A modern French economy leads Europe into the 1980s

By , Business and financial editor of The Christian Science Monitor

Here's a quiz to see how far behind the times you are in your economic knowledge of France: Which country has the higher per capita real gross national product, that is, the higher output of goods and services per individual -- France or West Germany?

France. A recent calculation by the Organization of Economic Cooperation and Development puts French "real" per capita GNP in 1976 at 78.5 percent of that of the United States, while that of Germany was 76 percent.

The calculation, an extrapolation of some 1974 figures, might well be challenged by some economists. But there is no doubt that French living standards are catching up with and may even have surpassed those of West Germany. French prosperity is visible to the eye here in the multitude of cars, the high quality of clothing, the richness of retail window displays, and the vast improvement in housing standards. In material goods, France has been "Europeanized" -- the goods found here are often the same seen in the shops of Germany, the Netherlands, Belgium, and Britain. The European Community's common market has become a solid reality. Which country, France or West Germany, has grown the faster over the past two decades?

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France, by far. Indeed, among the industrial countries, only Japan has grown faster economically since 1955 than France. Once it rid itself of its colonial burdens (Algeria became independent in 1959), the French economy took off like the Ariane, the sophisticated French-designed rocket that was launched for the first time last month.

Between 1967 and 1973, French real GNP grew at an average rate of 5.7 percent a year, compared with 4.5 percent for Germany and 2.9 percent for the United Kingdom. From 1974 to 1978, the comparative figures were 2.8 percent for France , 1.9 percent for Germany, and 0.8 percent for the United Kingdom. Growth has slowed for all these nations in this recessionary period. But the margin of French superiority over West Germany increased.

Edmund Stillman, director of Hudson Research Europe Ltd., comments: "From an economy based on inefficient agriculture and small-scale family enterprise, France has moved forward in the . . . years since the Second World War to join the ranks of the most advanced industrial nations. Yet, while acclaiming the West German, the Japanese, the Italian, the Brazilian, and even the quite fictitious Iranian 'economic miracles,' the world has allowed the sustained and dynamic character of French growth over more than two decades to pass virtually unremarked." Which nation is the world's fourth-largest exporter?

Japan. France used to be fourth, but last year its exports exceeded in value those of Japan, to come third after West German and US exports. Moreover, those exports are not primarily perfumes and cheeses, but sophisticated machines, transport equipment, armaments, chemicals, farm equipment, and so on. Which country produces more passenger automobiles, France or West Germany?

Some years West Germany, other years, France. In the first half of 1979, West Germany was running ahead, making about 336,000 cars per month, while France manufactured around 330,000 a month. german cars on average tend to be higher-priced than French cars.

The quiz could go on. Few Americans are fully aware of the enormous economic progress made by France. "I don't know of any country of which there is more misinformation and more prejudice," says Mr. Stillman, an economist who astonished even the French with a bullish economic report on France published in 1974.

One reason may be the French themselves. Many have a habit of being pessimistic or verbally negative. Although often charming, they are not usually the happy-go- lucky people imagined by foreigners.

Say to a Frenchman, "It's a nice day," and he may well reply, "Let's hope it lasts." Or ask: "You are doing well?" and the response may follow, "I'm defending myself." Optimistic statements are sometimes regarded as a sign of naivete. Prime Minister Raymond Barre constantly refers to the economic "crisis."

Yet there is much in the French economy of a positive character. Productivity has been increasing 3 or 4 percent a year -- far more than in the United States. The number of working days lost in strikes per 100 employees in 1978 was far less than in Canada, the US, or the United Kingdom, although more than in West Germany. In other words, the labor climate is not seriously agitated.

Measured in cereal yields per hectare, French agriculture outclasses Canadian agriculture by more than 2 to 1, and sometimes yields are even better than what American farmers achieve. Farmers make up an everdecreasing proportion of the total French population as their efficiency increases. They dropped from 24.6 percent of the workforce in 1957 to 9 percent in 1977 and are even a smaller percentage today.

French industrial corporations have grown internally or through mergers to join the giant multinationals in the world, companies such as Compagnie Francaise des Petroles, Renault, Michelin, Dassault, Rhone-Poulenc, St. Gobain, and Pechiney. These companies have been investing in new plant and equipment a little more heavily than their German counterparts, and they put a lot of money into research and development, but their balance sheets are generally weaker than those of similar firms in the US, UK, or West Germany.

Of course, France does have problems. Inflation has run much higher than in West Germany, France's largest trading partner. The approximately 11 percent rise in consumer prices in 1979, however, was less than the 13 percent of the United States.

"France is incapable of living without high inflation, institutionally and psychologically," maintains Otto von Fieandt, economic adviser to Eurofinance, an economic research group established by four major European banks. French inflation, he says, is not so much pulled up by excessive demand or pushed ahead by rising costs as it is shoved forward by "indexation."

Much of the French economy is indexed to the inflation rate. Trade union agreements require wage boosts in line with price increases, plus something extra. Rents are indexed. So are pensions. Government bodies, such as the postal-telephone system and railroads, raise prices periodically to keep up with rising prices.

"Nothing is indexed downward," Mr. von Fieandt notes. "This is really a curse."

Another difficulty for France is the rapid growth of its working population. This has overcome the tragic losses of two world wars and subsequent colonial wars. But it has made it more difficult for the economy to provide enough new jobs for school graduates. Unemployment has remained high, at more than 6 percent of the labor force.

Some industry remains old-fashioned and poorly managed. France probably has too many small retial shops for an efficient distribution of goods. The high level of government interference in the private economy may sometimes be detrimental, though the present government is trying to tone it down. France still has a relatively unequal distribution of income, although a highly developed social welfare system tempers the split between the rich and the poor.

Nonetheless, France has come close to, if not actually attaining, its long-sought goal of being a great economic power.

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