France - Economic development
Since World War II (1939–45), France has implemented a series of economic plans, introduced to direct the postwar recovery period but later expanded to provide for generally increasing governmental direction of the economy. The first postwar modernization and equipment plan (1947–53) was designed to get the machinery of production going again; the basic economic sectors—coal, steel, cement, farm machinery, and transportation—were chosen for major expansion, and productivity greatly exceeded the target goals. The second plan (1954–57) was extended to cover all productive activities, especially agriculture, the processing industries, housing construction, and expansion of overseas production. The third plan (1958–61) sought, in conditions of monetary stability and balanced foreign payments, to achieve a major economic expansion, increasing national production by 20% in four years. After the successful devaluation of 1958 and an improvement in the overall financial and political situation, growth rates of 6.3% and 5% were achieved in 1960 and 1961, respectively. The fourth plan (1962–65) called for an annual rate of growth of between 5% and 6% and an increase of 23% in private consumption; the fifth plan (1966–70), for a 5% annual expansion of production, a 25% increase in private consumption, and the maintenance of full financial stability and full employment; and the sixth plan (1971–75), for an annual gross domestic product (GDP) growth rate of between 5.8% and 6% and growth of about 7.5% in industrial production. The sixth plan also called for increases of 31% in private consumption, 34% in output, and 45% in social security expenditure.
The seventh plan (1976–80) called for equalization of the balance of payments, especially through a reduction of dependency on external sources of energy and raw materials; a lessening of social tensions in France by a significant reduction in inequalities of income and job hierarchies; and acceleration of the process of decentralization and deconcentration on the national level in favor of the newly formed regions. Because of the negative impact of the world oil crisis in the mid-1970s, the targets of the seventh plan were abandoned in 1978, and the government concentrated on helping the most depressed sectors and controlling inflation.
In October 1980, the cabinet approved the eighth plan (1981–85). It called for development of advanced technology and for reduction of oil in overall energy consumption. After the Socialists came to power, this plan was set aside, and an interim plan for 1982–84 was announced. It aimed at 3% GDP growth and reductions in unemployment and inflation. When these goals were not met and France's international payments position reached a critical stage, the government in March 1983 announced austerity measures, including new taxes on gasoline, liquor, and tobacco, a "forced loan" equivalent to 10% of annual taxable income from most taxpayers, and restrictions on the amount of money French tourists could spend abroad. A ninth plan, established for the years 1984–88, called for reducing inflation, improving the trade balance, increasing spending on research and development, and reducing dependence on imported fuels to not more than 50% of total energy by 1990. The tenth plan, for 1989–92, gave as its central objective increasing employment. The main emphasis was on education and training, and improved competitiveness through increased spending on research and development.
France adopted legislation for a 35-hour work week in 1998 that became effective in 2000. The object was to create jobs, but the impact of the change on economic growth and development had yet to be assessed as of 2003. Pension reform was being legislated in 2003, amid much popular protest. France's demography is changing, with the active population beginning to decline in 2007—this is due to reduce annual per capita GDP growth. Spending on health care increased in the early 2000s. The general government financial deficit was close to 4% of GDP in 2003, which exceeded the EU limit of 3% of GDP for the second year in a row. Weak growth, high unemployment, and lowered public finances were economic challenges the government faced in 2003. By the mid-1990s, and in line with European Union (EU) policy, French economic policy took a turn away from state dominance and moved toward liberalization. Large shares of utilities and telecommunications were privatized. Moreover, austerity came to the fore in budgetary planning as the government moved to meet the criteria for European Monetary Union. France adopted the euro as its currency in 1999, and discontinued the franc in favor of euro bills and coins in 2002. Government spending, however, was 52.7% of GDP in 2001, among the highest of the G-7 nations. Despite privatization efforts, the state in the early 2000s still owned large shares in corporations in such sectors as banking, energy, automobiles, transportation, and telecommunications.
French loans to its former African territories totaled CFA Fr50 billion by November 1972, when President Pompidou announced that France would cancel the entire amount (including all accrued interest) to lighten these countries' debt burdens. In 1993, France spent $7.9 billion on international aid, and $6.3 billion in 1997.