French Economy Essay Example

significantly drive employment or economic growth. The unemployment rate reached its highest level in January 2010 but is now approaching that previous peak after increasing in the second quarter of 2011. Nonetheless, France has a well-educated workforce. As of 2010, the country's GDP per person is EUR 30,913, ranking it as the seventh highest among euro area nations.

According to anskebank.com/danskeresearch, the French economy saw expansion in mid-2009 and strong growth in early 2011, mainly due to robust consumption and inventory-building. Despite high unemployment, it is gradually decreasing. The International Monetary Fund (IMF) predicts a growth rate of around 2 percent for the French economy in the next two years, despite implementing consolidation policies aimed at reducing deficit and public debt. This growth will be driven by private consumption, which will benefit from recovering investment spending similar to the first quarter. However, France must confront certain risks.

The sovereign debt crisis in certain euro zone countries, such as Greece, poses a threat. There is also concern about uncertainty surrounding energy and commodity prices. Anne-Marie Gulde-Wolf, who leads the IMF team responsible for conducting an annual review of the French economy, emphasized how the Greek situation impacts market attention to fiscal debt and deficits worldwide. Gulde-Wolf stressed the importance for France to continue its current path of fiscal consolidation and maintain credibility in the market. It is necessary for France, along with other advanced European countries, to implement growth-promoting reforms due to potential issues with growth in the medium term.

France is currently facing various challenges, such as a decrease in its share of the export market and high unemployment rates among young and unskilled workers. It is

also important for France to maintain stable levels of taxation and spending to ensure macroeconomic stability and strengthen its financial system against future crises. The global economic downturn and the financial burden caused by an aging population have significantly affected France's public finances. Consequently, the country's public debt has surpassed 80 percent of GDP, with debt servicing costs reaching approximately 2? percent of GDP in 2010 (refer to Chart 1).

France must implement effective measures to strengthen its finances and preserve its AAA-rated borrowing status, all while ensuring fiscal sustainability. Currently, the inflation rate in France stands at 2.20%.

The inflation rate in France in August of 2011 was 2 percent, while the average inflation rate between 1958 and 2010 was 4.93 percent. The highest recorded inflation rate in France was 18.80 percent in April of 1958, and the lowest recorded inflation rate was -0.70 percent in July of 2009.

The inflation rate, which measures the increase in prices compared to a specific level of purchasing power, can be assessed using two main indicators: the Consumer Price Index (CPI) and the Gross Domestic Product (GDP) deflator. The CPI focuses on consumer goods and services, while the GDP deflator provides insight into inflation across the entire domestic economy. In France, unemployment averaged 9.54% from 1983 to 2010. It peaked at 11.80% in March 1994 and reached its lowest point of 7.30% in February 1983.

The labour force includes individuals who are currently employed or actively seeking employment, while the nonlabour force consists of those not participating in the labor market, such as people not looking for work, individuals in institutions, and military personnel. In summary, if France were to adopt

reforms that encourage work incentives, investment in productive activities, and innovation, it could potentially attain higher economic growth. According to Everaert and Schule (2006), implementing labor and product market reforms aligned with best practices could lead to an annual growth increase of approximately ? percent over the medium term.

The link provides more details on how this would result in a higher potential growth rate of 2% in the medium term, compared to the current rate of 1.7%.

France currently operates as a democratic country with a multi-party system. This means that political power is divided between socialists and conservatives. One interesting aspect of French politics is the coexistence of both a President and a Prime Minister, who hold important roles within the country and on the international stage. The President is chosen by the people for a term of 5 years and appoints a Prime Minister, typically from their own political party. However, there have been instances where alternating electoral outcomes have resulted in an unusual situation called Cohabitation, where the Prime Minister comes from the opposing party.

France's employment situation during the crisis was positioned between Germany and the U.S. Unlike Germany, which witnessed a decline in unemployment and an upswing in overall employment due to labor hoarding supported by policies, France encountered a rise of over 2 percent in unemployment and is still struggling to recover from job losses since the onset of the crisis. One obstacle faced relates to employees returning prematurely to their home country or expatriates failing to meet their business objectives. This can be attributed to various factors including the inability of spouses to adapt, challenges for managers in adjusting,

family issues, personal or emotional immaturity among managers, and their limited ability to handle greater overseas responsibilities.

Some managers may not prefer working in a foreign country. The cost of using expatriates is generally higher than using local management talent. Multinational corporations may be seen as better citizens if they employ local talent, as French governments advocate for the use of local management. Managers who are stationed in France for a limited time may prioritize short-term projects over long-term tasks. British managers can be three times more expensive for a company due to transfer and other expenses like schooling for children, home leave, and dual taxation. Managers may also have to adapt to working with colleagues and a workforce with different cultural backgrounds. Being alone in a foreign country can create significant stress for the manager. If the spouse and children are also part of the assignment, there will be additional complexities and pressures, such as learning a new language, navigating unfamiliar surroundings, making new friends, and finding new schools.Motivation plays a crucial role in the workplace, particularly when it comes to French employees working under British management. The reason being that British management practices often differ from those of the French, leading to a potential decrease in motivation among the French labor force.

The strategy mostly failed due to the inability of people to adjust with the culture of the host country, making culture differences very important (Daniels ; Radebaugh, International Business, p. 768; Phatak, International Dimensions of Management, p. 106).

The utilization of British Managers in France is motivated by various factors. http://wps.prenhall.com/wps/media/objects/728/745520/chapter13.pdf

1. The lack of technical competence and control

are the main reasons for the difficulty in finding local candidates with the necessary technical qualifications.

According to Daniels & Radebaugh (International Business, p.769) and Phatak (International Dimensions of Management, p.106), a desire for a unified corporate culture and tighter control drives the goal of efficiently transferring specialized manufacturing skills and core competencies from the parent company to its foreign subsidiary.
Solution: Instead of fully relocating an employee and their family, alternatives such as frequent extended business trips accompanied by corresponding time spent back at home should be considered.

The text discusses the increasing popularity of short-term assignments, which typically range from three to twelve months. These assignments often involve frequent home leave and a dual household arrangement: the employee's family stays at home while the employee sets up a small household in the foreign country. One reason for the rise in short-term assignments is their perceived lower cost compared to traditional expatriate assignments. To ensure a successful foreign transfer and address potential personal issues, adaptability screening is commonly recommended during the selection process. This screening is usually carried out by a professional psychologist or psychiatrist and aims to assess the family's likelihood of adapting to the new environment and to provide awareness of any impacts on children.

According to Phatak's book "International Dimensions of Management" (p. 119), past experience is often a reliable indicator of future success. Candidates

who have demonstrated a commitment to and proficiency in living and working with diverse cultures through their work and non-work experience, education, and language skills are more likely to succeed. Even individuals who have spent multiple summers travelling overseas or participating in foreign student programs can provide concrete evidence of their ability to adapt when relocating abroad. This information is discussed further in the book "Developing the International Executive" (p. 45).

Realistic job previews are essential for both potential assignees and their families. They need all available information about the challenges they can expect in the new job, as well as information about the cultural benefits, issues, and idiosyncrasies of France. It is recommended that the employee and their family visit the new location before accepting the assignment to make an informed decision. The importance of clear communication prior to the assignment is emphasized in "Developing the International Executive" (p. 45). Orienting and Training follows a four-step approach, with Level One training focusing on raising awareness of cultural differences and their impact on business outcomes.

The training at Level Two is focused on attitudes. The goal is to help participants understand how attitudes, both negative and positive, are developed and how they impact behavior. Level Three training provides factual knowledge about the target country, while Level Four focuses on developing skills such as language proficiency and adjustment and adaptation skills. It is crucial for the training to be thorough and conducted with care if firms are going to offer cross-cultural training. Source: “Cross-Cultural Training: Issues to Consider During Implementation,” Canadian HR Reporter (June 5, 2000), pp. 10, 12.

The balance sheet approach is often used in determining expatriate

pay, aiming to achieve purchasing power parity between countries and provide a comparable standard of living to that enjoyed in their home country. This approach focuses on four main expenses: income taxes, housing, goods and services, and reserve funds. The employer calculates these expenses in both the expatriate's home country and host country, covering any discrepancies such as higher income taxes or housing costs.

According to Hill's International Business, one trend in international compensation is the implementation of long-term incentive pay for managers working overseas. In order to better align with subsidiary performance, multinational companies are developing new long-term incentive plans that are tied directly to performance at the subsidiary level. This strategy can foster a sense of ownership among important local managers, as well as offer the necessary financial incentives to attract and retain personnel for overseas operations.

The chapter 13 "Managing Human Resources in an International Business" discusses the challenges faced by individuals in international Employee Assistance Programs (EAPs). These problems include homesickness, boredom, withdrawal, depression, compulsive eating and drinking, irritability, marital stress, family tension, and conflict, all of which are typical reactions to culture shock. The treatment for psychiatric illnesses varies across different countries and so do the conditions in government-operated mental health institutions. Therefore, consulting with an EAP professional who has extensive cross-cultural training is crucial in ensuring the appropriate medical treatment is received. The article "Sustaining the Relocated Employee With an International EAP" in the Canadian HR Reporter (November 29, 1999), pages 18, 19, and 21 emphasizes the importance of addressing these challenges. Additionally, repatriation poses several common problems for relocated employees.

One concern that expatriates may have is feeling forgotten or disconnected

from their parent firm's culture, top executives, and those involved in the firm's management selection processes after an extended period abroad. These fears can be justified, as repatriates are often assigned to temporary or less significant roles. Ironically, the company frequently underestimates the value of the cross-cultural skills acquired during their international assignment, and this experience can hinder, rather than advance, their career. It can be particularly frustrating to discover that former colleagues have been promoted more quickly while the expatriate was overseas.

The expatriate's family may experience a form of reverse culture shock when returning home. This can be challenging as the spouse and children have to reestablish old friendships and routines or start anew at different schools. To prevent these issues, it is helpful to have repatriation agreements in place, assign a sponsor for support, offer career counseling, keep the Managers connected to home-office business, plan return trips, provide financial assistance to maintain the Manager's home-country residence, and provide reorientation programs for both the expatriate and their family (Phatak, International Dimensions of Management, p. 124). Additionally, refer to R.

Swaak (1995) discusses the challenges faced by expatriate families in today's society, focusing on dual careers and other obstacles. In relation to performance appraisal, it is highlighted that the process for overseas managers can be complex due to the requirement of input from both local and home-office supervisors. To improve this process, suggestions include specifying the difficulty level of assignments, giving more weight to the appraisal by on-site managers, and having home-site managers seek advice from those familiar with the abroad location before completing the expatriate's appraisal.

According to Addou and Mendenhall's article on "Expatriate Performance Appraisal"

(p. 66), one of the operational factors to consider is choosing a country with a global outlook. France is often chosen by international companies for its strategic position in the heart of Europe, being the largest market in the world with 500 million consumers. Additionally, France's membership in the euro zone allows for the benefits of a single currency across 13 different countries. With a population of 65 million, France is the second-largest consumer market in Europe, following Germany. It is also the fifth-largest economy globally, with a GDP of US $2,670 billion in 2010.

France attracted 80 million tourists in 2008, cementing its position as the top tourist destination worldwide. Additionally, it secured the third-highest amount of foreign direct investment globally in 2009, as reported by UNCTAD. The country received a total of $65 billion in foreign investment, only surpassed by the United States with $136 billion. Despite a decrease in global foreign direct investment, the IFA and its regional partners managed to record 639 new foreign investment projects that generated job opportunities. This figure remained similar to the previous year's numbers. Overall, these projects contributed to the creation and maintenance of approximately 30,000 jobs. (Source: http://www.invest-in-france)

org/us/why-choose-france/a-country-with-a-global-outlook. html France stands out as a gateway to Europe, offering convenient access to neighboring countries within a 2,000-km (1250-mile) radius of Paris. The Schengen Area allows for unrestricted movement across European countries. France boasts an extensive and secure road network spanning over 11,000 km (nearly 7,000 miles) of highways and 1 million km (620,000 miles) of roads. The efficient TGV high-speed trains significantly cut travel time between French and European cities, ensuring a safe and comfortable

journey. Paris to London, for instance, takes just 2 hours and 15 minutes. Moreover, France's coastal regions on the Atlantic, Mediterranean, and North Sea serve as vital connections to other continents.

France is home to five of Europe's main ports which can be conveniently reached by road or rail. These ports are also connected to highly efficient waterways along the Seine, Rhone, and Rhine rivers. Paris, with its airports at Roissy-Charles de Gaulle and Orly, is a major airline hub in Europe, excelling in cargo traffic and mail, and ranking as the second busiest in terms of passenger numbers on the continent. http://www.

The website invest-in-france.org/us/why-choose-france/a-springboard-into-europe.html highlights the advantages of choosing France as a springboard into Europe. Ile-de-France is the key economic region in France and is recognized as one of the top economic regions globally. Its GDP accounted for 2.5% in 2011, which is 29% of the domestic GDP. Furthermore, it has a population of 11 million people.

The region has a population of 6 million people, with 61.4% of them actively employed. It offers convenient access to a market of 500 million consumers in the 27 European Union countries. Ile-de-France has the fastest rail network in Europe, connecting the region to other European business centers in a matter of hours. Additionally, Ile-de-France is served by three international airports: Paris Le Bourget, the top business airport in Europe; Paris Orly, the second largest airport in France; and Paris-Charles de Gaulle, the leading hub airport in Europe.

The Autonomous Port of Paris is Europe's second largest port with ten multimodal platforms consisting of rail, road, and river transportation. It spans over 300 miles of waterways.
There is a diverse range

of world-class economic sectors within the port, including the automotive industry, information and communication technology, life sciences, aerospace/defense, eco-business, finance, agribusiness, professional events and meetings, logistics, fashion, design and luxury goods, and business services.
There are also seven innovation clusters located in the port: Advancity (eco-businesses), ASTech (aeronautics), Cap Digital (images and multimedia), Finance Innovation (financial services), Medicen (life sciences),
Mov'eo (automobiles), and System@tic (ICT).
The Autonomous Port of Paris is the second most preferred location for Fortune Global 500 companies worldwide, following Tokyo.
It is also Europe's top region for jobs created by newly established foreign companies and France's leading region for foreign direct investment.
The port is home to 680,000 companies, with 41.5% of them being SMEs.
Additionally, it boasts the largest commercial real estate portfolio in Europe with 50 million m? of office space (surpassing London), 30 million m? of business premises, and 29 million m? of warehouse space.
Moreover, it is the highest employment area in Europe with 53% of French managers working within it.

Ile-de-France is the leading region in Europe for science and technology, as well as the top region for research and development spending. This region in Europe also has the highest concentration of students, including 27% of France's student population, which amounts to 600,000 students. It is home to 17 universities and over 350 advanced training centers. Among these training centers are fifty globally renowned engineering and business schools such as HEC, Ecole des Mines, and INSEAD. Furthermore, Paris Ile-de-France, known as the capital of culture and gastronomy, attracts more than 42 million tourists every year, with 28 million of them being foreigners. ttp://www.

invest-in-france.org/us/why-choose-france/a-region-for-every-project.html Competitive Economy: France has a competitive economy in terms of overall

business costs in Europe. The country's business setup costs, including labor, facility costs, transport, utility costs, and corporate taxes, are highly competitive.

When taking into account social security contributions, France has lower total payroll costs compared to the UK or Germany. Additionally, commercial and residential real estate is more affordable in France than in the UK. The city of Paris and its surrounding Ile-de-France region possess Europe's largest portfolio of commercial real estate, surpassing London with 49 million m? of office space. Paris is also a highly attractive city.

The city of Paris is the second in the world, following Tokyo, in terms of the number of company headquarters it accommodates. It is home to almost all of the 39 French groups listed in the 2009 Fortune Global 500. According to http://www. invest-in-france. org/us/why-choose-france/a-competitive-economy.html, France has strong laws safeguarding intellectual property rights, providing effective protection for patents, trademarks, models, and designs. The INPI (Institut National de la Propriete Industrielle) serves as the central institute for intellectual property protection in France, and filing applications with it is the first step towards obtaining patent and trademark protection.

Intellectual property rights grant patent holders a 20-year monopoly on usage. Trademarks are valid for 10 years but can be renewed indefinitely. Models and designs have protection for 25 years. Company names, trade names, and logos are also safeguarded and can be referenced in unfair competition legal cases. The R Tax Credit is a French government initiative to encourage corporate research and development activities, which is provided in the form of a tax rebate or applied to a company's tax obligations.

France contributes to its attractiveness as an investment location by providing companies with

a notable tax reduction. According to an OECD study, France's research tax credit is one of the most appealing tax incentives globally. Additionally, research expenses incurred abroad are eligible in EU or EEA member states, or alternatively in France by a foreign company.

New companies are granted a temporary exemption from corporate tax (impot sur les societies or IS), which plays a pivotal role in France's investment appeal. Tax certainty and predictability are crucial factors for the French government. To address this, the French Tax Authorities (FTA) have implemented various measures to enhance visibility and legal certainty regarding tax treatment for future and retrospective investments. These measures encompass tax audits and potential litigation proceedings.

In conclusion, the current tax regulations demonstrate the FTA's dedication to improving France's tax system by fostering predictability and legal certainty.

The tax certainty principle plays a crucial role in maintaining France's tax competitiveness and attractiveness as an investment location, especially compared to countries with lower effective tax rates. Additionally, there is an initiative for family tax credits aimed at helping employees with children achieve a better work-life balance. The business development loan scheme provides interest-free loans to support investment projects throughout France. The French government also has various instruments to provide financial incentives for businesses to create jobs and train employees. Furthermore, support is being developed for environmental investments (http://www.invest-in-france).

org/Medias/Publications/862/doing-business-2011. pdf To achieve a genuinely unified market, a single currency is essential. Currently, British companies exporting to the Continent face uncertainty regarding currency exchange rates.