HomeExpressions by MontaigneHow Effective Will France's Post-Pandemic Economic Recovery Plan Be?Institut Montaigne features a platform of Expressions dedicated to debate and current affairs. The platform provides a space for decryption and dialogue to encourage discussion and the emergence of new voices.17/11/2021How Effective Will France's Post-Pandemic Economic Recovery Plan Be?Three questions to Aloïs Kirchner Economy Tech & InnovationPrintShare Aloïs Kirchner Senior Fellow - Industry Covid-19 deeply shook French supply chains, yet the time now seems ripe for recovery. On October 12, 2021 President Macron unveiled the new "France 2030" investment plan at an official event attended by the French government, students and business leaders. With a budget of €34 billion over five years, this plan hopes to boost French industrial activity, while attempting to decarbonize the economy. Aloïs Kirchner, our Senior Fellow in industrial-related issues, covers the main elements in the national recovery plan, its limitations, and its significance months before the 2022 French presidential elections.How does the French government’s "France Relance 2030" plan differ from other recovery plans in the EU? And what are its most important differences from other recovery plans of the last few decades?The France Relance plan is not quite a recovery plan as such. Rather, it is an investment plan based on a long-term vision that goes far beyond the current crisis. It will mean €34 billion being invested in the innovation and technology transfer areas between 2022 and 2027, and it will also bring about the industrialization of new innovations in strategic sectors. This is in addition to the €20 billion already approved in the 2021 Finance Act for France’s Fourth Future Investment Program (PIA 4). If we count the commitments already made in 2021, a total of approximately €7 billion a year remains to be spent over the 2022-2027 period. Compared to previous investments in innovation and industry, this plan stands out in two particular ways:Firstly, due to its unprecedented scale. In recent decades, the largest plan for future investment had resulted from the Juppé-Rocard commission, or the National Loan Commission, set up by Nicolas Sarkozy to respond to the financial crisis. Coined the "Great Loan" of 2010 this plan proposed investing approximately €25 billion over six years. Therefore, the new plan has practically doubled the rhythm of investments. Secondly, it stands out due to its aims. Whereas more than half of the "Great Loan" was used to upgrade the higher education and research systems, the France 2030 plan devotes most of its support to innovation in ten clearly identified sectors and assumes the risks of bringing those innovations to market.Is the implementation of this plan detailed enough, or do we need clarification regarding how it will be governed? Is there a risk as to the efficiency of the plan? As far as the governance aspect of the plan goes, almost everything remains to be seen. Compared to previous investments in innovation and industry, this plan stands out in two particular ways.The government can certainly rely on the actors that have already been implementing other investment programs (the General Secretariat for Investment, the ministries, as well as the National Research Agency, public investment bank Bpifrance and ecological transition agency ADEME). But these organizations are used to managing somewhat generic programs - based on calls for proposals from academic research or from R&D programs of large groups - or to supporting startups in the early stages of their development. There is thus both risk and opportunity. €7 billion a year means that, for the first time, we are investing at the right levels - the DARPA budget, for example, is around €3 billion per year, and the budget of the European Innovation Council (EIC) is limited to €1.5 billion per year. We have to imagine the right organizations and build the right teams in order to be able to invest quickly and efficiently. And if we do it right, there is a unique opportunity to build a French industrial policy that is truly adapted to the 21st century.Recruiting the right specialists will be key here, and this may prove difficult due to the rules surrounding public employment, especially regarding compensation terms. Another obstacle could be ethics rules that prohibit public service employees from working for companies they have helped support. A conceptual framework will have to be devised to ensure transparency and fairness in decision-making while maintaining the attractiveness necessary for projects subject to fierce competition from abroad.If we do it right, there is a unique opportunity to build a French industrial policy that is truly adapted to the 21st century.What political significance does the plan hold for Macron-less than a year before the 2022 presidential election?For an outgoing president, making a commitment for the next six years has a particular political meaning. Somehow, Emmanuel Macron is unveiling his industrial policy agenda here, that of reindustrializing France through innovation. There is some cross-party consensus on these issues, so it is unlikely the program would be canceled if Macron is not re-elected. But its contours could be challenged, which could pose a risk to the rapid startup of these investments. Moreover, this plan does not solve everything for France. As far as industry is concerned, there is still a huge challenge in France in terms of cost competitiveness, on the one hand, and training in science and technology, on the other. This plan will therefore have to be supplemented by other measures if France wants to hold its own and fulfil its role as a credible player in industry and innovation. Copyright: Ludovic MARIN / POOL / AFPPrintSharerelated content 11/08/2021 What’s Driving Britain’s Tech Growth Martin Carkett