Table Of ContentOECD
URVEY!
OECE»
ECONOMIC SURVEYS
FRANCE
ORGANISATION FOR ECONOMICCO-OPERATION AND DEVELOPMENT
Pursuant toArticle1 oftheConventionsigned inParison 14th
December1960,andwhichcameintoforceon30thSeptember1961,the
Organisation for Economic Co-operation and Development (OECD)
shallpromotepoliciesdesigned:
to achieve the highest sustainable economic growth and
employment and a rising standard of living in Member
countries,whilemaintainingfinancialstability,andthusto
contributetothedevelopmentoftheworldeconomy;
to contribute tosound economic expansion in Memberas
well asnon-membercountries in the processofeconomic
development;and
to contribute to the expansion of world trade on a
multilateral, non-discriminatory basis in accordance with
internationalobligations.
The original Member countries of the OECD are Austria,
Belgium,Canada,Denmark,France,Germany,Greece,Iceland,Ireland,
Italy,Luxembourg,theNetherlands,Norway,Portugal,Spain,Sweden,
Switzerland,Turkey,theUnitedKingdom andthe UnitedStates. The
followingcountriesbecameMemberssubsequentlythroughaccessionat
the dates indicated hereafter: Japan (28thApril 1964), Finland (28th
January 1969),Australia(7thJune1971)andNewZealand(29thMay
1973). TheCommissionoftheEuropeanCommunitiestakespartinthe
workoftheOECD(Article 13oftheOECD Convention).Yugoslavia
takespartinsomeoftheworkoftheOECD(agreementof28thOctober
1961).
Publiéégalementen français.
©OECD1991
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Contents
Introduction 9
I. Recent trends and prospects 11
A slowdown in growth 11
Continued albeit flagging pace ofjob creation 20
Wage and price inflation under control 22
Adequate external balance 28
The level of national saving 33
Short-term prospects 35
II. Macroeconomic policies 39
Monetary and exchange-rate policies 39
Budgetary policy 46
III. The structural agenda 52
The labour market and income-distribution issues 52
Taxation 57
Social-security financing and spending 60
Local government financing 65
Toward a greener environment 68
IV. Competition and competition policy 71
Historical background 71
Towards a gradual reduction in barriers to competition 73
Structure and thrust of competition law 82
Influence of EC competition policy in the run-up to 1992 91
A few concluding remarks 94
V. Conclusions 96
Notes and references 103
Annexes
I. Supplementary tables 109
II. Reform of the monetary aggregates and of the system of
required reserves 1 12
III. Main institutions responsible for competition policy 115
IV. Bibliography 118
V. Calendar of main economic events 121
Statistical and structural annex 129
Tables
Text
1. Recent economic indicators 12
2. Recent cost and price inflation in France and Germany 24
3. Balance of payments 29
4. Short-term projections ' 37
5. Objectives and outcomes of monetary policy 44
6. Consolidated general-government account 47
7. Changes in actual and simulated general-government borrowing
requirement, 1986-90 49
8. Labour-market outcomes: an international comparison 53
9. Taxes and social-security contributions 58
10. Recent social-security outcomes 62
11. Importance of local government 66
12. Environmental indicators: a France-OECD comparison 69
13. Petrol prices net of tax 74
14. Prices of trucking services 75
15. Subsidies by sector, 1981-1988 78
16. Distribution of public enterprises by industry, 1989 79
17. Imports affected by selected non-tariff" barriers 80
18. Merger and acquisition control 89
19. Import penetration in markets with public-sector procurement 92
Annexes
Al. Simulated effects of German unification on France 109
A2. Reform of the monetary aggregates 110
A3. Tax reductions, 1985-1990 111
A4. Rate of convergence of relative prices in OECD countries,
1980-1985 111
Statistical and structural annexes
Selected background statistics 130
A. Gross domestic product and expenditure 131
B. The money supply and its counterparts 132
C. Balance of payments on a transactions basis 133
D. Foreign trade by commodity 134
E. Foreign trade by origin 135
F. Structure of output and performance indicators 136
G. Labour market indicators 138
H. Financial markets 140
I. Public sector 142
Diagrams
1. Industrial output and inflation outcomes following oil-price
shocks: an international comparison 15
2. Incentives to invest in the business sector 18
3. Business investment 19
4. Slowdown in the labour market 21
5. Contributions to changes in the GDP implicit deflator 26
6. Inflation differentials 27
7. Competitiveness, export performance and import penetration 31
8. Net saving by institutional sector 34
9. Interest rates 41
10. Exchange rate and interest-rate differentials with Germany 42
11. Registered versus standardised unemployment 54
12. Tax wedge for private-sector workers 59
13. Relative consumer prices, 1985 83
14. Importance of markets with public-sector procurement 93
BASICSTATISTICSOFFRANCE
THELAND
Area(1000sq.km) 549.1 Majorciliés(1990),inhabitants:
Agriculturalarea(1000sq.lcm)1989 307.1 Paris 2175110
Marseille 807726
Lyon 422444
THEPEOPLE
Population,1.1.1990(thousands) 56304 Totallabourforce(1989,thousands) 24314
Numberofinhabitantspersq.km 102
Totalincreaseinpopulation,1990(thousands) 287
PRODUCTION
Grossdomesticproductal Originofthegrossdomesticproduct,
marketprices,in1989(billionsoffrancs) 6098.9 atmarketprices(1989):
GDPpethead(USJ)(1989) 17022 Agriculture 3.6
Grossfixedinvestment(1989): Industry 24.7
PercentofGDP 20.8 Construction 5.5
Perhead USS 3547.5 Services 66.2
Total 100.0
GENERALGOVERNMENT
(ESNAconcepts)
Currentexpenditurein1989(percentofGDP) 46.3
Currentrevenuein1989(percentofGDP) 48.4
Currentfixedinvestmentin1989(percentofGDP) 3.2
FOREIGNTRADE
Exportsofgoodsandservices, Importsofgoodsandservices,
asapercentageofGDP(1989) 23.3 asapercentageofGDP(1989) 23.1
Mainexportsasapercentageoftola! Mainimportsasapercentageoftotal
exports,1989(SITC): imports,1989(SITC):
Food,beveragesandtobacco(0+1) 15.2 Food,beveragesandtobacco(0+1) 9.8
Machineryandtransportequipment(7) 35.7 Machineryandtransportequipment(7) 33.5
Ironandsteelproducts(67+68) 7.0 Ironandsteelproducts(67+68) 6.7
Chemicalproducts(5) 13.9 Chemicalproducts(5) 10.9
Textileproducts(65) 2.9 Mineralfuels,lubricants
andrelatedmaterials(3) 8.9
THECURRENCY
Monetaryunit:thefranc CurrencyunitsperUS$,averageofdailyfigures:
Year1990 5.4459
March1991 5.3871
Note: Aninternationalcomparisonofcertainbasicstatisticsisgiveninanannextable.
ThisSurveyisbasedontheSecretariat'sstudyprepared
for the annual review of France by the Economic and
DevelopmentReviewCommitteeon22ndMarch1991.
After revisions in the light of discussions during the
review, finalapprovaloftheSurveyforpublicationwasgiven
bytheCommitteeon 15thApril1991.
The previous Survey of France was issued in
March1990.
Introduction
Economic activity remained buoyant in France for 1990 as a whole. For
the third consecutiveyear a substantial numberofnewjobswerecreated, and,
although it remained at a high level, the unemployment rate fell slightly
further. Inflation was kept under control, owing in part to a squeeze on
business margins, but company finances remain healthy overall. The current-
account deficit increased only modestly. Policies have adhered to two
medium-term objectives: i) fiscal consolidation in order to reduce the budget
deficit to a level consistent with sustainable trends in public debt; and ii) the
maintenance ofa stable franc within the EMS in order to return to a disinfla¬
tionary path and to work towards eventual European monetary union. These
prudent policies have continued to bear fruit as risk premiums embodied in
French interest rates have been eliminated; despite the oil-price rise, inflation
continued to moderate, and France recorded the second lowest rate among the
major seven OECD countries after Germany; finally, the economy entered the
recent turbulent period with only a modest public deficit.
However, the conjunctural situation has deteriorated recently as in most
other OECD countries. The economy has entered a phaseofweaker growth in
output and employment in recent months. Byyear-end, growth even came toa
halt, with the pace of demand increases severely reduced by the substantial
world-wide rise in uncertainty engendered first by developments in Eastern
Europe and then by the crisis in the Persian Gulf; the recessions now under
way in a number of partner countries and the appreciation of European
currencies against the dollar also weighed on activity. The war in the Gulf
may have had a further contractionary effect on demand, as both consumer
and business confidence deteriorated markedly. With the end of hostilities,
this should recover. Given the expected recovery in foreign markets, lower oil
