France Business and History

With a gross national income (GNI) per resident of (2017) US $ 37,970, France ranks in the top third of the industrialized countries and EU countries. The transition from an agricultural state to a modern and leading industrial and service society took place relatively slowly.

After 1945, the French economy, which had been characterized by small-scale agriculture, found itself in an accelerated process of catching-up industrialization and modernization (especially in relation to the Federal Republic of Germany) under the conditions of a corporatistically organized macroeconomic framework plan introduced in 1946. With this system of planification an attempt was made to achieve a balanced application of the control methods of planning and competition. The economic plans, which the private sector was encouraged to adhere to through the granting of state loans and contracts, proved to be an effective instrument for implementing agreed growth and investment goals until the French economy opened up to Europe. Added to this was the nationalization of key sectors (energy industry, transport, major banks, insurance companies) and some industrial companies.

The reconstruction and the increase in production in the 1950s (the level of 1929 was reached in 1949) took place within the protected framework of a largely closed economy; Little was exported to countries outside the franc zone (6% of gross domestic product [GDP]). A turning point was brought about by the loss of colonial markets in the course of decolonization in the early 1960s and the customs union established in the EEC. The transition to an open economy required an internationally competitive industry. Economic policy goals were: Promotion of key industries (electronic and capital goods industry), creation of a coherent national industrial structure, formation of internationally competitive groups of companies, based on state and private large companies.

The main economic policy problem of the 1970s and 1980s was the question of adapting to the demands of international competition and the new technological challenges, with two different strategies opposing each other: 1) a liberal strategy of global market-oriented structural adjustment, the core elements of which are adherence to free foreign trade, the acceptance of the international division of labor and the resulting pressure to adapt as well as a forced active and passive internationalization of the French economy; 2) a modernization concept, which – without questioning the opening of the French economy – attached great intrinsic value to industrial policy structural reforms and domestic economic development goals and was shaped by the will for a strongly self-determined economic and social development. Despite these different economic policy approaches, the public sector remained more decisive for the French economy (the second largest in the EU, after Germany) than in the other western industrialized countries.

The country was able to recover relatively quickly from the economic setbacks as a result of the international financial crisis (decline in gross domestic product in 2009: -2.6%), but without entering a stable growth phase. Attempts were made to counteract the high national debt (2017: 97% of GDP) through a strict austerity policy. However, the public sector’s declining willingness to invest favored the rise in unemployment to 10.6% (2015) (that of youth unemployment even to 23.7%) and thus the weakening of the domestic market.

Foreign trade: Until the beginning of the 1990s, the French trade balance consistently showed import surpluses. From 1992 to the beginning of the 2000s, export surpluses were achieved thanks to greater international competitiveness. In recent years, however, the opposite trend has occurred (2017: exports: € 473.6 billion, imports € 552.7 billion). France ranks seventh among the world’s trading nations. Important export and import goods are chemical products, machines, motor vehicles / parts and food. The most important trading partners are the EU countries, among which Germany comes first, followed by Belgium, the Netherlands, Spain and Italy. The EU countries account for around 60% of all French exports.


The name France is derived from the Germanic Franks who populated Romanized Gaul in late antiquity. Charlemagne created a great empire, from the western part of which France eventually developed. In the feudal state (Angevin Empire), which was temporarily connected to the English monarchy, the kings strengthened their power at the expense of the territorial lords. The French nobility took a leading role in the Crusades. 1309–76 and during the Western Schism (1378–1417) in competition with Rome, the Pope resided in Avignon. In the early modern period, France rose to become a major European power in a permanent conflict with the Habsburgs in Spain and in the Roman-German Empire. After the Huguenot Wars(1598) solidified the absolutist monarchy, which under Louis XIV radiated politically and culturally across Europe. France became a colonial power in the 18th century. The French Revolution abolished the Ancien Régime in 1789 and created the modern nation-state with basic democratic rights for its citizens (republic from 1792). Napoleon I , Emperor of the French from 1804, subordinated Europe to the hegemony of the “Grande Nation” (until 1815).

Industrialization took hold in the first half of the 19th century. After the July Revolution in 1830 France became a constitutional monarchy, after the February Revolution in 1848 it became a republic again, and again after the fall of the Second Empire under Napoleon III. as a result of the defeat in the Franco-German War. In the Third Republic (from 1870) a party democracy was formed with a strict separation of state and church (laicism). During the First World War, France suffered great human losses and destruction. Popular Front governments (1936–38) laid the foundation for the French welfare state. After the military defeat by Hitler’s Germany (1940), the État Français (Vichy regime) became an authoritarian satellite state (until 1944). The Fourth Republic grew out of the Resistance against him and the German occupation. It was wiped out by internal political conflicts and decolonization, especially in Indochina and Algeria. Under President Charles de Gaullethe Fifth Republic was created (from 1958). It ended the Algerian War (1954–62), became reconciled with Germany and, from the mid-1970s, became an engine of European unification. In the 1980s, the first measures were taken to break the strong political centralism through more powers for the departments and regions. Globalization, overcoming the euro crisis, populism and the integration of immigrants and their descendants, especially from the former colonies in Africa, were a particular challenge to France at the beginning of the 21st century.

France Business and History