France: What happened in the early 2000s?

Series on the debates of the French presidential campaign – No. 8 This Flash looks at a key topic for debate in France’s presidential campaign. A comparison of France and Germany shows that there was no major structural difference in the early 2000s with regard to the weight of industry, foreign trade, the employment rate, the public debt ratio or living standards. So why is it that France now lags considerably behind Germany in all these variables ? This question should be analysed and debated to guide reforms in France. We explore the following possible explanations: A decline in the quality of France’s education system; Labour costs and the 35-hour work week; Corporate taxation and the weight of welfare benefits; The corporate research, innovation and modernisation effort; The offshoring strategies of large corporations; Underinvestment ( coupled with excessive dividends?). The candidate explanations which seem pertinent and which, moreover, may be interrelated, are, in France relative to Germany: The decline in education system quality and in youth employability; The increase in corporate taxes that have a negative effect on employment; The decline in companies’ innovation and modernisation effort; But not, contrary to what is sometimes claimed: The 35-hour work week or labour costs; The scale of offshoring; Underinvestment.