THE
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Lea Polony, a French citizen who currently [May 2003] lives in California, has completed a study of her home country government's economic policies as compared to the MIEPA list of policies as outlined above. The study on France is shown below. 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, 1996. Used herein with permission]
To read a disclaimer about the analysis in this file, scroll to the bottom of the file.
FRANCE:
Comparison of France's economic policies to MIEPA criteria as prepared by native student of France , Ms. Lea Polony, studying in the US in May 0f 2003.
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 2.5 7.5 15.0 50
4 4.5 13.5 15.0 90
5 3.5 10.5 15.0 70
6 4.5 13.5 15.0 90
7 5.0 15.0 15.0 100
8 5.0 15.0 15.0 100
9 2.0 6.0 15.0 40
10 4.5 13.5 15.0 90
11 3.0 9.0 15.0 60
12 4.5 9.0 10.0 90
13 5.0 10.0 10.0 100
14 4.0 8.0 10.0 80
15 2.0 4.0 10.0 40
16 4.0 8.0 10.0 80
17 2.0 4.0 10.0 40
18 2.5 5.0 10.0 50
19 3.8 7.6 10.0 76
20 3.0 6.0 10.0 60
21 2.5 5.0 10.0 50
22 4.0 8.0 10.0 80
23 4.5 9.0 10.0 90
24 4.5 9.0 10.0 90
25 4.0 8.0 10.0 80
26 4.0 8.0 10.0 80
27 2.5 5.0 10.0 50
28 4.5 9.0 10.0 90
29 2.5 2.5 5.0 50
30 3.8 3.8 5.0 76
31 5.0 5.0 5.0 100
32 2.8 2.8 5.0 56
33 3.5 3.5 5.0 70
34 2.0 2.0 5.0 40
TOTAL 125.4 275.7 375.0 73.5%
===== ====== ===== =====
INDIVIDUAL POLICIES
1: Freedom from internal control: 5.0
French are free to move within and without the country. Foreign travel,
emigration and repatriation are all rights provided by the Law, which the
government respects. Citizens are free to create new enterprises and engage
in any activity that is not prohibited by the law. They do not need a
permission from the government in order to initiate a business. However,
French citizens are subject to the rules common to all of the EU countries.
EU rules are in most part similar to previous and present French rules. The
main difference between the 2 is that under the EU’s rule, every EU citizen
is allowed to move between countries without much control.
Source: personal.
2: Freedom of speech: 5.0
The law provides for freedom of speech and of the press and the government
generally respects these rights. An independent press, an effective
judiciary, and a functioning democratic political system combined to ensure
freedom of speech and of the press, including academic freedom. The
independent media is active and competitive and expresses a wide variety of
views without the government restriction. Internet access is widely
available and unrestricted. The government also respects for peaceful
assembly and association. Regular demonstrations on various issues occur
without incident. Unlike Americans, the French have little doubt about the
democratic legitimacy of laws against racist speech. The restriction of
racist speech is consistent with the republican understanding that
individual liberty must be promoted and affirmed within a collective space,
upon the basis of public authority. Since “France assures equality before
the law of all citizens, without distinction of origin, race or religion…”,
it is democratically appropriate, though not without complications, to
prohibit racist speech.
Source: Journal of comparative politics, Jul.2000. Karen L. Bird.
3: Effective, fair police force: 2.5
The Gendarmerie, a unit of the French armed forces, is considered by some to
be one of the most reliable and efficient police forces in the world. Others
criticize French police for their unfair treatment toward immigrants and
prisoners. The gendarmerie exists to ensure public security and maintain law
and order. It is responsible for tasks relating to the general maintenance
of public order and the prevention of crime, and also with the enforcement
of the law and bringing offenders to justice. It consisted in 2002 of 98135
personnel including 15,203 volunteers. It comprises a territorial force of
69,000 personnel throughout the country, a mobile force of 17,025 personnel
and specialized formations. The Gendarmerie Nationale is divided into
territorial groups to cover the entire country and may be sent anywhere at
any time to deal with riots, disorders, strikes, or natural disasters. The
GN is divided into many specialist units, including motorcycle units,
motorway units, surveillance and intervention platoons, an anti-terrorist
group, a Naval unit, mountain units, speleological groups, an Air Force
unit, an air transport unit, an armament security unit, police dogs,
overseas units, reserves, and women volunteers.
However, France was found guilty of torture and of excessively lengthy
judicial proceedings by the European Court of Human Rights which, in a
separate judgment, also found the French authorities had breached
international norms on the length of preventive detention.
There were
allegations of ill-treatment and use of excessive force by law enforcement
officers, sometimes resulting in fatal or near-fatal incidents. Paris police
have increased security operations in the city center and imposed a virtual
curfew on the immigrant community. This operation is obviously created to
repress and put pressure on North African immigrants.
Prison guards were also accused of ill-treatment and prisons were criticized
for cruel, inhuman and degrading treatment. Courts appeared to remain
reluctant to convict police officers for crimes of violence or excessive
force, or to uphold sentences that attempted to reflect the seriousness of
the crime. In some cases prosecutors appeared to play an active part in
perpetuating a situation of effective impunity where police officers were
concerned.
Source: the statesman year book, 2003 and www.humanrights.com
Viewed on 04/25/03
4: Private Property rights: 4.5
France is a strong defender of intellectual property rights and has highly
developed protections for intellectual property. Under the French system,
industrial property is protected by patents and trademarks, while
literary/artistic property is protected by copyrights. By virtue of the
Paris Convention and the Washington treaty regarding industrial property,
U.S Nationals have a “priority period” after filing an application for a U.S
patent or trademark, in which to file a corresponding application in France.
This period is twelve months for patents and six months for trademarks.
Foreign companies have the option to purchase commercial and industrial land
and buildings from private or public sector owners. They can be assisted by
realtors in finding the property they need. The legal safety of transactions
is ensured by legal rules that apply to real estate transactions and through
the intervention of notaries.
Source: U.S Department of State. FY 2001 country commercial guide: France.
5: Commercial banks: 3.5
In 1996 there were 1,445 banks and other credit institutions, including 400
shareholder-owned banks and 342 mutual or savings banks. Commercial banks
offer all classical financing instruments, including short, medium, and
long-term loans, short and medium term credit facilities, and secured and
non secured overdrafts. Commercial bank also assist in public offerings of
shares and corporate debt, and mergers, acquisitions and takeovers. Banks
offer hedging services against interest rate and currency fluctuations. In
commercial savings banks (caisses d’epargne et de prévoyance), deposited
funds are centralized by a non-banking body, the Caisse de Dépôts et
Consignations, which finances a large number of local authorities and
state-aided housing projects, and carries an important portfolio of
transferable securities.
However, increasingly, firms in France are bypassing banks and going
directly to financial markets for their financing needs. The center of the
French market is the Paris stock exchange (the bourse), which listed 962
companies with a total capitalization of FF4.1 trillion (50% of GDP) in
1998.
Source:www.sybworld.com.ezproxy.sfpl.org/views/entrytext/fr/Banking_and_Finance
6: Communication system: 4.5
In 2000 there were 34·1m. telephone main lines, or 579·3 for every 1,000
inhabitants, and there were 18m. PCs in use (equivalent to 304·3 per 1,000
persons). In Nov. 2001 mobile phone subscribers numbered 33·72m. (Up from
24·29m. in Nov. 2000). In 1997 there were 2·8m. Fax machines in use. There
were still 39,000 telex subscribers in 1996, although telex usage has
declined considerably in recent years. France had 16·97m. Internet users in
May 2002—just over 28% of the population.
La Poste is a public enterprise under autonomous management responsible for
mail delivery and financial services. There were 16,919 post offices in
1994. In 1995, a total of 24,391m. pieces of mail were processed, or 419
items per person.
Public radio is provided by Radio France, which broadcasts nationwide via 39
radio stations. In 1999, there were 3,229 private local radio stations.
Radio and T.V broadcasts must contain at least 60% EU-generated programs and
50% of these must be French. In addition to French specialized national
channels, foreign channels are also transmitted to approximately 1.5m French
households via cable. There were about 58m. radio receivers in use in 1997
and 35.5m.Tv set. 16.97 million used the internet.
There are about 80 daily papers (10 nationals, 70 provincials). The total
daily press in circulation was 13.6 million copies, up from 10.3 million in
1980. Also, a total of 34,766 book titles were published.
Source:www.sybworld.com.ezproxy.sfpl.org/views/entrytext/fr/
7: Transportation: 5.0
France has one of the most highly developed transportation systems in
Europe. The nation has about 28,275 km (about 17,570 mi) of national
highways and some 6825 km (4240 mi) of limited-access autoroutes; in all,
the road network measures some 810,000 km (about 503,300 mi). France has the
longest road network in the EU In the early 1990s about 29 million motor
vehicles were in use; approximately 23.8 million of these were passenger
cars. The average distance traveled by a passenger car in 1997 was 14,000
km. Road passenger traffic in 1998 totaled 753·1bn. passenger-km.
In 1938 all the independent railway companies were merged with the existing
state railway system in a Société Nationale des Chemins de Fer Français
(SNCF), which became a public industrial and commercial establishment in
1983. In the early 1990s there were about 34,075 km (about 21,175 mi) of
railroad track, 37% of which was electrified. France is particularly noted
for the high-speed train à grande vitesse (TGV) linking Paris with Lyon,
Bordeaux, and Calais. The Euro tunnel is a rail tunnel under the English
Channel connecting Calais with Folkestone, England.The Paris transport
network consisted in 2000 of 211·3 km of metro (297 stations), 115 km of
regional express railways and 20 km of tramway France has extensive inland
waterways, about 8625 km (about 5360 mi) including some 4425 km (some 2750
mi) of canals. Canals are administered by the public authority France
Navigable Waterways (FVN). In 1999 there were 8,500 km of navigable rivers,
waterways and canals (of which 1,647 km were accessible to vessels over
3,000 tons), with a total traffic of 59·8m. tones. The French merchant
marine, one of the world's largest, comprises about 730 vessels of more than
100 gross registered tons.
France has two state-run airlines: Air France, which operates flights to
most parts of the world, and Air Inter, which offers service within the
country. Several private airlines also offer national and international
service. The chief airports in the country are Orly and Charles de Gaulle,
both located near Paris. In 1999 it flew 636·8m. Km, carrying 37,027,900
passengers (19,141,000 on international flights).
Source:www.sybworld.com/transportation
8: Education: 5.0
For administrative purposes, the country is divided into 27 educational
districts called academies. In the early 1990s some 4.1 million pupils
annually attended about 44,100 elementary schools. Enrolment at schools
included 99% of children in the relevant age group for primary education. In
addition, about 5.6 million students attended some 11,300 secondary schools,
which represents 92% of the relevant age group. Participation rates for the
age group 2-22 years, estimated at less than 80 per cent in 1980, reached 86
per cent ten years later, with participation for 11-17 year-olds practically
universal. The trend continued, at least into the mid-1990s, with
participation rates for 2-22 year-olds exceeding 91 per cent. Since then
there has been stagnation or even a slight fall (to 90.6% in 1999-2000).
France’s literacy rate is above 99%, one of the highest in the world.
Compulsory education is free and provided for children of 6–16. The
educational stages are as follows:
1. Non-compulsory pre-school instruction for infant aged 2–5.
2. Compulsory elementary instruction for children aged 6–11.
3. Lower secondary education for pupils aged 11–15,
4. Upper secondary education for pupils aged 15–18.
Higher education is provided by the state free of charge in the universities
and in special schools, and by private individuals in the free faculties and
schools. Each university must respect the rules designed to maintain the
national standard of qualifications. There are 69 state universities and
three national polytechnic institutes (with university status), which are
grouped into 25 Academies. There were 2,107,600 students at universities in
1994–95. Over 400 schools and institutes provide higher education (academic,
professional and technical) outside the university system. Progress in
schooling over recent years has been far from negligible. At least in
overall terms, the education system has not failed to meet the need for
higher levels of attainment and for greater numbers of well-qualified young
people. The trend to massification of upper secondary and higher education
is really implied by the call on a more educated population, and demands
both political will and greater social outlays. The democratic
transformation of education, on the other hand, has proceeded at a slower
pace. This has been achieved, at least in certain schools and in certain
areas, as a result of interventionist policies, such as the educational
priority zones (giving more resources where greater difficulties are found).
French schools are known for their excellent education and have spread
throughout the world with at least one French school in each major cities of
the world.
Source: SYB world at www.sbyworld.com
9: Social Mobility: 2.0
Analyzing recent French research, which has concluded that inequality of
opportunity has remained unchanged in France during the last two decades,
The use of “log-linear and log-multiplicative models” reveals that the
statistical association (as measured with the logarithm of the odds ratio)
between social origin and destination has declined steadily by 0.5 % a year
over a period of forty years. This finding highlights a slow but continuous
trend towards a reduction in inequality of opportunity from the middle of
the century. Of the twelve million French men and women between the ages of
35 and 59 who were in employment in 1993, nearly half a million would have
belonged to different classes without this forty year increase in social
fluidity.
French society is today neither more nor less meritocratic than
several decades ago. In other words, qualifications and the rise in
qualification levels do not constitute a kind of pledge of social mobility.
The authors insist on the fact that `social destinations are not forged only
at school, but are constructed throughout an individual's working life'.
Using an index of reproduction which measures the probability of an
individual maintaining the social status of his or her father as against the
probability of rising above it, they show that, regardless of generation,
age or level of education, reproduction generally wills out over mobility
Source: world mark encyclopedia of culture and daily life. France p.162
10: Freedom from outside control: 4.5
French citizen have to follow the rules of the French constitution. There
are also several laws that have been passed by the European Union, in which
France plays a major role.
Source: personal
11: Foreign currency transactions: 3.0
The Euro is the only transaction allowed in France. All foreign currency
must be converted in Euro for foreigners to be able to purchase goods and
services in France.
Source: personal
12: Border control: 4.0
French Border policies are established by the European community, in which
France plays a leader role concerning most of the decisions. The old maps of
Europe--based as they were on competing ideologies and rival power
blocks--are changing. And the new maps being created often have more to do
with economics than with nation-states.
In 1985, Germany, France, Belgium, Luxembourg and the Netherlands signed the
Schengen Agreement on the gradual abolition of checks at their common
borders and on the improvement of police and judicial cooperation. Outcome
of traditional intergovernmental cooperation between certain Member States
of the Union, the Schengen Agreements now cover the entire territory of the
European Union (apart from the United Kingdom and Ireland). But, they are
not EU agreements. Now the 'Schengen area' covers the entire territory of
the European Union (apart from the United Kingdom and Ireland).
The objective was to abolish all border controls within the Schengen area,
both on roads and at ports and airports. On the other hand, controls should
be tightened at the external frontiers of the Schengen area, in particular
by the introduction of a computerized system for the exchange of data (SIS)
between law enforcement authorities. Specifically the agreement is concerned
with: harmonizing provisions relating to entry into and short stays in the
Schengen area by non-EU citizens; asylum matters; measures to combat
cross-border drugs-related crime; police cooperation; cooperation among
Schengen states on judicial matters. The Schengen Agreements, and the Dublin
Convention visibly indicate the development of a restrictive migration
policy and the social construction of migration into a security question.
Moreover, since the 1970s, France--like much of Europe--has enacted "zero
immigration" laws. In 2003, President Jacques Chirac was deliberately
echoing that France would have to start closing the door against
asylum-seekers. The number of other foreigners, including members of fellow
EU countries, allowed to settle in France has been cut by a third, since
tough anti-immigration measures were introduced three years ago.
Source: www.auswaertiges.com. The Schengen agreements and convention.
13: Currency: 5.0
Ever since the Treaty of Paris in 1951, several countries have had as their
major goal the introduction of a single European currency. The next stage of
economic unification began with the Economic and Monetary Union (EMU). In
January 1999, the Maastricht Treaty signified the final stage of the
creation of a single currency. On January 1999 the euro (EUR) became the
legal currency in France and 13 other European countries: irrevocable
conversion rate 6.55957 francs to one Euro. The euro, which consists of 100
cents, has been in circulation since 1 January 2002. There are seven euro
notes in different colors and sizes denominated in 500, 200, 100, 50, 20, 10
and 5 euros and eight coins denominated in 2 and 1 euro and then 50, 20, 10,
5, 2 and 1 cents. On the introduction of the Euro there was a ‘dual
circulation’ period before the franc ceased to be legal tender on Feb. 2002.
The implementation of a single currency is making travel easier between the
countries, is making economic calculations easier (for example, comparisons
between wages and salaries of different European countries) and is
strengthening Europe as a unified economic force.
Source: Source: U.S Department of State. FY 2001 Country Commercial Guide:
France.
14. Cultural language homogeneity: 4.0
Although President Jacques Chirac says he supports the development of the
regional languages (75 languages including Celtic and Latin with Teutonic,
Slavic, North African, Indochinese and Basque), he refused this summer to
support ratification of the European Charter on Regional and Minority
Languages. It’s part of the fear that language diversity will undercut the
concept of the French state as highly centralized and indivisible. The
charter, ratified by only eight European countries thus far, requires that
the most important laws be published in the regional languages, a
bureaucrat's nightmare and a threat to national unity in the minds of many.
Chirac is only pursuing a previous concept, which suppresses regional
identities and promotes a centralized authority and a common culture.
The Academie Francaise has spent the past 366 years guarding the purity of
the French language from foreign and regional contamination. With the
underlying assumption that France is both unique and united, some
politicians believe the need to erase dialects and make French universal.
95% of France’s inhabitants speak French, the country’s official language.
The most widely spoken regional language in France today is Occitan,
utilized by 3.5 million Frenchmen who live along a wide swath in southern
France stretching from the Atlantic Ocean to the Mediterranean Sea. This
compares with the more than 10 million people who knew the language in 1920.
Even though Brittany in western France has a strong cultural and historical
identity, only 200,000 to 300,000 people speak Breton, compared with the 1.2
million who spoke it at the start of the century. In the Basque region of
southwest France, just 40,000 of the area's 260,000 inhabitants speak that
mysterious tongue, widely practiced by almost all Basques 100 years ago.
According the 1999 census, there were 3.26 million people of foreign
extraction in France (5.6% of the pop.) Largest group of foreigners with
residence permits: Portuguese, Algerian and Moroccans. With a Muslim
population of 5 millions (highest in Europe), Arabic and Islam have become
the second language spoken and the second religion practiced in France.
Source: The salesman book, 2003. www.frrancediplomacie.fr/label_france
Viewed on 03/23/03
15: Political effectiveness: 2.0
The Raffarin government seems to be the prisoner of a Bermuda triangle: a
bad International economy and lower tax receipts; a European Union budgetary
policy, which risks a recession; and the need to finance heavy spending,
plans. Mr. Raffarin, with a budget deficit (limited by the European Union)
of some 2.6% this year, must somehow be effective by fulfilling Chirac’s
election promises and his ambitious program of tax cuts, while spending more
on defense, health and law and order.
France faces today a serious economic slow-down characterized by a high
unemployment rate (9%), mainly fueled by extremely generous and expensive
social benefits. Indeed, Public spending amount to 76.4% of the total GDP.
Jacques Chirac has had the unpleasant task of attempting to reduce some of
these “cradle-to-grave benefits”, which threaten to rapidly ruin the
country. One of his attempts led to a serious general strike, which
paralyzed Paris for nearly three weeks!
At the same time, the Raffarin government has slash income tax by 5%, as
well as cutting corporate taxes and the amount employers’ pay in social
security payments for their workers. But the figures being flashed around
sound unrealistic, given France's traditional commitment to proper funding
of its public services.
Mr. Chirac and his centre-right UMP coalition made law and order
(essentially anti-crime measures) into one of the central planks of their
electoral campaign. He has promised to spend six billion euros (5.67 billion
dollars) on crime-busting initiatives, including regional taskforces and new
detention centers.
Another problem that holds France from being fully effective is that most of
the political and business power is held by the upper bourgeoisie. Those in
political positions appoint many of their own members to key positions in
powerful government-owned companies.
SOURCE: The Economist, September 7,2002. The Bermuda triangle; French
Politics. Info Trac one file plus.
16: Institutional stability: 4.0
France and the United States are rightly considered the birthplaces of
modern democracy. But while Americans have enjoyed the political and
institutional stability for over 200 years, the French since 1789 have
experienced a succession of short-lived regimes: a Directoire, a consulate,
two empires, two monarchies, and five republics, as well as the Vichy regime
during World War II. In France, as one President of the Fifth Republic has
noted, political crises tend to lead to institutional crises which threaten
the regime itself. In such moments, the French have thrice heeded the call
of charismatic and prestigious leaders (Napoleon I, Napoleon III, and
Marshall Pétain) whose temperaments and politics paid short shrift to
democracy. To date, it has proven a robust, prosperous and stable democracy.
The Fifth Republic, which was established by the Constitution of 1958, has
provided France with institutional stability unequalled in the two preceding
centuries. Its chief merit has been to overcome the inefficiency of earlier
institutions while at the same time develop in a consensus of acceptance for
them within the nation. It is important to emphasize that Gaullism, whose
principles inspired the Constitution, is not an ideology but rather a means
to work toward clearly defined objectives:
The greatness of the nation,
the predominance of the nation's interestss over
ideologies,
a strong role for the state,
sovereignty of the people and
the
identification of a leader
17: Honest government: 2.0
France’s current president, Mr. Chirac, has been accused of presiding over a
system of illegal party financing while he was mayor of Paris. New
allegations in 2001 were even more damning. In July 2001, he also stands
accused of using secret cash funds (normally used to finance intelligence
activities or to top up the salaries of the prime minister's close staff) to
pay for travel expenses for his family and his friends. Furthermore, the
current leadership of the government has been delegitimized because of
corruption charges and because elitist class of mostly ENA graduates detains
the monopoly of power. Some of the allegations included illegal campaign and
party financing through kickbacks on public work printing contracts, the use
of municipal funds in Paris to pay political party staff members; and the
manipulation of electoral lists to sway district votes.
May 2002 was not in any way an endorsement of Chirac. In the first round
Chirac scored 19.88% of the vote, which actually meant that only 14% of the
total electorate voted for him. He is despised as corrupt and usually called
the "super-liar". The London based Financial Times correctly pointed out
that the popular slogan ‘better a crook than a fascist’ was "the defining
sentiment" of the second round campaign.
The allegations, and Chirac's refusal to testify in many of the above cases,
helped to crystallize the debates on removing presidential immunity and on
obstruction of justice.
Source: The economist, Nov 16, 2002, Chirac’s profile
18: Common laws: 2.5
Unlike the United States, France follows principles of the Civil law, a body
of rules based on the codified laws of the Napoleonic Code of the 19th
century. Civil law follows broad statements of principles setting out the
standards of conduct. The key feature of a civil law system is that all the
laws of the country are codified or arranged into a coherent system, which
applies to every citizen in the country. In a civil law system, the
principles by which conduct is governed are generally found in the civil
code and not in a body of judicial decisions. It does not mean that all
disputes in France are resolved by simply consulting the Civil Code; France
judges do produce written judgments, which may have some precedential value.
A central goal of a national legal system is to protect law enforcers from
being oppressed with either physical force or bribes by powerful local
interests. For a legal system to protect property, the effects of coercion
and corruption must be limited. Jacque Chirac is known for past illegal
activities (See #17) but we do not know whether he is currently involved in
illegal matters or not. The civil law approach to law enforcement is
especially vulnerable to abuse by a bad government. Such a government can
use the controls inherent in civil law to politicize justice to its own end
rather than to pursue community standards of justice. As a consequence,
civil law, if used to direct justice to political ends, will lead to heavy
government intervention, insecure, property rights, and poor governance in
general. Chirac has not yet been accused of leading such a bad government.
He could direct justice to political end if he was not constantly under
scrutiny by the French population. Indeed, French are really aware of their
political situation thanks to some excellent media like the news paper Le
Monde etc…
Source: Legal Origin, the Quaterly journal of economics, Nov ,2002
And personal sources.
19. Central Bank: 3.75
Although, the central bank is not independent of the government, the
government remains a significant force in France's banking sector. In 1984,
the government has enacted reforms to remove most of the distinction between
commercial banks and merchant banks and grouped most financial institution
under a single supervisory system. Considered to be the French Central Bank,
the Bank of France (Banque de France), a member of the European system of
Central Banks (ECSB), participates in the regulation and supervision of the
French Banking and financial system. It grants or withdraws banking licenses
and ensures that banks adhere to banking regulation. Government also
returned all large banks to private ownership, increased competition in the
banking industry, and opened some financial services to foreign banks.
The French government has sold its majority equity stakes in major banks and
insurance companies. However, it retains ownership of the "Caisse des Depots
et Consignations” and retains a 10 percent stake in Crédit Lyonnais, which
was kept afloat in the 1990s only through one of the largest amounts state
has ever assigned.
Source: www.france.tresor.gouv.fr viewed on 02/20/03
20. Domestic budget management: 3.0
Although, budget deficits have been one of France’s major problems since the
early ‘nineties, the situation has been improving since 1994. As in
neighboring countries, sizeable deficits are a constant feature. At that
time, spending requirements for financing the administrations accounted for
5.8% of the GDP: they subsequently fell to 4.2% in 1996, 3.1% in 1997 and
3% in 1998. This improvement is the result of curbs on spending by central
government, local authorities and the social security system. Whereas in
1995 there was a budget deficit of 323 billion francs ($53.8 billion), in
1999 France succeeded in reducing its deficit to 206 billion francs ($34.3
billion). The French government, like those of the other European
countries, has begun a program to improve public finances known as the
"convergence programme"; at the same time, it is taking selective action in
sectors, which are sensitive to economic cycles, so as to reduce
unemployment and government debt. High levels of public spending mean that
compulsory payments to the state are also high, whether they are extracted
in the form of taxes or national insurance contributions and such spending
inevitably increases the national debt, which currently amounts to 58% of
the GDP. This may be lower than in most European countries, but interest
payments now account for over 14% of budget spending. As for the inflation,
it has been limited to approximately 1.5% annually,
Source: www.info.france-usa.org and www.minefi.gouv.fr
Viewed on 02/20/03
21. Government debt: 2.5
The aim of government debt and treasury management is to ensure that the
government is able to meet its financial liabilities under all
circumstances. In other words, the Treasury's Account with Banque de France
must always be positive. Debt Management must at all times be designed to
minimize the cost for public finance and therefore the taxpayer in the
short- and medium-term. The Maastricht Treaty established limits on a
government's spending and debt in the Euro-zone. Both Chirac and Raffarin
have hinted that lowering taxes and stimulating economic growth are their
top priorities, even though these supply-side policies could increase
France's national debt beyond the Maastricht limits in the short-to-medium
term. The French stability program covers the period 1999-2002 and projects
a decline in the government debt ratio to 59.5% of GDP in 1998, to 57,2% in
2001 and 58% of the GDP reference value in 2002. Government deficits of
around 3% of the GDP reference value means a more dramatic increase in debt
is to come.
Debts guaranteed by the French government came to FRF 179.7 billion at the
end of March 2001 (FRF 161.3 billion for domestic debts and FRF 18.2 billion
for foreign debts). This concept encompasses the debts of French firms,
administrations, agencies, etc....
Source: www.globalmarkets.socgen.com/net/research/net
From the article: Euro insight. Viewed on 10/03/03
22. Economic statistics: 4.0
France enjoys a free press and has more than 100 daily newspapers, which are
mostly in private hands and not linked to political parties. This free press
reflects a thirst for knowledge from the French population who is deeply
concerned over different events or policies concerning French and
international economy and politics. French generally trust Economic
statistics and policies published by newspapers more than television-based
information since the latter tend to be owned by the government. One of the
main source for statistics is the INSEE, which stands for the national
institute of statistics and economy and is constantly cited in articles,
documentaries etc… Although the French government uses statistics from the
INSEE, there are no other links between them.
Source: personal
23. Protection of public health and safety: 4.5
France has one of the most effective welfare systems in the world. At
nearly 2,500 billion francs ($416 billion), over 35% of GDP, the level of
France's annual spending on social protection is one of the highest in the
European Union. One of the fundamental social requirements it covers is
health care. Health-care expenditure now totals nearly 800 billion francs
($133 billion) this figure includes spending by the state, private
individuals, social security, mutual and other insurance companies offering
optional complementary insurance policies. On average, every person in
France spends 12,400 francs ($2,066) per year on health care. In other
words, nearly 10% of GDP is spent on health, which constitutes an important
economic sector.
The public authorities are also endeavoring to develop preventive medicine,
by encouraging systematic pre- and post-natal check-ups, increasing the
number of workplace consultations and organizing large-scale public-health
campaigns on major health risks. These have focused, for example, on smoking
and alcoholism, methods of early detection of cancer and preventing AIDS.
These efforts have brought some impressive results: France's infant
mortality rate is amongst the lowest in the world and its life expectancy
amongst the highest, increasing by approximately 100 days every year. The
life expectancy is 75 years for men and 83 years for women.
The growing concern in Europe about the health risks associated with food
products and the risks for the environment associated with the production of
goods has given rise to a new approach to product quality. The traditional
distinction between products and processes, which was used to set boundaries
on the legitimate intervention of governments on trade matters is now being
challenged. Indeed, the analysis of products alone is no longer enough to
determine risks and fully understand the qualities of products. Detailed
information about the quality of earlier stages in the production chain are
now required.
According to the latest statistics from IFEN (the French Institute for the
Environment), the production of waste (excluding waste soil and rock) in
France is estimated at 600 million tones, most of it consisting of
agricultural waste (350 million tones) and building site waste (110 million
tones).
Among European countries, France lies in second place behind Germany in
waste management. With every French person throwing away an average of more
than a kilo of waste material each day, French government has set itself the
target of recycling 65% of household packaging. Used as energy through
incineration is an estimated 25% of packaging material. The officially
approved company, Eco-Emballages, founded in 1993, processes 1.7 million
tones of household packaging each year in 250 approved sorting centers and
has 37 million sorters in 2000 and 44 million expected in 2001.
Source: www.sante.gouv.fr viewed on 02/25/03
24: High wage policies: 4.5
The multi-annual tax reduction plan will accelerate the return to full
employment in coming years by increasing the earnings of all workers,
encouraging investment in France and removing the obstacles that keep people
out of the labor market.
The reduction in income tax will be larger for people with low and medium
incomes so as to preserve the progressive feature of income tax, and it will
benefit the vast majority of workers.
Also, the government wants to take a step further in the 2001 budget by
increasing net income from work for all low-wage earners. This is the
purpose of the rebate on CSG ( social security contribution on all sources
of income) and CRDS (social security debt reimbursement levy), which will
eventually result in a net monthly gain of 10% for people earning the
minimum wage. France has a minimum wage that is revised annually on July 1
and also whenever the cost of living index increases by 2 percent.
Source: www.cf.heritage.org/index/country.
Viewed 02/27/03
25: Environmental protection: 4.0
Since it was established in 1971, the Ministry of the Environment, at that
time the “Ministry for the Protection of Nature and the Environment” have
expanded so as to reflect increasing national and international awareness,
following which: certain natural resources, such as water, previously
regarded as inexhaustible, are now seen as rare and necessary. The ministry
also takes into accounts the accumulated local pollution, which can
adversely affect the planet, this issue was stressed at the June 1992 Rio
Summit Conference. Thus, the market for environmental technologies is
generally favorable, largely due to greater public and government interest
on dealing with growing threats to environmental challenges. In addition, a
growing economy, stronger E.U regulations and the increasing costs
associated with polluting, have played a major role in an expanding market
for environmental technologies. The French parliament knows that economic
and technological stakes are high when dealing with the environment. This is
why it published the requirements of a new law that mandates all French
corporations to report on the sustainability of their social and
environmental performance. The "new economic regulations" law (nouvelles
régulations économiques, or NRE), passed last year, completely overhauled
France's outdated corporate law structure. The NRE focuses predominantly on
financial issues such as increasing the transparency of take-over bids,
improving corporate governance, and fortifying antitrust regulation. In 1996
the budget amounted to 1.7 billion French Francs. Though modest, this budget
serves mostly to stimulate and lead investment and operating costs expended
in the field of water, risk prevention, pollution treatment and the nature
conservation.
Source: www.environment.gouv.fr
Viewed on 02/28/03
26: Strong army: 4.0
French defense efforts are based on the six-year Military Program Law,
adopted in 1996. Since the Gulf War, France's projection capacity has
increased to 15,000 army personnel for a deployment of unlimited duration
and is planned to expand even further under the next Military Program Law to
be submitted to parliament in 2001. For 2003, the defense budget has been
raised to 39.96 billion euros, a 6.1% increase compared to 2002.
The 2003-2008 military program bill calls for a significant increase in
French capabilities and targets three objectives: re-establish the immediate
availability of equipment; upgrade equipment and to prepare for the future
in order to face threats and play a major role in the building of a European
security and defense policy; complete professionalization of the armed
forces, by re-orienting some personnel, in particular, those dedicated to
interior security, and by making these defense jobs more attractive;
In 2001, the French armed forces included some 516,000 military and civilian
people.
Source: "Profile of France" printed by the French Ministry of Foreign
Affairs
27: Foreign trade impact: 2.5
By becoming more open to the rest of the world since 1945 and casting aside
its traditional protectionist attitudes, France has remained one of the
most important players in the world economy. It is today fully engaged in
globalization and its economy is growing increasingly international, a
factor reflected by the substantial growth in trade. In 2002, its export
amounted to 293,3 billion euros and its import, 292,6 billion euros.
Adding Export and import together amounts to 585,9 billion euros which
exceed 1/3 of the GDP (1.51 trillion euros) by 8 billion euros. France
accounts for over 5% of world GDP, making it the country with the
fourth largest GDP, behind the USA, Japan and Germany. It is now
responsible for 6% of world trade, second only to the USA for services and agricultural
exports and the fourth largest exporter of industrial products. France is
also one of the leading countries for outward investment and the third
largest destination for inward investment.
Source: structure exportatrice de France. Article from l'economiste n.638 ,
jan 2002 by Eric Scigliano
28: Protection of foreign currency earning enterprises: 4.5
France protects its exporting industry by not imposing restriction and
regulation on the export of merchandise from France with the exception of
strategic production (including arms and dual use technologies) and
antiques.
Moreover, France has a sophisticated export financing market. In general,
large commercial banks, like Eximbank and COFACE , provide the bulk of
export financing. Eximbank provides an export credit insurance, pre export
financing through working capital guaranteed loans, and medium and long
term loans and guarantees to oversees buyers. COFACE insures exporters on
commercial terms against short-term non-payment risk, principally
involving
trade with other OECD countries. These include the insolvency of private
buyers, unfavorable currency fluctuations on ordinary business, and
political risks in OECD countries. In these cases, COFACE acts like any
other insurer: it set a competitive premium based on perceived risks.
COFACE's second function is to support French exporter in markets that
conventional insurance companies are not willing to cover due to the
perceived risk. In cases of large projects (aircraft financing for
example), COFACE acts on behalf of and with the backing of the French
Government.
This category includes market survey insurance, medium-term credit insurance
on large-scale projects and capital goods, investment risks in foreign
countries, and exchange rate guarantees on major contracts or large
amounts. Basically, COFACE acts as the manager for the French government.
Source: from the Internet: tic@ita.doc.gov viewed on the 02/18/03.
sponsored by the international Trade Administration (ITA),
from the Trade Information center
29: Management of foreign currency budget: 2.5
After recording a deficit for fifteen years, France regained a positive
trade balance in 1992, when exports exceeded imports by 5 billion dollars.
Then, the surplus has considerably increased, reaching $20.3 billion in
1996, $28.8 billion in 1997 and $17.7 billion in 1999. In 2002, France
only
had a trade surplus of 10 billion euros since International economics has
been degrading since summer 2002. Actually, commercial exchange reveals a
clear contraction of the imports (-3.5% compared to 2001) and exports
(-1.3% compared to 2001)
Office and industrial equipment is the sector whose overseas sales have
contributed most to France's healthy trade balance, especially in the
fields
of aircraft construction, office machines and professional electronic
equipment and industrial machinery. Food products (in which there has
traditionally been a trade surplus), the defense industry, luxury goods,
cars and other means of land transport also make a major contribution to
the
surplus. In the last few years, there have also been comfortable
surpluses
in pharmaceuticals and personal hygiene products sold in pharmacies.
France's largest deficits are in energy products (-80 billion francs
[-$13.3
billion]), minerals, tropical food products and products of its
traditional
industries (textiles and clothing, leather and hides, shoes, etc.)
SOURCE: Le chiffre du commerce exterieur at http:
lekiosque.finances.gouv.fr
from the article: Commerce exterieur annee 2002
30: Layers of collective actions: 3.75
In December 2002, the project of constitutional law on the decentralization
will introduce several possibilities into the constitution of the 5th
Republic, in particular the possibility for the communities to organize
local referendums and to proceed to experiments. This text dedicates a new
stage in the transfers of the resources and the competence of the State
towards regions with a measure of autonomy, after the big laws Deferre of
1982.
The laws Deferre created three categories of local government authority:
municipalities or communes (36,8000), Départements (100) and, since 1982,
regions (26).
Firstly, local authorities have an essentially legislative statue other
words, the executive branch has no power in this sphere to amend the status
of local authorities. In addition, local governments are protected by an
important constitutional guarantee — that of administrative independence.
Since 1982, they also have powers to act in the social and economic sphere
(grants and subsidies to companies, for example). Currently, they have
become important centers of decision-making in terms of regional planning,
education, environment, occupational training, transport, culture and
research.
Still, a number of limits are placed on the administrative independence of
local authorities by the central government, such as the allocation of
subsidies to local authorities and the power of a representative of central
government (the Préfet) to determine the legality of some of their measures.
SOURCE: www. Prometa.ru/msgr.com viewed on 02/18/03
From Decentralisation et les lois Deferre de 1982.
31: Pro-business climate:5.O
Entrepreneurship is becoming fashionable in France, as French innovation
policy quietly adopts the model of Silicon Valley. In the year 2000, French
start-up companies accounted for the largest number of initial public
offerings in Europe. A January 2000 survey of French adult found that 13
millions hopes to create their own companies over the course of their
carrier. Only 3 millions had indicated such an interest in 1992.
The post second world war system of state-led innovation proved hugely
successful. It has been credited with the creation of the world’s first
national digital network, Minitel, and what is arguably the best high-speed
train system in the world, the Train à grande vitesse (TGV). Under French
president Jacques Chirac, the new focus on entrepreneurial starts up
companies has been a dramatic shift for France’s large companies. Although,
large firms still play an important role in the French economy, government
reforms designed to encourage risk-taking have increasingly promoted
innovation in the context of small entrepreneurial firms.
SOURCE: le nouvel economiste (aug/sep 2002)
32: Government enterprises: 2.75
For decades, France had a tradition of a highly centralized government upon
its market-based economy. However, over the past few years, France has
chosen to encourage privatization and considerable progress has been made in
this direction although the government maintains control in industries such
as aeronautics, automobiles, defense and telecommunication and can still
maintain a presence in privatized firms. The government has made efforts to
reduce its role in economic life through fiscal reform, privatization, and
the implementation of European Union liberalization and deregulation
directives. Yet the government remains deeply involved in the functioning of
the economy through national and local budgets,
Remaining state holdings of major corporations, and extensive regulation of
labor, goods, and services markets. This can sometimes result in a lack of
transparency in the making of decisions that affect U.S. and other firms.
SOURCE: www.lemonde.fr viewed 02/08/03
33: International security agreements: 3.5
Score for U.S enterprises: 3.00
Score for European enterprises: 4.00
Since 1970 the EU’s members have sought to construct a coordinated and
common position on foreign policy issues through the “collective spirit”,
known as the European Political Cooperation (EPC). In order to strengthen
the EU’s security and military cooperation, its members need to reach a
consensus about its military doctrine and about its European defense
organization in which NATO is the most important. Formed during the cold war
against the Warsaw pact member, NATO faced an identity crisis with the
Soviet security threat and the cold war ending. Since then NATO has been
reformed and extended to peacekeeping mission and crisis management
operations as we have seen with the Kosovo intervention. However, Europe
disliked its dependence on the United States and decided to form its own
military force, with the Cologne Summit in 1999, capable of acting
independently of the United States. It has resulted in the European military
pact known as the Western European Union (WEU). Since then, France has been
involved in partnership with Germany, Italy and Spain. Along with military
agreements came regional trade policies and realignments of European
currencies into a single currency (euro), which would raise the value of
euro against the dollars, thus making Europe less dependant on the United
States.
SOURCE: Le Courrier International 10/02
34: Protection of domestic enterprises from government mandated cost: 2.00
In 1997, the socialist government sharply raised taxes (direct and indirect)
on enterprises. Although, Prime Minister JP Raffarin announced lower taxes
in 2003, French mandated taxes represent a considerable weight for
enterprises. Concerning the direct taxation, most French limited liability
trading companies are subject to the impot sur les societes (I.S), the
French equivalent of Corporation tax, which has an effective rate of 34.33%.
France also has a specific local business tax, known as Taxe professionelle
(TP), which has an annual rate of 22%. However, this rate varies according
to the geographic location and the number of employees in the company. Also,
it should be noted that Social Security contributions are levied on gross
salaries at 35% to 45% for employers.
French government also imposes indirect taxation like the value added tax
(VAT). Subject to very limited exceptions, all economic activity in France
is subject to VAT, which is not an expense for the company, as input VAT can
be offset against output VAT. There are several different rates, which are
currently applicable, but the standard rate is 19.6%, which has slowly
decreased over the past few years.
The collection of VAT and the form filling associated is considerable burden
especially upon small and medium sized companies. The highest attention
should be paid to VAT aspects of international transactions.
SOURCE: Internet: www.impots.gouv.fr/espace_professionnels.htm on 02/14/03
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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.To learn more about other countries, click to other files here:
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