France’s economy combines extensive private enterprise (nearly 2.5 million companies registered) with substantial (though declining) government intervention (see dirigisme). The government retains considerable influence over key segments of infrastructure sectors, with majority ownership of railway, electricity, aircraft, and telecommunication firms. It has been gradually relaxing its control over these sectors since the early 1990s. The government is slowly selling off holdings in France Télécom, Air France, as well as the insurance, banking, and defence industries.

A member of the G8 group of leading industrialised countries, it ranked as the fifth-largest economy in the world in 2003, behind the United States, Japan, Germany, and the United Kingdom. France joined 10 other EU members to launch the Euro on January 1, 1999, with euro coins and banknotes completely replacing the French franc in early 2002.

According to the OECD, in 2004 France was the world’s fifth-largest exporter of manufactured goods, behind the United States, Germany, Japan, and China, (but ahead of the United Kingdom). It was also the fourth-largest importer of manufactured goods (behind the United States, Germany, and China, but ahead of the United Kingdom and Japan).

Yet according to the OECD, in 2003 France was the OECD country that received the most foreign direct investment (Luxembourg excepted, where foreign direct investment was mostly monetary transfers to banks located in that country). With 47 billion USD of foreign direct investments, France ranked above the United States (39.9 billion USD of FDI received), the United Kingdom (14.6 billion USD of FDI received), Germany (12.9 billion USD of FDI received), or Japan (6.3 billion USD of FDI received).

At the same time, French companies invested 57.3 billion USD outside of France, ranking France as the second most important outward direct investor in the OECD, behind the United States (173.8 billion USD of outward FDI), but ahead of the United Kingdom (55.3 billion USD of outward FDI), Japan (28.8 billion USD of outward FDI), or Germany (2.6 billion USD of outward FDI).

France is also the second most productive country in the OECD (excluding Norway and Luxembourg where productivity data are inflated by oil revenues in Norway, and by investments in off-shore banks in Luxembourg). In 2003, the GDP per hour worked in France was 47.2 USD, ranking France behind Belgium (48 USD per hour worked), but above the United States (43.5 USD per hour worked), Germany (40.6 USD per hour worked), the United Kingdom (37.7 USD per hour worked), or Japan (30.9 USD per hour worked).

Despite a higher productivity than in the US, France’s GDP per capita is significantly lower than the US GDP per capita, being in fact comparable to the GDP per capita of the other European countries, which is on average 30% below US level. The reason for this is because a much smaller percentage of the French population is working compared to the US, which sinks the GDP per capita of France, despite its high productivity. In fact, France has one of the lowest percentage of its population at work among the OECD countries. In 2003, 41.5% of the French population was working, compared to 50.7% in the US, and 47.3% in the UK. This phenomenon is the result of almost thirty years of massive unemployment in France, which has led to three consequences reducing the size of the working population: about 10% of the active population is without a job; students delay as long as possible their entry into labour market; and finally the French government gives various incentives to workers to retire in their early 50s.

As many economists have stressed repeatedly over the years, the main issue with the French economy is not an issue of productivity. It is an issue of structural reforms, in order to increase the size of the working population in the overall population. Liberal and Keynesian economists have different answers to that issue.

With over 75 million tourists in 2003, France is ranked as the first tourist destination in the world, ahead of Spain (52.5 million) and the United States (40.4 million). It features cities of high cultural interest (Paris being the foremost), beaches and seaside resorts, ski resorts, and rural regions that many enjoy for their beauty and tranquillity (green tourism).

France has an important aerospace industry led by Airbus S.A.S. and is the only European power to have its own national spaceport (Centre Spatial Guyanais). France is also the most energy independent Western country due to heavy investment in nuclear power, which also makes France the smallest producer of carbon dioxide among the seven most industrialised countries in the world. Large tracts of fertile land, the application of modern technology, and EU subsidies have combined to make France the leading agricultural producer in Europe.

Since the end of the Second World War the government made efforts to integrate more and more with Germany, both economically and politically. Today the two countries form what is often referred to as the “core” countries in favour of greater integration of the European Union.
France was still largely a nation of small farms and family-owned businesses. After World War II (1939-1945) the French government nationalized several business enterprises—particularly in energy, finance, and manufacturing—and it introduced a series of national development plans intended to modernize the economy. These reforms, along with European economic integration, helped secure a time of sustained economic growth in the quarter century following the war. Today, France is one of the world’s leading economic powers, ranking fourth within the Organization for Economic Cooperation and Development (OECD), behind the United States, Japan, and Germany. It is also the leading agricultural producer in western Europe. In 1999 France’s gross domestic product (GDP) was $1.43 trillion, and per capita income was $24,430.

France is one of the major economic powers of the world, ranking along with such countries as the United States, Japan, Germany, Italy, and the United Kingdom. Its financial position reflects an extended time of unprecedented growth that lasted for much of the postwar time until the mid-1970s; often this time was referred to as the trente glorieuses. Between 1960 and 1973 alone the increase in gross domestic product (GDP) averaged nearly 6 % each year. In the aftermath of the oil crisis of the early 1970s, growth rates were moderated considerably and unemployment rose substantially. By the end of the 1980s, development was renewed, although at a slower rate than recorded 20 years earlier.

France is in the midst of transition, from an economy that featured considerable government ownership and intervention to one that relies more on market mechanisms. The government remains dominant in some sectors, particularly power, public transport, and defense industries, but it has been relaxing its control since the mid-1980s. The Socialist-led government has sold off part of its holdings in France Telecom, Air France, Thales, Thomson Multimedia, and the European Aerospace and Defense Company (EADS). France’s leaders remain committed to a capitalism in which they maintain social equity by means of laws, tax policies, and social spending that reduce income disparity and the impact of free markets on public health and welfare. The government has done little to cut generous unemployment and retirement benefits which impose a heavy tax burden and discourage hiring. It has also shied from measures that would dramatically increase the use of stock options and retirement investment plans; such measures would boost the stock market and fast-growing IT firms as well as ease the burden on the pension system, but would disproportionately benefit the valuable. In addition to the tax burden, the reduction of the work week to 35-hours has drawn criticism for lowering the competitiveness of French companies.

France has a capitalistic and growing entrepreneurial economy. Historical government intervention and control is declining, especially in the transportation and telecommunication industries.

Agriculture Products wheat, cereals, sugar beets, potatoes, wine grapes, beef, dairy products, fish

Exports (major) machinery and transportation equipment, chemicals, iron and steel products, agricultural products, textiles and clothing

Imports (major) crude oil, machinery and equipment, chemicals, agricultural products

Industries (major) steel, machinery, chemicals, automobiles, metallurgy, aircraft, electronics, mining, textiles, food processing; tourism

Natural Resources coal, iron ore, bauxite, fish, timber, zinc, potash

Gross Domestic Product: $1.41 trillion (2000)

Gross Domestic Product: (per capita) $23,450 (2000)

Official Currency the Euro, Agriculture Products wheat, cereals, sugar beets, potatoes, wine grapes, beef, dairy products, fish

Exports (major) machinery and transportation equipment, chemicals, iron and steel products, agricultural products, textiles and clothing

Imports (major) crude oil, machinery and equipment, chemicals, agricultural products

Industries (major) steel, machinery, chemicals, automobiles, metallurgy, aircraft, electronics, mining, textiles, food processing; tourism

Natural Resources coal, iron ore, bauxite, fish, timber, zinc, potash

Gross Domestic Product: $1.41 trillion (2000)

Gross Domestic Product: (per capita) $23,450 (2000)

Official Currency the Euro,