FRANCE

COUNTRY OVERVIEW

LOCATION AND SIZE.

France has the largest land area of any Western European nation and lies between the Mediterranean Sea on the southeast and the Bay of Biscay and English Channel to the north and west. France has a total land area of 547,030 square kilometers (211,208 square miles) and a coastline of 3,427 kilometers (2,130 miles). It shares borders with Andorra, Monaco, Belgium, Luxembourg, Germany, Switzerland, Italy, and Spain. Its area is about four-fifths of the size of Texas.

Paris, the capital city, is the largest city in France and Europe (excluding Russia), and accommodates about one-sixth of the country's population. Other cities with over a million people including surrounding areas are Lyon, Marseille, and Lille.

POPULATION.

France's population was estimated to be 59,329,691 in 2000, with a slow growth rate of 0.38 percent. The French population is about one-fifth of Europe's total population and ranks third in Europe and sixteenth in the world. It has about 106 inhabitants per square kilometer (or about 275 people per square mile). Roughly one-sixth of the entire population lives in the Greater Paris area. France's ethnic groups include Celtic and Latin strains, with Teutonic, Slavic, North African, Indochinese, and Basque minorities. Foreigners comprise 6.3 percent of the population.

While the majority of the population (65 percent) falls between the ages of 15 and 64, about 16 percent are older than 65 years of age. The remaining 19 percent are 14 years old and younger. At the turn of the 19th century, France was the most populous country in Europe. But by the late 19th and early 20th century, France experienced the lowest birth rate in the continent. Due to government efforts and the post-World War II baby boom, however, France reached a birth rate of 21 per 1,000 people in the post-war era. This growth declined to 18 and 13.6 per 1,000 in 1963 and 1989, respectively. Currently, France's birth rate stands at 12.27 births per 1,000 population according to 2000 estimates. (France had 9.14 deaths per 1,000 population during the same

year.) The influx of immigrants into France at the last quarter of 20th century, though, has moderated the trend toward a shrinking population. It is estimated that France has received 0.66 net immigrants per 1,000 people in 2,000. The ratio between males and females is nearly oneto-one in almost all age strata of French population, with the exception of those over age 65, where there are 0.68 males per each female. This is mainly because the life expectancy for females at birth is about 83 years while it is only 75 for males. Life expectancy for the total population averages 79 years.

In 2000, France was the sixteenth most populous nation in the world. The French population is expected to decline by the year 2025 when France will rank twenty-fifth in the world. The United Nations Development Program (UNDP) estimates that the population will reach 61,662,000 in 2025 but drop to 59,883,000 in 2050, with 30 percent of the population over 80 years of age. (This number was 16 percent in 2000.) This means that the potential support ratio (the number of people aged 15 to 64 for each person aged 65 years or older) in 2050 will be half of its 1999 level. In other words, every 2 working people will be supporting a retired person in 2050, which doubles the burden on the society from 1999 to 2050 in providing care and benefits for the elderly.

Archaic immigration policies make France somewhat unattractive for foreigners who seek work or asylum, even though the need for more workers has been recognized by many. The government provides generous family and health support programs, though these have not necessarily encouraged population growth. Individuals with health problems, the unemployed, and the retired are protected from bankruptcy by the social security system. Some cities even tried to implement their own programs to encourage population growth, but they were aimed at French or European races, and thus quickly denounced as racist. Overall, the government's efforts to address the serious under-population problem of the near future have not been successful.

INDUSTRY

France is among the most industrialized countries of the world. It is a member of the G8, a group of countries which comprises the 7 largest industrial democracies, plus the Russian Federation. In 1999, the French GDP was almost identical to that of Great Britain and comfortably larger than that of Italy.

MANUFACTURING.

About 19.3 per cent of the GDP was generated by manufacturing in France in 1999, compared to 17.8 percent in the United States and 18.5 percent in Britain. Manufacturing contributes roughly 20 percent of the GDP in Italy, Germany and Japan. Investment in the industrial manufacturing sector was 141 billion francs in 1999. (These figures excluded the energy and agricultural manufacturing sectors.)

Firms operating in the industrial manufacturing sector produced a variety of goods such as consumption goods, items related to the auto industry, and equipment such as electronics, machinery, and intermediate goods . The well-established name for French products in the fashion world helps France in the export of perfumes and even flowers. The consumption goods industry made nearly 200 billion francs from sales abroad in 1999. The contribution of the auto industry to the French exports figures in 1999 was almost 300 billion francs. France is one of the largest producers of passenger cars and commercial vehicles in the world, along with Japan, the United States, and Germany.

The principal manufacturing companies are located in Ile-de-France, Rhone-Alpes, Nord-Pas-de-Calais, and Pays de la Loire regions. New industrial areas emerged around the English Channel and Mediterranean Sea in order to save shipment costs of imported raw materials. Even though some French companies, such as Renault and Airbus, are world famous, most French firms are characterized as moderate to small-sized. But small firms tend to be ineffective in the world market because of heavy competition from companies based in countries with cheaper labor costs or higher and better production technologies. The pressure of competition was felt heavily with the unification of the European markets under the umbrella of EU, in which movement of capital and labor is not constrained. Unless smaller and relatively inefficient French firms can adapt, labor and capital may move elsewhere. With the advent of the euro, many French companies have had to restructure and form mergers.

The major European airplane producing company is Airbus, which is based in France but also supported by Germany and Britain. With more than 4,200 aircraft orders placed by international customers as of April 2001, Airbus is the world leader in aircraft production. Airbus and Boeing of the United States are in competition, and they have conflicting ideas about the future of the world air travel. The perception of future demand and air travel habits shapes the design of aircraft to be produced. Airbus believes that huge aircraft with a short flight range will shape demand in the future. Boeing, on the other hand, believes that passengers will be flying long miles in smaller aircraft. Time will show which one is on the right track.

One other field where French companies are strong is construction and civil engineering. However, a recent declining trend in enrollment in science classes in the country is a major concern of education authorities. France is the second ranked producer and the leading exporter of agri-foodstuffs (processed food such as wine, cheese, and pasta) in Europe. It is the fourth-largest exporter in the world in chemicals, rubber, and plastics; and third ranked in pharmachemicals and pharmaceuticals.

MINING.

Mining is not a field in which France competes, and only a very minor fraction of the labor force (less than 1 percent) is engaged in mining. Regarding coal, 2 major fields produce most of France's coal: the Lorraine coal field near Metz and the Nord-de-Calais coal field near Lille. Most of these fields do not have economically viable reserves compared to other big producers because they lack sufficient amounts in some cases or are difficult to extract. Many coal fields have shut down since the 1950s.

France is among the biggest producers of bauxite in Europe and also plays a big role in the continent's natural gas production. France's position may be threatened, however, if some Asian companies acquire access to the European market, although the tariff -free regulations that EU member states enjoy put France in a strong position. France is an importer of petroleum but processes petroleum at home to produce several oil products which are sold domestically and abroad.

FINANCIAL SERVICES.

France has a developed credit market which channels savings to investors very efficiently and in large volumes. The market capitalization of shares listed on the Paris Stock Exchange, the fifth largest in the world, accounts for about 32 percent of the French GDP. Market capitalization at the end of 1997 reached an extraordinary 4 trillion francs. The Paris Stock Exchange is an internationally used capital market, and foreign investors hold about 35 percent of French stocks. This puts Paris in an advantageous position to attract more international capital with the help of the euro, the common currency of the EU. In an effort to adjust to the introduction of the new currency, all asset management companies in France started to offer their services in euros as of January 1999, the date the euro was introduced as the common currency of Europe. Since not all EU, let alone the European countries, decided to adopt the euro as their currency, authorities in the Paris Stock Exchange believe it has a comparative advantage over the stock markets of these nations since it can offer more opportunities via its reach to wider international audience. The Paris Stock Exchange has gone through extensive technological and legal restructuring to become more investor friendly in the international market. According to the stock exchange's data, foreign investments in the Paris Stock Exchange have tripled in monthly trading since the beginning of 1998, due in large part to the restructuring of the exchange. The exchange has trade relationships with the Chicago Mercantile Exchange and the stock exchanges of Sao Paolo, Toronto, Brussels, Lisbon, Tunis, Casablanca, Warsaw, and Amman, among others. The French bond market is among the world's leaders and ranks second after its U.S. counterpart.

The French banking system is also quite competitive in the world market. Credit Agricole, Compagnie Financiere Paribas, Groupe Caisses d'Epargne, and Banque National de Paris rank among the top 25 banks in the world. In Europe, banks are allowed to engage in activities that would normally be reserved for either commercial banks or investment banks in the United States. In a unified Europe, there will be one central bank, while national central banks will be largely autonomous.

INSURANCE.

Like banking and the stock market, the French insurance sector is also a world player, ranking among the top 5 in the global insurance market. Although French insurance firms have a global presence, 60 percent of their total international activity is carried out within the borders of EU. Like other insurance industries, French insurers are institutional investors. The largest chunk of investments in the insurance industry is in the form of bonds, at 69 percent. Stocks account for only 15 percent of investment, and the rest is real estate, commercial paper and other assets. French insurers saw their overall value rise 16 percent from 1996 to 1997. The introduction of the common currency is expected to boost profits in the insurance industry.

TOURISM.

Over 60 million tourists visit France every year, making it one of the largest tourist centers of the world. Visitors are attracted to its high fashion (or haute couture ), beautiful scenery, historic heritage, and cultural activities. Paris, the center of France's tourist trade, offers attractions such as the Louvre (its famous art museum), fine restaurants, the Eiffel Tower, and the beautiful works of architecture along the Seine, its major river. With about 67 million annual tourists, France trailed behind only the United States and Spain in 1997. France has a surplus in tourism in its balance of payments accounts. The more than 100,000 businesses directly or indirectly involved in tourism in 1997 generated over 100 billion French francs. Investments in the sector came close to 15 billion francs in that same year. According to the Ministry of Tourism, there were about 634,640 people employed in the various categories of the tourism sector including travel agencies, restaurants, and hotels. About one-sixth of this figure is employed for less than full-time.

DEPENDENCIES

France has no territories or colonies.

BIBLIOGRAPHY

Airbus. <http://www1.airbus.com> . Accessed April 2001.

Aron, Raymond. "The French Economy: A Study in Paradoxes." The Atlantic Monthly . June 1958.

Brogna, Brunner, editor. "France." Time Almanac 2000 . Boston, MA: Time Inc., 2000.

Discover France. <http://www.discoverfrance.net> . Accessed January 2001.

Economist Intelligence Unit. Country Profile: France. London: Economist Intelligence Unit, 2000.

Ministry of Economy, Finance and Industry. Welcome to MINEFI. <http://www.minefi.gouv.fr> . Accessed February 2001.

Ministry of Tourism. Tourisme. <http://www.tourisme.gouv.fr> . Accessed April 2001.

National Institute for Statistics and Economic Studies (L'Institut national de la statistique et des études économiques). Insee. <http://www.insee.fr/en/home/home_page.asp> . Accessed January 2001.

United Nations Development Program. Human Development Report 2000 . New York: Oxford University Press, 2000.

United Nations Development Program. World Population Trends. <http://www.undp.org/popin/wdtrends> . Accessed January 2001.

U.S. Central Intelligence Agency. World Factbook 2000. <http://www.odci.gov/cia/publications/factbook/index.html> . Accessed July 2001.

U.S. Department of State. FY2001 Country Commercial Guide: France. <http://www.state.gov/www/about_state/business/com_guides/2001/europe/france_ccg2001.pdf> . Accessed November 2001.

—Ismail H. Genc

Emine U. Genc

CAPITAL:

Paris.

MONETARY UNIT:

French Franc (FRF). A franc equals 100 centimes. Coins are in denominations of 1, 2, 5, 10 and 20 francs, and 5, 10, 20 and 50 centimes. Paper currency is in denominations of FRF 50, 100, 200, and 500. In 1999, the European Union (EU), of which France is a member, introduced a new currency, called the euro, to be the common currency among the participating member countries. The euro is scheduled to circulate amongst the members of the European Monetary Union (EMU) by 2002. When this happens, it will be the sole currency in member states, including France. The exchange rate between the euro and franc is fixed at 6.56 francs per euro. Both the franc and euro currently float against all other currencies. The exchange rate for 1 U.S. dollar was 0.98 euros at the euro's inception, but it has lost substantial value since then. There are 100 cents in a euro. Coins will come in denominations of 1, 2, 5, 10, 20, and 50 cents, as well as 1 and 2 euros. Paper currency will be issued in denominations of 5, 10, 20, 50, 100, 200, and 500 euros.

CHIEF EXPORTS:

Machinery and transportation equipment, chemicals, iron and steel products, agricultural products, textiles and clothing.

CHIEF IMPORTS:

Crude oil, machinery and equipment, chemicals, agricultural products.

GROSS DOMESTIC PRODUCT:

US$1.373 trillion (in purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$304.7 billion (f.o.b., 1999). Imports: US$280.8 billion (f.o.b., 1999).