PARIS “It is Paying the Price for Being a Global City”
In this volume, Paris the capital city of France, which is also the fifth strongest economy of the world, has been examined in detail from a globalisation perspective.
BY FATIH EREN | June 2012
Paris is located at the north of France. With its 12 million population, it is the biggest metropol of the country as well as it is one of the most populated metropols in Europe. Paris is usually remembered as one of the most historic, culturally vital and physically beautiful global city by the world society. It has a significant role in making France as the most attractive country for tourists in the world. In 2009, in total 76,8 million tourists came to France and the fifteen million of these tourists visited Paris (Paris Convention and Visitors Bureau, 2010). The Paris region, which is also called as one of the world’s leading business, culture and tourism destination, accounts for almost a third of France’s gross domestic product (GDP).
France, which is one of the leading playmaker actors of the globalisation process, is naturally a member of the world’s first and strongest global organisations such as G20, NATO, WTO, OECD and UN. It is clear that France benefited very much from the globalisation process as two-sided thanks to its playmaker role. On one hand, France is the fourth country which attracts foreign direct investments in the world at the most. International companies were recently invested in Research & Development (R&D), energy and recycling sectors in the country in general. On the other hand, the number of French companies is at the highest among European-origin companies in the Top 500 Global Companies list (Fortune Magazine, 2011). International French-origin companies (For example Renault, Peugeot, Danone, Carrefour, Axa, Groupama, BNP Paribas, GDF Suez and so on) mainly invested in strategic sectors such as automotive, retailing, insurance, food and cement in other countries.
France has an advantageous geographical position in Europe. In recent decades, using this advantage in a good way, it established a strong transportation and logistical infrastructure and network for itself in the European Union. In this way, it achieved to attract huge foreign capital. In 2010, 70% of all foreign investments in France were made by European countries especially by Germany and UK. France makes both import and export trades mostly with Germany, Italy, Spain, Belgium, UK and USA. Therefore, it can be said that France is getting its economic power mainly from the European Union.
Due to changing world economic conditions, France’s share in the world trade decreased gradually in the last 10 years. 2008 global crisis became a turning point for the country. USA and Europe, which are the main trade partners of France, were affected badly from this crisis so the French economy entered in a harsh rocky road after this year. The number of investment projects with foreign capital decreased about 31% in 2010 when it was compared with the year 2008. This fall showed its direct impact quickly on the country’s unemployment rates. The unemployment rate rose to 9.8% in 2011 where it was 8% in 2007. The unemployment rate among young population was measured over 22% in the country (INSEE, 2011). The French government then took some measures to increase employment and to fire non-financial sector. The cost of these measures was very high so the government went into debt of a high percentage. The government planned an important and large project, which is called ‘the Great Paris Project’, for national economic recovery and development. It decided to borrow 35 billion euros for the realisation of this project. It then borrowed another 8 billion euros in May 2012 for other purposes. The public budget deficit went beyond 150 billion euros in 2012 where it was 60 billion euros in 2004 (France Economy Profile, 2012). The only way to get over this crisis was to attract more foreign direct investments into France according to the government. In this context, the government started a new practice, which is called ‘single window implementation’, to facilitate fiscal and administrative operations for foreign investors in the country. Incentives for FDIs were also increased.