Trade Surplus
By becoming more open to the rest of the world since 1945 and casting aside its traditional protectionist attitudes, France has remained one of the most important players in the world economy. It is today fully engaged in globalisation and its economy is growing increasingly international, a factor reflected by the substantial growth in trade. France accounts for over 5% of world GDP, making it the country with the fourth largest GDP, behind the USA, Japan and Germany. It is now responsible for 6% of world trade, second only to the USA for services and agricultural exports and the fourth largest exporter of industrial products. France is also one of the leading countries for outward investment and the third largest destination for inward investment.
After recording a deficit for fifteen years, France regained a positive trade balance in 1992, when exports exceeded imports by 31 billion francs (US$5 billion dollars). Since then, the surplus has considerably increased, reaching 122 billion francs (US$20.3 billion) in 1996, 173 billion francs (US$28.8 billion) in 1997 and 124 billion francs (US$17.7 billion) in 1999. This performance appears to be solid and lasting. In 1992 and 1993, the upturn had looked vulnerable as it was linked to a significant fall in imports resulting from a slowdown in the economy. But since then the trade surpluses have continued, despite consistent growth in goods purchased from abroad: the value of imports rose from approximately 1,100 billion francs (US$189.3 billion) in 1993 to 1,720 billion francs (US$245 billion) in 1998. So it is clearly a structural rise in exports, which has put France firmly in the black as regards external trade in goods.
Office and industrial equipment is the sector whose overseas sales have contributed most to France's healthy trade balance, especially in the fields of aircraft construction, office machines and professional electronic equipment and industrial machinery. Food products (in which there has traditionally been a trade surplus), the defence industry, luxury goods, cars and other means of land transport also make a major contribution to the surplus. In the last few years, there have also been comfortable surpluses in pharmaceuticals and personal hygiene products sold in pharmacies. France's largest deficits are in energy products (-80 billion francs [-US$13.3 billion]), minerals, tropical food products and products of its traditional industries (textiles and clothing, leather and hides, shoes, etc.).
If trade in financial and other services (especially tourism) is added to that of trade in goods, France has a substantial balance of payments surplus. There was a positive balance of over 230 billion francs (US$38.3 billion) on France's current account in 1997, once figures for trade in services and investment income had been added to the balance of trade.
Europe, France's Leading Trading Partner
78% of French trade is with the rich OECD countries and 62% with its EU partners (50% with other euro area countries). Europe has accounted for an ever increasing share of France's foreign trade over the last few decades (up almost 20% since the 1960s). So the European enterprise has created a genuinely dynamic market, from which France has benefited, since its balance of trade with EU countries shows a large surplus - in the region of 88 billion francs (US$14.6 billion) in 1997. France's five largest customers are its closest European neighbours: Germany, United Kingdom, Italy, Belgium-Luxembourg and Spain. These countries are also France's largest suppliers, with the exception of Spain, overtaken by the USA. Germany has long been France's leading trading partner, currently accounting for 16.3% of total French foreign trade, ahead of Italy (9.6%) and the UK (9.2%). In 1996 and 1997, France's chronic trade deficit with Germany was reversed. Outside the EU, France has three main trading partners: the USA and Japan, with both of which it has a trade deficit, and Switzerland, with which it has a large trade surplus.
Trade with non-OECD countries accounts for only 20% of France's foreign trade, of which over 4% is with East European countries and Russia. Developing countries in Asia, Africa and Latin America account for 14%, less than with Germany alone. From these countries, France chiefly imports energy products, mineral products and raw materials of agricultural origin, together with cheaply produced consumer goods. Exports to these countries are mainly of plant and machinery, consumer durables and agri-foodstuffs. France's balance of trade with these countries varies fairly widely. It is in deficit with China, Russia (except in 1995 and 1997) and South-East Asia, but is positive with Africa, Latin America and the Middle East (with the exception of certain states in these regions, Saudi Arabia and Nigeria, with which it has a significant and chronic deficit due to its oil imports). Trade is rapidly increasing with East European countries and France's balance of trade with these countries became positive in 1996 and remained so in 1997.
Increasing internationalisation of the French Economy
France's exports account for 21% of its GDP, reflecting a major internationalisation of its trade, which, while the comparable percentage is lower than in Germany (24%) is higher than in Japan (10%) and the USA (9%). The net direct investment flows are another sign of the opening-up of the economy. In 1996, the stock of French direct investment abroad was around 1,000 billion francs (US$166.6 billion) and of direct foreign investment in France nearly 750 billion francs (US$125 billion).
Between 1990 and 1996, France was the third largest investor abroad, behind the USA and the UK. Worldwide, 16,000 French companies employ 2.6 million people. The country with the largest number of French companies is the USA (1,850 companies and 370,000 employees). Next come Germany (1,100 companies and 224,000 employees), the UK (1,200 companies and 221,000 employees) and Spain (1,000 companies and 218,000 employees). In fact, 45% of all employees of French companies outside France work within the EU. Of developing countries, Brazil has by far the largest number of French companies (in seventh place, behind Italy), but in Latin America the French presence is stagnant, as in Africa, where, although there is a long history of French companies setting up subsidiaries, it has hardly increased at all. By contrast, in the fast-growing Asian economies, France has made a major impact, with French companies increasing their workforce by over 60% between 1990 and 1995. Similarly, in Eastern Europe and the former Soviet Union, the number of employees of French companies was up by 57% over the same period.
At the same time, over 10,000 companies in France, of which half are in the Ile-de-France region, which includes Paris, are foreign-owned. On the industrial front, recent investment has mainly been in growth sectors such as telecommunications, electronics, chemicals and pharmaceuticals and, in the commercial and services area, in financial services, hotels and catering and leisure activities. The country with the highest investment in France is the USA, followed by the UK, the Netherlands, Germany and Belgium. Recruitment by foreign-owned companies plays an important role in reducing high levels of unemployment in France. At present, such firms are creating about 20,000 jobs per year, compared with an average of 10,000 during the 1980s.
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Source: Profile of France, French Ministry of Foreign Affairs
