or more categories of products or services. French citizens benefit from trademarks to create new concepts, companies, or services.

In conclusion, French citizens' properties (real, personal and intellectual) are highly protected. www.senat.fr/dossier-legislatif/pjl07-405.html

5. Commercial banks. 4.4

As defined in the dictionary, a commercial bank (in French, banque de dépot) takes deposits from citizens. They can also provide credit. Commercial banks are also referred as retail banks. Furthermore, they deal with individual and small businesses, unlike investment banks. In France, commercial banks offer services like credit, investments and insurance. The credit service is accompanied by interest and fees (including bank guarantee, cash credit and payment period). The loan system in France is complex, but beyond any doubt, it is effective; funds provided by the commercial bank are stable and meet expectations for those with decent to high credit. The only negative point is the interest rate.

http://www.cambiste.info/sdmpage/banques/banq10.php; http://banque.comprendrechoisir.com/comprendre/credit-bancaire

6. Communication system. 4.3

France's communication system is varied and effective:

• France Telecom S.A. is the main telecommunication company in France, the third largest in Europe, and one of the largest in the world. In 2010, they had 192.7 million customers worldwide.

• Radio France is a public French broadcasting company established in 1975. Among the many radio stations offered by Radio France, there is also a major French news station. Daily, more than 80% of the French public tune in to the radio.

• In regards to Internet in France, on December 2010, France had 24.5 million broadband connections, of which 94% are ADSL subscribers.

Thus, France has facilities in terms of communication; according to “Le Figaro's” (French newspaper) annual ranking of countries by their use of communication technology, France scored in 18th place.

www.leFigaro.fr; www.mediametrie.fr

7. Transportation. 5.0

Transportation in France relies on one of the densest networks in the world with 90 miles (146 km) of roads and 3.85 miles (6.2 km) of rail lines per 100 km². It is built as a web with Paris at its center.

There is a total of 31,939 miles (51,401 km) of railway in France, mostly operated by SNCF, the French national railway company. However, the railway system conducts a small portion of total travel, accounting for less than 10% of passenger travel. There are 622,000 miles (1,000,960 km) of roads in France. The French motorway network, or auto-route system, consists largely of toll roads, except around large cities and in parts of the North. It has the fourth largest highway network in the world, trailing only after the U.S., Canada and Germany.

The French natural and man-made waterways network is the largest in Europe extending to over 5,300 miles (8,500 km). Approximately 20% of the network is suitable for commercial boats of over 1,000 tons. There are approximately 478 airports in France; 288 of the airports have paved runways, with the remaining 190 unpaved. The national carrier of France is Air France, a full service global airline, which flies to 20 domestic destinations and 150 international destinations in 83 countries across all 6 major continents.

www.itransports.fr/fr/transports; fr.wikipedia.org/wiki/Histoire_des_transports_en_France

8. Education. 5.0

The French educational system is highly centralized, organized and ramified. It is divided into three different stages: enseignement primaire (meaning the primary education), enseignement secondaire (meaning secondary education) and enseignement supérieur (meaning higher education). The system was gradually put in place during the 1960's and 1970's, ending the formerly more compartmentalized system which was based on a clear separation between primary and secondary education.

At the end of their secondary education, students take the end-of-lycée diploma, the baccalaureat, in order to be eligible for university entry, a classe préparatoire, or professional life. It is generally taken at age 18 if the pupil has not repeated a class during secondary school.

Higher education in France is organized in three levels or grades which correspond to those of other European countries, facilitating international mobility:

-Licence and Licence Professionnelle (Bachelor)

-Master (Master)

-Doctorat (Doctorate)

18 million pupils and students, which totals to a quarter of the French population, are enrolled in the education system. Of these, over 2 million are in higher education. In 2010, France's GDP was close to €1,575 billion ($2,113 billion). Of this total, just over €88 billion ($118 billion) was devoted to initial or continuing education: 5.59% of GDP. As far as school education spending is concerned, France maintains a middle position, behind two Nordic countries (Sweden and Denmark), but ahead of Italy and Japan.

http://www.discoverfrance.net; www.frenchentree.com

9. Social mobility. 2.2

Basically, social mobility refers to the likelihood that a child will grow up into adulthood and attain a higher economic and social well being level than his family of origin.

According to a report of social mobility in the world, France ranks third to last when it comes to the rate of income improvement for over four generation of families. In France, there is a wide acceptance among sociologists that social mobility has greatly increased in recent decades.

Another report shows that in France, 52% of sons of executives aged between 40 to 59 years become also executives, while a mere 10% of sons of blue collared workers become executives. The main conclusion is there is an inequality between French social classes.

Forty years of social mobility in France : change in social fluidity in the light of recent models. p.12-13

10. Freedom from outside control. 3.8

France, belonging to the European Union, participates in the implementation of European Union laws; it is a body of treaties and legislation, such as regulations and directives, which have both a direct effect and an indirect effect on the laws of European Union member states.

Moreover, France has its own laws. However, the justice system in France considers the European Union law while making judgment.

www.lawinFrance.com

11. Protection of Domestic Enterprises 2.5

In 2010, the value of French exports to the world raised by 10.2% to an estimated $511,6 billion from $464,1 billion in 2009. France imported a hefty $599,2 billion worth of products from the rest of world in 2010, 9.7% more than the $540,5 billion in imports during 2009. France’s global trade deficit was $87.6 billion for 2010, a 16.2% decline over the $75.4 billion shortfall in 2009. Consequently, In regard to the previous statistics, there are more import than export. This deficit trains a weakening of the protection of domestic enterprises.

www.intracen.org

12. Foreign currency transactions. 3.8

Euro, the French currency, is one of the major reserve currencies together with the US Dollar, Japanese Yen, Pound Sterling and Swiss Franc. Thus, it is easy for businessmen, who are creating enterprises in France, to exchange Euro against Dollar or other foreign currencies. However, the exchange rate between Euro and other currencies is shifting and unstable.

In conclusion, it is simple to find Euro in the world, but its rate is not constantly profitable.

www.exchangerates.org

13. Border control. 4.0

Belgium, Luxembourg, Germany, Switzerland, Italy, Monaco, Spain, Andorra have a border with mainland France.

In 1985, France signed the Schengen Agreement; The Schengen area represents a territory where the free movement of persons is guaranteed. The first agreement between the five original group members was signed on 14 June 1985. A further convention was drafted and signed in 1990, gathering 20 additional country members. In order to reconcile freedom and security, this freedom of movement was accompanied by so-called "compensatory" measures. This involved improving cooperation between the police and the judicial authorities in order to fight organized crime. With this in mind, the Schengen Information System (SIS) was set up. SIS is a sophisticated database used by authorities of the Schengen member countries to exchange data on certain categories of people and goods.

www.europa.eu; www.ey.com

14. Currency. 5.0

The currency of France is Euro. The euro (€) is also the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. It is consequently used daily by some 332 million Europeans. Additionally, over 175 million people worldwide use currencies which are pegged to the euro,

The euro is the second largest reserve currency as well as the second most traded currency in the world after the United States dollar. As of July 2011, with nearly €890 billion in circulation, the euro has the highest combined value of banknotes and coins in circulation in the world, having surpassed the U.S. dollar.

According to International Monetary Fund estimation, the eurozone is the second largest economy in the world.

www.mapsofworld.com; www.ecb.int

15. Cultural, language homogeneity. 4.1

There are a numerous languages in France. French is the sole official language and is by far the most widely spoken, but several regional languages are also spoken to varying degrees. According to the last INSEE studied, French is spoken by 39,360,000 people (86% of the population). Then, German dialects (Alsatian, Lorraine Franconian) are spoken by 970,000 (2.12%), Arabic is spoken by 970,000 people (2.12%) and Occitan language (Languedocian, Gascon, etc) is spoken by 610,000 people (1.33%). Finally, About 400 other languages(Polish, Berber languages, East Asian languages, Catalan, Franco-Provençal, Corsican, Basque, etc.) are spoken by 2,350,000 people (5.12%).

In conclusion, French citizens speak several languages in France; homogeneity is not completely total.

www.eblul-france.eu; www.tlfq.ulaval.ca/axl/europe/francegeneral.htm

16. Political effectiveness. 3.8

First, A law, passed in 1982, enhanced decentralization by increasing the powers and authority of the départements. Formerly, the chief executive of the département was the government-appointed prefect (préfet), who also had strong powers over other local authorities. The commune, the smallest unit of democracy in France are led by the mayor (maire). The mayor is both the chief executive of the municipal council and the representative of the central government in the commune. In conclusion, rural areas (like commune) are governed as well as urban areas.

Second, since the 2001 attacks on the United States, France has improved its terrorism prevention by:

• Developing the DGSE(external security general directorate) counter terrorism department’s staff and resources.

• Coordination between the police and the national gendarmerie, with the latter having its own counter terrorism brigade (BLAT) is provided by the counter terrorism coordination unit (UCLAT).

• Creation of a national intelligence coordinator, under the responsibility of the President of the Republic.

denistouret.fr; www.diplomatie.gouv.fr

17. Institutional stability. 4.1

Today’s France remains a democratic country with a multi-party system, even if politics tend to be a bit bipolar between socialists and conservatives. One main French peculiarity remains the presence of both a President and a Prime Minister, who are both very active on the home front and on the international scene. The President is elected by the people for a 5 year period. Then, he nominates his Prime Minister, generally from inside his own party. However, alternating periods of electoral victories and defeat have created an entirely new process, the Cohabitation where the Prime minister belongs to the political opponent of the President’s party.

French laws are very old, since both the Civil Code and the Criminal Code used in all courts of the country were originally devised under Napoleon Bonaparte in the early 1800’s. French law is therefore statutory although some part of influence is left to judicial precedents when judges appreciate the pertinence of the laws invoked in a trial. The French judicial system is very complex and delays are quite long for procedures to lead to an actual judgment.

Sources of Stability and Vitality in France. By HERBERT ADAMS GIBBONS

18. Honest government. 2.1

According to a survey by CSA for Les Echos ( French newspaper), 62% of French citizens do not trust Nicolas Sarkozy (President of the Republic) against 32%, who trust the president.

According to a report by Transparency international, France has a corruption level of 6.9, on a scale from one to ten. In comparison, the United States is reported to have a corruption level of 7.5.

According to the Global Integrity Report, France has a history of high corruption levels, which is due to "poor accountability regulations for executive, legislative and judicial branches." In total, France's integrity rating is 78 out of 100.

www.lesechos.fr/; www.transparence-france.org/

19. Common laws. 2.9

French law is divided into two principal areas: private law and public law. Private law includes, in particular, civil law and criminal law. Public law includes, in particular,administrative law and constitutional law. However, in practical terms, French law comprises three principal areas of law: civil law, criminal law and administrative law.

A Group of States against Corruption (GRECO) was established in 1999 by the Council of Europe to monitor member states' compliance with anti-corruption standards. According to a report by GRECO, "France has severely restricted its jurisdiction and its ability to prosecute cases with an international dimension, which, given the country's importance in the international economy and the scale of many of its companies, is very regrettable." Indeed, French prosecutors have no jurisdiction in prosecuting foreign companies that have bribed French public officials abroad.

http://euobserver.com

20. Central bank 3.9

Banque de France (meaning central bank of France) was founded in the year 1800. Napoleon Bonaparte was the founding father of the bank for sustaining the renewed economic growth for the nation. In the year 1936, the Government stepped forward by nationalizing the bank for ensuring price stability and bringing a landmark reform in the banking system of the country.

In the year 1998, the bank came under the European System of Central Banks (ESCB). As a member of the Eurosystem, the bank functions with the sole objective of attaining price stability. It is headquartered in Paris.

The important functions of the bank are as follows:

• Formulating and implementing monetary and credit policies

• Issuing the currency

• Monitoring the country's financial markets

• Maintaining financial stability

• Controlling foreign exchange reserves

The Bank is administered by a General Council. The council is responsible for activities related directly to the formulation and execution of the monetary policy in the country.

www.banque-france.fr/; www.gralon.net

21. Domestic budget management. 2.9

In 2009, France's public deficit reached 7.5% of gross domestic product (GDP) its highest level ever and more than twice the maximum agreed for members of the European Union. The French budget deficit hit 141 billion euros, according to figures released by national statistics office INSEE.

In 2010, it said the public deficit, the shortfall of revenues to expenditures in one year, would also be better than had been feared; coming to 8.2% of output rather than 8.5 percent. The budget deficit amounts to 116 billion euros.

In 2011, INSEE forecasts a domestic budget of 198 billion euros and a deficit of 92 billion euros. Thus, there is an decrease in the budget deficit from 2009 to 2011.

www.rfi.fr ; www.insee.fr/

22. Government debt. 2.3

Over the past three decades ranging from the early 80s, France has had a large increase in their governmental debt. Several factors such as a high unemployment rate, a shorter work week, and increased spending stretching to four times their annual state budget have contributed to an increase in the national debt.

In 1995, government debt in France amounted 55.51% of Gross Domestic Product (GDP).

In 2005, France had a debt of 66.6% of GDP.

In 2010, According to a study from the CIA, compared to 133 government debt countries, France is ranked as the seventeenth country (decreasing order) with 82.4% of GDP.

Therefore, the economy of France compared to its national debt is headed in a bad direction.

www.indexmundi.com ; www.cia.gov

23. Economic statistics. 4.8

France's National Institute of Statistics and Economic Studies (in French, Institut National de la Statistique et des Études Économiques: INSEE) is a Directorate General of the Ministry of the Economy, Finance, and Industry. Therefore, it is a government agency whose personnel are government employees, although not all belong to the civil service. INSEE operates under government accounting rules: it receives its funding from the State's general budget. The official statistical system collects the data needed to compile quantitative results. In this capacity, it undertakes censuses and surveys, manages databases, and also draws on administrative sources.

www.insee.fr/

24. Protection of public health and safety. 4.4

France has a system of universal health care largely financed by government national health insurance. In its 2000 assessment of world health care systems, the World Health Organization found that France provided the "best overall health care" in the world. In 2009, France spent 11.7% of Gross Domestic Product (GDP) on health care, or $3,939 per capita, a figure much higher than the average spent by countries in Europe.

To qualify for health cover it is necessary to have paid a social insurance premium calculated as a percentage of income. In addition, fees are payable at the time of use and can be claimed back from the insurer or waived for the poor (people earning less than 6,744 euros per year do not have to contribute).

Violent crime is relatively rare in France. However, the crime rate of incidents involving violence has increased a little compared to the last decade.

www.who.int/fr/

25. High wage policies. 4.5

In France, a national minimum wage, referred to as the SMIG “salaire minimum interprofessionnel garanti” (meaning inter-professional guarantied minimum wage), was created by a law in 1950. It was replaced in 1970 by the SMIC “salaire minimum de croissance” (meaning minimum growth wage). Given the disparity of the situation, the link between the minimum wage and the position at a given level, in the standard of living scale, is not very strong. In a labor based French society, the minimum pay of a full time employee ought to ensure him and his family an adequate stance in the general standard of living. Moreover, for unemployed people, a French governmental agency “pôle emploi” (meaning employment pole), helps citizens to find jobs and provides them with financial aid.

In regards to French wage policies, one can conclude France benefits from an active governmental agency with an effective financial aid, and a guarantied minimum wage. So, this allows job security for French citizens.

www.assemblee-nationale.fr

26. Environmental protection. 4.3

In 1980, The Ministry of Ecology, Sustainable Development, Transportation and Housing is an agency in the government of France . This ministry has been developing for the last ten years. They are responsible for the State Environmental Policies (Preservation of Biodiversity, Climate Kyoto Protocol Application, Environmental Control of industries, etc.), Transportation (air, road, railway and sea regulation departments), Sea, and Housing Policy.

In 2004, an Environmental Charter was included in the French Constitution. The adoption of the charter was a crucial step in the history of rights in France. As a result of President Jacques Chirac's desire, the charter reconciled economic and social development as well as environmental protection. In 2011, France is conscious about transmitting C02. Therefore, France is one of the top countries that is the least damaging to the planet.

www.elib.kkf.hu/france ; www.nouveaux-mondes.org

27. Strong army. 4.2

The French armed forces encompass the French Army, the French Navy, the French Air force, and the National Gendarmerie. The President of the Republic heads the armed forces, with the title “Chef des Armées” (meaning Chief of the Military Force).

The French Army, officially the “Armée de Terre” (meaning Land Army), with approximatively 130,000 active soldiers and 30,000 reservists, is one of the largest armed forces in Europe.

According to statistics of the military defense, the budget of the French armed forces is scheduled to rise from €30.1 billion in 2010 to €32.7 billion in 2013. They have invested the majority of the budget in equipment (vehicles, weapons, etc.) and other new technologies. Therefore, this budget represents less than one third of the domestic budget in France.

www.ambafrance-us.org ; www.defense.gouv.fr

28. Foreign trade impact. 4.6

France's trade is one of the largest in the world. France exports and imports various raw materials, automobiles, and electronic products. The country ranks sixth in the world in terms of export volumes and fifth when it comes to imports.

In 2010, France's export amounts $456.8 billion including: iron and steel, beverages, plastics, chemical and pharmaceutical products. Its main export trading partner is Germany (14.3%).

France's import totaled up to $532.2 billion in 2010 declining from $692 billion in 2008. France main import commodities are: vehicles and aircrafts, crude oil and machinery equipment. Its main import partner is also Germany (17.9%).

In conclusion, the total of import and export is $989 billion, which is about one third of the GDP ($2.555 billion in 2010).

www.globaltrade.net ; www.ec.europa.eu/

29. Management of foreign currency budget. 2.8

The relation between public deficit and public debt is crucial. Public debt, measured in Euros, increases when the government budget is in deficit. In the 1970's, an increase in inflation was globally caused by the suspension of the parity between the U.S dollar and gold. Thus, in 1970's and 1980's, France entered in a regime of permanent debt; the debt reached peaks such as interest payments and debt services become significant.

From 1985, the reduction of inflation is positive for France: the state benefits from lower lending rates (from 11% in 1985 to 5% in 2000). The decrease in interest rates enabled France to refinance itself at lower cost.

In 2011, according to a report from the Department of Budget, the public debt should be higher than expected (85.4% of GDP).

Consequently, France has a a high deficit budget according to the public debt statistic, but lower than the deficit budget of the countries in other Euro areas.

“La dette publique dans l'histoire” P.14 ; “Stratégie de réduction de la dette publique.”

30. Layer of collective action. 3.90

Until 1982, a real autonomy did not exist between the French government and its communes. Defferre law, enacted in March 1982, is considered the first act of decentralization and provided three categories of local government authority: regional, departmental, and communal. Because this law was enacted, France is now divided into 27 administrative regions; the regions are subdivided into 101 departments; each region is controlled by a prefect, which is the state's representative in a department or region.

Regions, departments, and communes are all known as territorial collectivities, entailing that they possess local assembly as executive.

In conclusion, France is a country with a wide variety of collective enterprises.

www.iaat.org ; www.linternaute.com

31. Pro-business climate. 4.90

All public stakeholders either national or local, rally for the creation of new enterprises.

Initially, national public stakeholders occur by political actions; numerous laws have been voted like “la loi Duteil” in 2003 in order to encourage TPE (très petites entreprises translates to very small enterprises).

Then, locally, the public stakeholder mobilizes on the problems of starting a business. For example, take the platform for local initiative in Lyon, which helps starting level businessmen to create their own company.

Therefore, French society places a high value on business.

www.invest-in-france.org ; doc.sciencepo-lyon.fr

32. Government enterprises. 2.90

In France, most public companies have gained public status since the nationalization of 1945. In 1986, France started to sell a portion of these holding. In order to recapitalize some companies (EDF: electricity company) and to open certain sector to competition (France Telecom: telecommunication company), this proved to be a revolutionary movement. Finally the movements of privatization reduced the budget deficit of France.

However, the government possesses the monopoly of companies (On May 2007, State ownership of public enterprises were valued at a total value of 200 billion Euros) and still maintain reign on private companies.

www.ac-bordeaux.fr ; www.news-26.com

33. International security agreements. 4.30

The creation of European Union on February 7th 1993, which rallied 27 members’ states including France, was the first international collaboration providing safety and extended business overseas; it was the beginning of a French expansion. Since this unification, many treaties were signed so that was allowed to aggrandize international security.

After the Second World War, The North Atlantic Treaty Organization (NATO), which is an intergovernmental military alliance, was signed on April 4th 1949. This organization constitutes a system of collective defense in response to an attack by any external force.

www.doc.diplomatie.fr ; www.nato.int/

34. Protection of domestic enterprises from government mandated cost. 2.20

French enterprises are mainly subject to three types of taxes:

• VAT: the value added tax is necessary on consumption, which aims at all goods and services consumed or used in France. National companies play the role of “tax collector”; they charge VAT to their customer at a rate of 19.6% and then donate to the treasury.

• IS (CT): “impot sur les sociétés” (translated by company tax) concerns the benefits of certain companies and corporations.

• TEC: combination of two subscriptions.

However, one can enjoy several tax benefits when he participates in the creation of a business. But the requirements are strict and temporary; It is tailored towards those in certain zones or opting for a specific statute.

www.apce.com ; www.impots.gouv.fr

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All the information and conclusions in each country analysis are solely the responsibility of the individual student and have not been verified, corrected, checked for copyright infringement or evaluated in any way by MIEPA or Mike P. McKeever. You are solely responsible for the results of any use you make of the information and conclusions in these studies. Use them at your own risk as interesting supplemental information only instead of seasoned judgements about the policy factors contained herein. Each student has granted permission for his or her work to be displayed here under his or her own name or wishes to remain anonymous and have either created a pen name or used no name at all; if you wish to contact them for any reason, forward your request to MIEPA and the student will be notified of your interest.

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CONTENTS OF SITE

Return to MIEPA's Home Page list of country studies

Introduction and Policy Recommendations

Winning Essays: There Are Alternatives Project (TAA)

Essay: Balanced Trade: Toward the Future of Economics

Moral Economics

McKEEVER INSTITUTE of ECONOMIC POLICY ANALYSIS

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