economics of france - updated

8/6/2019 Economics of France - Updated

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Economics of Economics of

FranceFrancePresented by: Paula Estevez

Toshi Morino, Richard Barnard, Diego Casteneda,Shreeya Kumar, Ron Schnackenberg



Agenda Agenda� Current Issues---------------------------------------Slides 1-3

� Fiscal Policy------------------------------------------Slides 4-5

� Labor Market----------------------------------------Slides 6-7

� Immigration------------------------------------------Slides 8-9

� Trade Policy------------------------------------------Slides 10-11

� Exchange Rate Management----------------Slides 12-13� Recommendations--------------------------------Slides 14-15



Current IssuesCurrent IssuesGROSS DOMESTIC PRODUCTGROSS DOMESTIC PRODUCT



Current IssuesCurrent IssuesECONOMIC INDIC ATORSECONOMIC INDIC ATORS



Current IssuesCurrent IssuesECONOMIC POLICYECONOMIC POLICY

FISC AL POLICY

Highest ratio amongst OECDcountries

Proposed increase in retirement

age and elimination of wealth tax

L ABOR POLICY

Rigid labor market and high unemployment.

Current unemployment rate at

9.2%

IMMIGR ATION POLICY

Unsuccessf ul integration of 11mnimmigrants

Conf used immigration policy

TR ADE POLICY

Trade deficit since 2002 due tolow production of high value

added goods and low penetrationinto emer ging markets



Fiscal PolicyFiscal Policy

� Public Debt� Peak in 2014

� Sharp spike 2008

� Taxation� 44% of GDP

� Heavy wealth tax

� Now What?



Labor MarketLabor Market� Unemployment� 15-24 years old

� Seniors, Unskilled

� Employment Flexibility� Termination by agreement

� Unions, Collective Bar gaining



Trade PolicyTrade PolicyEUROPE AN UNION POLICYEUROPE AN UNION POLICY

A SINGLE TR ADE POLICY FOR A UNITED EUROPE

� The EU ± 27 speaks with one voice in international trade.

� Agreements concluded by the EU are binding on the EU-27 member states

� The EU Commission negotiates deals on behalf of the 27 member states.

ORIGIN OF THE EU POLICY

� The EU Trade & Development policy origin can be traced to the French Union

A CUSTOMS UNION

� Uniform import duty char ged on non-EU imports

� A ³Community Integrated Tariff´ (T ARIC) established for the application of

these duties� Weighted Average tariff rate in 2009: 1.2% - Raw materials mostly imported

duty free whereas manufactured goods tariff rates vary between 5 ± 17%

� Agricultural product imports are covered by the ³Common Agricultural

Policy´



Trade PolicyTrade PolicyEUROPE AN UNION POLICYEUROPE AN UNION POLICY

TR ADE AGREEMENTS

� ³Customs Union Agreements´ and 26 FT A¶s under the G ATT Article XXIV/

G ATT Article V

� FT A¶s with Mexico and South Africa concluded in 1999.

� Cotonou Agreement gives non reciprocal preferential access to African,

Caribbean and Pacific developing countries� The ³Generalized System of Preferences´ allows such access to other

developing countries.

NON-T ARIFF BARRIERS

� Applied for subsidies, quotas, import restrictions and bans, market access

restrictions among others.



Trade PolicyTrade PolicyTR ADE DEFICITTR ADE DEFICIT

� France has not experienced an annualtrade surplus since 2002.

� Lar gest deficit in intermediate goods (¼

57.8 bn in 2010)

� Moderate deficit in consumer goods (¼ 11.1

bn in 2010)

� Small surplus on capital goods (¼ 6.5 bn in

2010)� Deficit mainly with EU countries

RE ASONS FOR TR ADE

DEFICIT

� Low share of higher value

added and high tech goods ± Germany is better placed

to meet demand from

emerging markets

� High prices of imported

ener gy

RECOMMENDATIONS

1. Gear up presence in emerging markets to tap

the strong demand - W ill require significant expenditure in production facilities and may take

several years

2. Strengthen price competitiveness of their

products in comparison to other European

countries ± One way is to increase immigrants by

opening labor market to foreigners.



ManagementManagementEUROPE AN UNION POLICYEUROPE AN UNION POLICY

� Exchange Rate Management system centralized for the Euro currency at

the EU level - The EU identifies with the Target Zone system

� France monitors the decision making process as it a leading nation in the

EU fiscally and vulnerable to getting dragged down by other nations

� In recent months, France has been under pressure due to shortfalls of

certain other member nations.



RecommendationsRecommendations� Lower the national debt

� Find a way to lower taxes (encourage private savings)

� Cut expensive government sponsored programs

� Lar gest threat is the instability of European Union Member

Nations� Establish reserve f und for member aid

� Establish strict fiscal policy for members



Questions?Questions?

economics of france - updated

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