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World > Europe > France > Economy (Notes)

France - Economy (Notes)


ECONOMY
With a GDP of approximately $2 trillion, France is the sixth-largest economy. It has substantial agricultural resources, a large industrial base, and a highly skilled work force. A dynamic services sector accounts for an increasingly large share of economic activity and is responsible for nearly all job creation in recent years. GDP growth was 1.1% in 2003, after two years of steady decline from 3.9% in 2000. GDP growth was 1.7% in 2005, down from 2.5% in 2004 (2000 price basis).

Government economic policy aims to promote investment and domestic growth in a stable fiscal and monetary environment. Creating jobs and reducing the high unemployment rate through recovery-supportive policy has been a top priority. French unemployment dropped from a high of 12% to 8.7% in the late 1990s, and after hovering around 10% during the 2000s, unemployment slipped once again to 8.0% in July 2007. France joined 10 other European Union countries in adopting the euro as its currency in January 1999. Since then, monetary policy has been set by the European Central Bank in Frankfurt. On January 1, 2002, France, along with the other countries of the euro zone, dropped its national currency in favor of euro bills and coins.

Despite significant reform and privatization over the past 15 years, the government continues to control a large share of economic activity: Government spending, at 53.5% of GDP in 2006, is among the highest in the G-7. Regulation of labor and product markets is pervasive. The government continues to own shares in corporations in a range of sectors, including banking, energy production and distribution, automobiles, transportation, and telecommunications.

Legislation passed in 1998 shortened the legal work week from 39 to 35 hours for most employees effective January 1, 2000. Recent assessments of the impact of work week reduction on growth and jobs have generally concluded that the goal of job creation was not met. The former administration introduced increasing flexibility into the law, returning the country to a de facto (if not de jure) 39-hour work week in the private sector. Under President Nicolas Sarkozy's impetus, overtime work will be exempt from income taxes on October 1, 2007, a move to encourage work and to increase work duration.

Membership in France's labor unions accounts for approximately 5% of the private sector work force and is concentrated in the manufacturing, transportation, and heavy industry sectors. Most unions are affiliated with one of the competing national federations, the largest and most powerful of which are the communist-dominated General Labor Confederation (CGT), the Workers' Force (FO), and the French Democratic Confederation of Labor (CFDT).

France has been very successful in developing dynamic telecommunications, aerospace, and weapons sectors. With virtually no domestic oil production, France has relied heavily on the development of nuclear power, which now accounts for about 80% of the country's electricity production.

Trade
France is the second-largest trading nation in Western Europe (after Germany). France ran a $33.7 billion deficit in 2006. Total trade for 2006 amounted to $1,013.5 billion, over 45% of GDP 75.0% of which was with EU-24 countries. In 2003, U.S.-France trade in goods and services totaled $80.3 billion. U.S. industrial chemicals, aircraft and engines, electronic components, telecommunications, computer software, computers and peripherals, analytical and scientific instrumentation, medical instruments and supplies, broadcasting equipment, and programming and franchising are particularly attractive to French importers. Total French trade of goods and services was $1,001 billion in 2006.

Principal French exports to the United States are aircraft and engines, beverages, electrical equipment, chemicals, cosmetics, and luxury products. France is the ninth-largest trading partner of the United States.

Agriculture
France is the European Union's leading agricultural producer, accounting for about one-third of all agricultural land within the EU. Northern France is characterized by large wheat farms. Dairy products, pork, poultry, and apple production are concentrated in the western region. Beef production is located in central France, while the production of fruits, vegetables, and wine ranges from central to southern France. France is a large producer of many agricultural products and is expanding its forestry and fishery industries. The implementation of the Common Agricultural Policy (CAP) and the Uruguay Round of the GATT Agreement resulted in reforms in the agricultural sector of the economy. Continued revision of the CAP and reforms agreed under the Doha round of World Trade Organization (WTO) will further change French agriculture. France remains Europe's strongest opponent of genetically modified organisms (GMOs) and often assumes an agricultural position at the EU Council to promote this policy.

France is the world's second-largest agricultural producer, after the United States. However, the destination of 70% of its exports is other EU member states. Wheat, beef, pork, poultry, and dairy products are the principal exports. The United States, although the second-largest exporter to France, faces stiff competition from domestic production, other EU member states, and third countries. U.S. agricultural exports to France, totaling $464 million in 2003, consist primarily of soybeans and products, feeds and fodders, seafood, and consumer oriented products, especially snack foods and nuts. French agricultural exports to the United States are mainly cheese, processed products, and wine. They amount to about $3.327 billion (2006) annually.


Facts at a Glance: Geography - People - Government - Economy - Communications - Transportation - Military - Climate - Current Time - Ranking Positions - Euro Exchange Rates
Notes and Commentary: People - Economy - Government and Political Conditions - Historical Highlights - Foreign Relations - Relations with U.S.



Facts at a Glance
Geography
People
Government
Economy
Communications
Transportation
Military
Climate
Current Time
Ranking Positions
Euro Exchange Rates


Notes and Commentary
People
Economy
Government and Political Conditions
Historical Highlights
Foreign Relations
Relations with U.S.





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