Restructuring the French Economy: Government and the Rise of Market Competition since World War II

Restructuring the French Economy: Government and the Rise of Market Competition since World War II

Restructuring the French Economy: Government and the Rise of Market Competition since World War II

Restructuring the French Economy: Government and the Rise of Market Competition since World War II

Synopsis

At the end of World War II, experts on both sides of the Atlantic believed that France was doomed to economic stagnation. French culture and institutions, they argued, inhibited the changes in economic structure that sustained growth would require. But in spite of these predictions and the occasional volatility of the world economy, the French economy grew rapidly. Only the Japanese, of the major economies, has grown faster, and by 1975 the French standard of living matched that of West Germany. Restructuring the French Economy looks at the four decades of the structural changes that fostered growth and explores explanations of why such changes occurred. Drawing on many and diverse primary materials, including government statistics, judicial decisions, and professional memoirs, Adams examines three different explanations of France's postwar economic success. The first downplays the extent of structural change during the surge of growth. The second emphasizes the importance of government policies to compensate for inadequate private initiative. The third suggests that European economic integration and French decolonization created enough market competition to push the private sector into its own restructuring. Adams stresses that if government initiatives worked well, they did so in an environment of strong market competition; if competition seemed to work wonders, it occurred only as a result of government actions. He also devotes considerable attention to the implications of his findings for U. S. policy concerning European protectionism and the health and growth of American industries.

Excerpt

Twenty years ago Richard Caves organized for the Brookings Institution a major collection of essays on the British economy. Since then Brookings has sponsored economic profiles of Australia, Canada, Japan, and Sweden, among others, as well as an overview of the economy of Western Europe as a whole. These investigations differ markedly in scope and method, but they share the belief that Americans should study the structure and function of other economies--partly to understand foreign behavior, partly to inform American debates on economic policy. This study of the postwar French economy by William James Adams falls squarely in that tradition.

At the end of World War ii, few people predicted the smooth and rapid growth the French economy would experience in the next quarter century. Rigid government regulation of resources, restrictive business practices, and traditional French resistance to change seemed to preclude any dramatic transformation of economic life. Yet by 1985 the gross domestic product had quadrupled and per capita income had doubled. To explain these developments, Adams examines changes in economic conditions, the extent of government aid to industry, and industry responses to the challenges of foreign competition and French membership in the European Communities. Providing information from many sources, the author argues his conclusions while challenging readers to develop their own interpretations of the French experience and its implications for the U.S. economy in the 1990s.

William James Adams is professor of economics at the University of Michigan and affiliate of the Foreign Policy Studies program at Brookings. His research was supported by grants from the Ford Foundation, the German Marshall Fund of the United States, and the John D. and Catherine T. MacArthur Foundation. Also contrib-

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