FRANCE’S ECONOMIC
SYSTEM
CATHERINE WANNEMACHER
Political History
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French Revolution in 1789 - overthrew monarchy
- first republican government
Napoleon Empire 1804 – implemented liberal reforms
e.g. abolition of feudalism
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Napoleonic Code influenced numerous civil jurisdictions
worldwide; first modern legal code
e.g. forbid privileges based on birth, allowed freedom of
religion, government jobs should go to most qualified
Monarchy restored once, followed by several republics
Currently in its Fifth Republic established in 1959
Economic History
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Tradition of state intervention
Dirigisme economic systemic between 1944 to 1983
e.g. nationalization of major industries including transportation,
electricity, banking sector etc.
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In recent years, government has sold shares in
corporations esp. due to EU regulations
- still exercises control over the economy
Political System
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Republic (5th) – governance defined by the Constitution
Semi- presidential representative democratic republic
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Multi-party system
Checks and Balances
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Includes a popularly elected President (head of state) and a Prime
Minister (head of government) and Cabinet
Executive Branch have most power esp. President e.g. appoints all
member of Cabinet and PM, military control etc.
e.g. President appoints PM, National Assembly can revoke
appointment
Various organizations are independent of Executive
branch
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E.g. Bank of France, Financial Boards, Energy regulations
Culture
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Individualistic society – greater concern on social status
and being judged as an individual
Low tolerance for uncertainty – role of planning
important
Culture
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Hofstede Cultural Dimensions
Organizational Structure
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Centralization – concentrated authority lies in one
individual usually
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Reflected in government and businesses; (geographically)
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e.g. two more hierarchical levels more
Originate in power and authority of earlier monarchs
Property Rights
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Civil law – allows private property
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2014 Property Rights Index 7.3
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e.g. Napoleonic Code first introduced absolute ownership
Measures degree to which country’s laws protect private
property rights and degree government enforces these laws
Assesses likelihood of private property expropriation
And corruption within judiciary
Right to buy and sell
Right to reek profits
Allocation Mechanism
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Markets
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Solves problems of resource allocation- decides amount of
goods and service to be produced
Incentives
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Material incentives
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e.g. wage, bonus, stock options for managers etc.
Role of Planning
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High due to low tolerance to uncertainty
State intervention is still exercised
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E.g. subsidies, planning inputs and outputs
Social Safety Net
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Standard income – minimum hourly wage
Social security benefits
Illness, maternity and disability insurance
Family benefits – allowances, family housing etc.
Unemployment insurance
Human Development Index (UN)
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Measures human development progress in three
dimensions: long and healthy life, access to knowledge
and standard of living
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(i)life expectancy (ii) mean years of education (iii) Gross
National Income per capita
2013 HDI value 0.884 – very high category rank 20 out of
187 countries
Human Development Index (UN)
Human Development Index (UN)
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HDI progress relative to other countries
GDP Growth Rate (%)
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Average growth rate from last four years (2010-2014)
= 0.825 %
From Data World Bank
Economic Freedom Index (Heritage
Freedom)
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Moderately free 63.5 index (rank 70 out of 175
countries)
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Index covers 10 freedoms including trade freedom,
monetary freedom, property rights and entrepreneurship
rights
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slightly decreased compared to last year
Weighted equally
brings greater prosperity
Political and Civil Liberty (Freedom House)
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Political Rights 38/40
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Electoral process 12/12
French President, lower house Parliament ,
National Assembly elected to five year terms
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Political Pluralism and Participation 15/16
Parties organize and compete on free basis
 Centre right UMP and Centre left PS are
largest parties; far right and National Front
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Functioning of Government 11/12
Civil Liberties 57/60
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Freedom of Expression and Belief 15/16
Associational and Organizational Rights 12/12
Rule of Law 15/16
Personal Autonomy and Individual Rights 15/16
Corruption Perception Index (Transparency
International)
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Based on the degree of corruption in the public sector
World Happiness Index
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rank 25
Measures happiness as an emotion and as a whole in life
Sources
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sourceshttp://en.wikipedia.org/wiki/Napoleonic_Code
http://europeanhistory.about.com/od/france/a/cpfrance.htm
http://www.nationsencyclopedia.com/economies/Europe/FranceOVERVIEW-OF-ECONOMY.html
http://education-portal.com/academy/lesson/checks-balances-internal-limitsof-the-french-executive-branch.html#lesson
http://www.globalsmes.org/news/index.php?func=detail&detailid=512&catal
og=24&lan=en
http://internationalpropertyrightsindex.org/data_download
http://www.cleiss.fr/docs/regimes/regime_france/an_index.html
All websites on the Data Sources sheet
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