France

Jessica Sierzenga

Economic France

Overall Score: 62.5 World Rank: 73

France Facts/United States Facts

  • Population: 63.7 million/316.4 million
  • GDP: $2.3 trillion/16.8 trillion
  • GDP Growth: 0.3%/1.9%
  • GDP Per Capita: $35,784/$53,101
  • Unemployment: 10.5%/7.5%
  • Inflation: 1.0%/1.5%
  • Foreign Direct Investment: $4.9 billion/$187.5 billion

1. Legal System

Economic progress lays on the foundation of protection of privately owned property and enforcement of rules evenly. France has a fairly good legal system, it is an independent judiciary and has law strictly posed. It has a weak demand and slow activity, however, the property rights and law are efficient and set strong. France is expensive due to its many regulations of property. This can compare to the United States in many similar ways; both have private property guaranteed, contracts are mainly enforced and minimal corruption takes place. On the other hand, when comparing the facts to Mexico, things are very contrasting. In Mexico, things are very delayed, corruption has a good chance of being present and the government is not put together well. All in all, France has a proper legal system that is beneficial to their people and economy, causing the nation to be on a path to success.

2. Competitive Markets

Competitive markets promote use of resources and provide the want for improvement, which is what every country desires. Competitive markets are good because they push business to supply and do everything they can for the consumers. Thus, the successful business will thrive, while the unsuccessful ones will fade. In France, business start-up is simple, but licensing can take awhile. Employment does not grow well becuase of the labor market, but freedom of business overall is mostly free. The domestic employment environment has caused high unemployment. However, recently the government has increased reform measures, thus the competitiveness of markets will increase. The United States has a flexible market mainly run by the states. On the other hand, Mexico does not do as well in the area of markets becuase of their unorganized government. For example, labor codes are out of date and licensing takes months to pass. Overall, competitive markerts create success and France's government affects how well it can do.

3. Limits on Government Regulation

Limitations on government regulation can help or hurt a country based on what the regulation implies. Some policies can slow down trade, which also slows down economic progress. Some ways government can limit trade and decrease the rate of progress: limit entry to some businesses and occupations, substituting political authority for rule of law and freedom of contract, and imposing price controls. Good thing for France, setting up a firm is simple, no capital requirement helps this. However, to get licensed takes about three months. Another bad aspect is employment growth is not rapid, prices are not the best and energy has been a concern lately. The United States seems to have the same situations due to many restrictions. On that same note, Mexico also has government slowing down its economy. In a similar manner, it also takes Mexico about three months to pass a license. In the end, France is slow in creating a successsful market becuase of government regulation.

4. An Efficient Capital Market

A major source of economic success is having an efficient capital market. A country must create wealth and this will create projects to be successful. Despite the fact that France has has been slow in the economy lately, the government has been putting in a lot of hard work to improve it. France keeps strong protection rights and stable legal laws. France's government plays a role in the economy be proposing tariffs or quotas and provides a range of services. Also, they have pursued reform measures which will help markets reach their full potential by creating well-thought out projects. The United States and Mexico collaborate on some acitivites that create an effecient market; however, Mexico has a very slow growing economy and development of projects. Therefore, France has to be more creative in its projects if it wants an efficient capital market.

5. Monetary Stability

Monetary stability is important to control inflation, investment and reach economic stability. France sets tariffs and quotas on certain objects, which affects monetary stability. France uses Euros as its currency, which means there is a 1.0 percent average tariff rate. Monetary stability revolves around money, so if France can control its money well then the economy will do well. France is mostly free and so is the United States. Mexico is free, however not as free as France. All in all, monetary stability is all based off money and France is pretty free in this aspect.

6. Low Tax Rates

Having low tax rates will cause people of a country to produce more because they can keep more. High tax rates cause no effort and no productivity towards a business and that will effect the business negatively. France has a individual tax income rate of 45 percent and top corporate rate of 34.3 percent. Tax of domestic income is about 45.3 percent and government is about 57 percent. Taxes can be value-added or inheritance. Also, public debt is high at 94 percent. In comparison, the United States has an individual tax rate of 39.6 percent and a corporate rate of 35 percent. The US and France have somewhat the same tax information, along with Mexico. Mexico has an individual tax income rate of 35 percent and corporate of 30 percent. Overall, France needs to have lower tax rates because it is motivating and would create triumph.

7. Free Trade

Freedom of trade is a very big aspect in a country. A nation makes progress by selling goods/services that are not costly to produce. In EU, there is an average tariff rate of 1.0 percent, which is beneficial. However, by putting quotas on things like, TV and music, France is creating a barrier. Creating barriers does not help anybody even though France does it for protection. On the other hand, many services are given and forgien financal firms are becoming prosperous. Overall, France is moslty free in trade. Compared to France, the U.S. has a higher tariff rate by .5 percent. The financial aspect is well but tariffs on clothing, sugar, etc are very high. Mexico has a tariff rate of 2.2 percent, and is not as successful as it could be. It is trying to reduce it, build deeper and pass more laws to become more successful. In conclusion, free trade is a great necessity and France is decent, but could be better.

Video-"Has the UK overtaken France in global economic rankings?"

In this video, the topic of France being taken down in economic rankings was discussed. France has now gone below the UK in economic ranking, making it 6th in the world. The country's 5th place ranking was an achievement, but now they are in sixth and the French president speaks out. The GDP still has to be accounted for, but this was not good for France. This video also speaks on things that make up the economy of France and how everything is going.

More information on France

France is the 73rd freest market in the 2015 index. France used to be higher in ranking until declines of labor freedom and managment of governemnt spending. Francois Hollande was elected president in 2012 and he handled the economy poorly. Thus, he recived bad approval ratings and was punished. France is a leading participant in NATO and European Union's common Agricultural Policy. Overall, France is well rounded, but could always be improved in all aspects.