France suffered twice from war in the 20th century at the hands of its neighbor Germany. The 21st century, however, looks much brighter than the preceding one. France is part of a European coalition which may create a United States of Europe in the future. Not only is France one of the leading players in this effort, it also has strong relations with Germany, once its invader, which brings it security. By joining the common currency efforts in Europe, France has secured an influential role for itself in European affairs, both economically and politically. It has already started to reap the benefits of one of the largest markets in the world by receiving a large volume of foreign direct investment and exporting its agricultural and other products within Europe in a tariff-free environment.
Recent liberalization and privatization efforts of the government, which reversed an earlier course of the 1980s, both brought confidence to markets and increased efficiency to the government, which is now much smaller than before. Its main problems lie in its relatively high unemployment rate and low population growth. The EU may provide a solution to the unemployment problem, but with a more integrated Europe comes the possibility that France may lose many of its more talented workers if they leave for better jobs. Coupled with rigid immigration policies and xenophobia, France may experience a shortage of technically capable individuals. Germany, which has many of the same racial difficulties, recently initiated a program which is similar to the U.S. green card and may encourage technologically savvy people to come to Germany. France may soon have to confront the same problem. Decreasing population growth may seem to be an answer to unemployment in the short run, but it is a fact that the burden of supporting the retired will have to be shared by fewer working people as France's demographics change. This situation may mean the need for higher spending on health care and related services, which will drain government aid funds. Perhaps this problem is the biggest challenge France has to deal with in the 21st century.