WEF Transformation Maps: 7 Things To Know About France

France’s Transformation Map was co-curated by the World Economic Forum and Institut Montaigne.

France has traditionally played a significant role in global affairs thanks to its political, economic and cultural influence. The question is whether or not France will be able to secure this position in the future. France shares a responsibility in addressing the rise of populism in Europe, and in helping to lead the international battle against climate change. However, in order for the country to assert its position on both a European and international level, the French government must first leverage economic growth and overcome a significant number of domestic challenges. Institut Montaigne examined these crucial issues for the World Economic Forum Annual Meeting.

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Economic Competitiveness

France ranked 22nd out of 137 economies in the World Economic Forum’s Global Competitiveness Index 2017-2018, thanks to the country’s relatively good infrastructure, large and globally integrated market, business sophistication and environment for innovation. However, the country’s weak ratings in the most recent edition for its macroeconomic environment (63rd) and labour market efficiency (56th) are particularly concerning.

France is less competitive than its European neighbours, mostly because of the weight of its labour costs and the relatively high level of its compulsory taxes. The issue of high taxes and labour costs dissuading foreign firms from setting up offices in France is a focus of attention for the French government. 

Nevertheless, France has many competitive assets such as relatively high quality rail, road and air transport infrastructures. France is also becoming an increasingly prominent player in the field of new technologies. Developing the presence of French technology on the international scene is one of President Macron’s priorities, as he aims to strengthen the country’s position in this domain, particularly when it comes to green and health technology, artificial intelligence and the Internet of Things. 

Modernizing France’s Workforce

France has been dealing with structural unemployment for over three decades. In addition,  France’s ranking in the OECD’s Programme for International Student Assessment (PISA) dropped from 14th in 2000 to 26th as of 2015, when it was outperformed by fast-improving education systems elsewhere, particularly in Asia.

France is the OECD country where students’ socio-economic status has the greatest effect on their academic performance. Addressing the French education system’s weaknesses, and introducing policies to minimize the potentially negative effects of students’ social environment is critical for the country’s social cohesion.

France’s historically rigid labour markets have been flagged as among the most problematic factors preventing business to prosper in the country. Worker protections are attached to their status, rather than  to the individuals themselves, which stiffens the system and increases the inequality between the insiders who enjoy the protections of an open-ended contract, and the others.

The French government has implemented major reforms to overhaul and simplify the labour code, thus aiming to give more flexibility to companies. Another significant challenge for France is the need to help workers adjust to the shifting demands of the economy throughout their careers. In order to address the potential gap between its education system and the modern workplace, France needs to reform its curricula to better prepare workers for future jobs in an innovation-driven economy.

Social Cohesion

According to the Directorate for Research, Studies, Evaluation and Statistics, only 25% of French people take the country’s social cohesion to be strong, while the vast majority of immigrants’ children in the country have obtained French citizenship and demonstrate a strong sense of national identity. Yet, nearly half of the immigrants of French nationality and one-quarter of the immigrants’ children feel like they are not considered as French.

As a result of growing levels of wealth and income inequality in France, globalization is increasingly perceived as only benefiting a minority, which raises concerns about fair distribution. Growing economic inequality and the limited possibilities for upward social mobility are intensifying community tensions, and undermining the country’s social cohesion.

Combating Climate Change 

France is committed to fostering international cooperation in order to achieve the widely-shared goal of limiting global warming to less than 2°C. The country has become a leader in promoting climate-friendly policies. Indeed, the Paris climate change conference held in 2015 - also known as COP21 - had countries adopt the first-ever universal, legally binding global climate deal, which was seen as a significant French diplomatic success.

The French economy is not particularly carbon-intensive, and total energy-related carbon dioxide emissions and per capita emissions in France are relatively low compared with other G20 countries. However, in order to achieve its chosen 2020 objectives, established as part of the Paris Agreement, France must commit to truly implementing its climate policy, in order to significantly reduce its consumption of fossil fuels, as well as its energy use per capita.

France is the world’s most nuclear-reliant country : 75% of the electricity produced in the country comes from nuclear capacities. Improving energy efficiency and further developing its renewable energy sector will be crucial to reduce France’s dependence on nuclear power.

Concerned about higher carbon emissions and the risk of endangering the power supply’s security, the government extended its deadline for scaling down the share of nuclear energy in the power mix to 50% from 2025 to sometime between 2030 and 2035. 

Domestic and Foreign Security

The election of President Emmanuel Macron has strengthened France’s global engagement and influence, propelling the country to the top of the Soft Power 30 index for 2017. France is playing a leading role in fostering international cooperation and integration, defending democratic values abroad, and campaigning for a stronger, more united Europe with a common defense force and budget.

Security issues are among the primary concerns of French citizens. Since 2015, France has been the victim of a series of terrorist attacks. As a result, national security and the fight against terrorism are at the heart of both domestic and foreign policies. 

President Macron aims to comply with NATO's target of spending 2% of national output on defense by 2025. According to Institut Montaigne, the country’s current priorities regarding security and defense should be :

• restoring military capability ; 
• modernizing and replacing military equipment ;
• strengthening participation in nuclear deterrence ;
• and increasing investment in research.

European Reforms

The Franco-German alliance has historically been the engine driving the European project forward, and pushing necessary reforms to address challenges confronting EU institutions and the Eurozone. In a speech delivered in September 2017 at the Sorbonne, President Macron presented plans for a renewed EU that embraces globalization and innovation, promotes European interests and values, and protects Europeans from new security threats.

Institut Montaigne promotes proposals to build a stronger EU, which can be summarized in the six following headings :

• making the eurozone work thanks to a deeper financial integration and a common eurozone budget ;
• improving the EU economy ;
• strengthening European security ;
• strengthening European foreign policy ;
• trying to come to grips with migration ;
• making the existing EU system work better

Crisis of Representation

Like many other European countries, France has witnessed a surge of populism. During the first round of the 2017 presidential election, left-wing candidate Jean-Luc Mélenchon and his party La France Insoumise won 20% of the vote, while the far right candidate Marine Le Pen and her party the Front National won 21%. This reflected a shift of voter interest away from traditional parties, which were thus shaken to their core. 

France is suffering from a general decline of trust in institutions. According to the Fondation pour l’innovation politique (Fondapol), 89% of French citizens do not trust political parties (compared to 82% in Europe), and 71% do not trust the government (versus 65% in Europe).

According to a study conducted by the global market research firm Ipsos, 29% of the 18 to 24 years old, and 28% of the 25 to 35 years old in France did not show up to vote during the 2017 presidential election. However, the centrist political party La République En Marche is strongly represented by deputies coming from civil society at the National Assembly. Meanwhile, the digitization of institutions and of the public debate is empowering citizens and enabling them to contribute to their own democracy, by organizing civic forums and selecting members of neighbourhood councils, for example.