Introduction
The French socio-economic model’s specificity is the state’s traditional high role in the economy. After the Second World War, indicative economic planning and a comprehensive social protection system were created, and by the mid-1980s, as a result of three waves of nationalization in 1936, 1945, and 1982 the largest nationalized sector of the economy among developed countries was formed (Magalhães et al., 2019). Since the mid-1980s, there has been a decrease in the state’s role in the economy: it lost its dominant position in the industry and the banking sector (Rezvani Ghomi et al., 2021). Public sector enterprises currently employ about 5% of the total employees (Serfati, 2021). Nevertheless, the state retains a certain degree of control over large national companies and continues to influence them indirectly, primarily through financial assistance to them. At the same time, France is characterized by a traditionally high level of support for large companies and banks, mainly because the country’s policy is traditionally aimed at creating “national champions” and maintaining national control over them (Somai, 2019). In addition, the state is pursuing an active policy of stimulating small businesses, which is regional in nature.
An analysis of the economic mechanism of France using the indicators of the Global Competitiveness report of the World Economic Forum shows the following. On the one hand, against the background of countries of a similar level of development, France is distinguished by relatively high infrastructure and innovation potential sub-indices, as well as market size. On the other hand, its weaknesses include relatively low indicators of macroeconomic stability, higher education and retraining, the efficiency of product markets, and the labor market (Hosli & Kantorowicz, 2022). For several years, France has been characterized by modest GDP growth rates, a chronic state budget deficit, and an increase in public debt. Widespread unemployment remains a serious social problem, at 10.2% of the economically active population, one of the highest rates in the EU, with a persistently high unemployment rate of 24.3% among those under 25 years of age (Angeletti, 2021). France is included in the group of countries with a very high level of human development, ranking 20th in the world according to the UNDP Human Development Report (Bridge et al., 2020). Among countries of a similar level of development, it stands out for its high life expectancy at birth and relatively low average years of schooling and GNI per capita.
In France, as in the EU, there is an increase in the proportion of people over 65 years of age in the total population. This fact leads to a deterioration in the ratio of workers to pensioners and creates specific difficulties in the context of the social policy crisis in the country (Gossner et al., 2020, Or & Penneau, 2018). Restrictive labor laws, mass unemployment, poor access to finance, unstable tax policy, inefficient government bureaucracy, political and macroeconomic instability, and a shortage of skilled labor remain critical problems for France’s economic development (Danaj et al., 2018, Facchini & Seghezza, 2018, Garbinti et al., 2018, Shahbaz et al., 2018). Consequently, this leads to a significant problem of poverty among the population, which is generally lower than in developing countries or third world countries, but against the backdrop of global crises, it requires intervention and a comprehensive solution.
Literature Review
To assess such a phenomenon as poverty with the specifics of the selected country, one should turn to macroeconomic indicators, and their dynamics, in order to find a possible correlation with the poverty indicator. In addition, the pitfalls in this study are precisely the specifics of the country, which is one of the leaders among European economies. The review methodology will review various news and press releases from government officials or structures to search for such features. In this section, work is underway to collect information and a critical assessment of poverty compared with other countries of a similar level of development and the whole world; the specifics will be given in the next chapter – Analysis & Discussion.
Poverty as a phenomenon is characteristic of any economic system in any period of its development along with the development of humanity. This phenomenon is simultaneously a macroeconomic and humanitarian problem that has long gone beyond national economies: individual countries determine the conditions under which other states interact economically and politically (Atkinson, 2019). Since any economy develops cyclically, poverty problems are exacerbated during recessions and economic crises (Zhou & Liu, 2022). It is impossible to overcome this feature, and this conclusion comes from the very nature of humanity and a market economy based on competition and the survival of the most vital subjects (Chien et al., 2022, Patel et al., 2019). However, today the resource, and motivational factors, often setting the direction of the state socio-economic policy, play a decisive role.
Poverty should be studied from the standpoint of a systematic approach since the nature of this phenomenon is social, political, and psychological. Economic poverty is only a consequence resulting of internal and external economic conditions sometimes exacerbated or constrained by government policies (De Bruijn & Antonides, 2021, Wright et al., 2020). Different economies define the problem of poverty in different ways and interpret and evaluate the processes of impoverishment, which are of a systemic nature (Timilsina et al., 2020). France is a leading European country with a well-developed and balanced economy, a well-to-do population, and wealthy political traditions. France’s GDP grew by 7% in 2021, the highest since 1970 (Galeazzi et al., 2021). The French economy has thus begun to recover rapidly from an 8% contraction in 2020 (Galeazzi et al., 2021). However, according to experts, 2021 was not marked by the total return of the French economy to everyday life: after all, in the first six months, there were still significant sanitary restrictions due to the epidemiological situation (Pullano et al., 2021). Household consumption returned to pre-crisis levels only at the end of the year, and the positive dynamics were due to solid growth in producing goods and services. Made its own, albeit not so significant, contribution to the rise and foreign trade. However, in general, exports and imports in 2021 remained well below their pre-crisis levels.
The dynamics of GDP over the past ten years are shown in Figure 1. Figure 2 shows the change in the poverty rate until 2018 – there are no more recent data at the moment. These graphs have a natural and logical correlation: poverty was significantly reduced with a noticeable increase in GDP. The uniqueness of 2020 with a pandemic with a similar ratio should have led to a commensurate increase in people with meager earnings (Bassanini et al., 2020). However, the most significant increase was observed in the group of people at greater risk of poverty than in the group itself. A decrease in GDP can signify an economic downturn: people buy less, companies produce less, and business and government revenues decline. Given the closed borders, imports and exports suffer, and in the absence of proper support from the state, the approach to poverty began to gain the corresponding momentum.
The problems caused by the spread of the coronavirus revealed not only the unpreparedness of companies for severe crises but also the specific features of the country. Not all companies kept jobs, and not every person had significant savings for a comfortable existence without work (Girault et al., 2021). State structures have suffered due to the falling budget, due to the reduction in company profits, and, accordingly, taxes. The authorities’ response to the pandemic was belated; many European countries made this mistake (Lefrant et al., 2020, Yan et al., 2020). However, France provided economic interventions to stimulate markets and companies, employment-related measures, concessional lending, and support from the Bank of France (Or et al., 2022). To varying degrees, these factors aim to maintain the GDP level, which has an inverse linear correlation with poverty, as shown in Figures 1 and 2.
The context for this situation is formed by many complex factors. It is not only the improvement in the epidemiological situation that has a positive effect but also the country’s responsibility for hosting the upcoming Olympics (Attali & Le Yondre, 2022). Although the pandemic was contained, for the time being, the geopolitical situation in the east of Europe has worsened, which is reflected in the consumption of the country’s resources (Abbassi et al., 2022). However, macroeconomic mechanisms are not limited to the GDP indicator.
The provision of services mainly characterizes the French economy: the tertiary sector accounts for 76.5% of the active population. Only 2.9% now work in agriculture, fisheries, livestock, and 20.6% in industrial enterprises (McMullin, 2019). Since jobs are distributed relatively accordingly in these sectors, the specifics of the pandemic unsettle the service sector, which is in the tertiary sector. Like in other countries, unemployment rose by 2% in France, reaching over nine percent, as seen in Figure 3 (Ahmad et al., 2021). The recovery to date has been intermittent, but most of the way back is almost done.
Searching for an appropriate correlation between the graphs in Figures 2 and 3 yields relatively the same results as GDP estimation. There were notable booms and busts in 2012-2014 and 2015-2018, but in the latter case, the 2018 crisis impacted jobs less than the long plateau in 2013-2014. Accordingly, there is a correlation, but it is much more insignificant than the GDP indicator. Since unemployment is due to the entire course of the state’s socio-economic development and society, it is a constant element, a product, including the development of production. In a certain sense, we can say that it is the product that generates unemployment, which acts as a macroeconomic phenomenon that determines the level and pace of the country’s economic development, and it is at this moment that Figure 1 shows GDP growth after a slight fall. At the same time, France is increasing spending on research and development, reaching sixth place in the world regarding the number of registered patents (Sokhanvar & Çiftçioğlu, 2022). The country fixed this position until 2020, then fell because of pandemic.
Among the measures proposed by Emmanuel Macron in developing French artificial intelligence technologies is giving startups working in this field access to data collected by French government agencies, such as the health database. In addition, the French leader is committed to more active interaction between public research centers and private companies (Cole, 2020). Jobs are needed to retain specialists in the country: this decision was made to cooperate with IT corporations Samsung, Fujitsu, and Google, which at the end of March 2018, agreed to build research centers in France (Fischer, 2022). However, the global cost share is much higher, driven by giants such as Japan, the US, and China.
In 2019, France imposed an additional tax on the IT industry for 3% of its income to replenish the budget, increasing the threshold for entry and deployment of new industries and research centers (Filonova et al., 2020). In the short term, this factor increases injections into the budget, but in the long term, it causes new extremum points both in unemployment and the need to increase imports. To mitigate the impact, in early June 2020, France set up a fund to protect domestic technology companies that could become the “prey” of foreign buyers (Omodero et al., 2022). However, against the background of the pandemic, this innovation turned out to be insignificant, and its fruits can be assessed only after a few years.
The key indicators of France’s imports and exports are sufficiently diversified, which creates a solid and sustainable basis for development, which is demonstrated by a relatively adequate response to global crises compared to other developed countries in Europe. Thus, post-pandemic support programs included the lowest costs in the country compared to other developed EU countries (Yan et al., 2020). On the one hand, this fact demonstrates the coherence and targeted policy of support programs due to the diversification of public spending. On the other hand, the country was forced to raise the key rate in 2022 to 0.5%, breaking the multi-year low of 0%, as shown in Figure 4 as of 2020 (Ahmad et al., 2021). For comparison, due to significant interventions in the currency and the economy, other countries could maintain more favorable conditions for banks and businesses without resorting to this tool.
France’s main exports are machinery and transport equipment, aerospace equipment, and plastics, while its main imports are machinery, vehicles, and crude oil. In addition, France is the most visited country in the world, which makes tourism an important economic sector. In addition, this country is one of the largest energy suppliers in Europe since it has many nuclear power plants on its territory. However, recently, due to global warming, the operation of power plants has become impossible, which, against the background of the aggravated geopolitical situation, has created a difficult situation within the state. At the same time, due to unemployment, preparations for the 2024 Olympics have significantly slowed down, which is already worrying the relevant commissions (Attali & Le Yondre, 2022). It is worth noting that the problem of global warming is not only the cause of the lack of energy and labor.
Agricultural products of France are famous, as a rule, for alcoholic beverages, cheeses, and other elite products. However, providing for the country’s vast population also requires the availability of budgetary opportunities for subsistence. Global warming is gradually destroying crops, which again creates a dangerous trend against the backdrop of an aggravated geopolitical situation. The parties to the conflict, represented by Russia and Ukraine, are the largest suppliers of fertilizers and grains in the world; Europe, due to its geographical accessibility, consumes a significant part of the exports of these countries, and France is no exception (Droz et al., 2021). Although hunger does not threaten developed countries shortly, poverty can contribute to its development locally, which requires attention to this problem.
Analysis & Discussion
Issues of demography, employment, and unemployment are directly related to poverty; poverty has the most direct impact on the health of the population, the level of education and culture of citizens, their upbringing, socialization, and morality; it is one of the brakes on the development of science. Projecting this phenomenon onto the correlations, one can notice a logical connection between the country’s success in producing its own products and services, unemployment, and the need for imports and exports. However, macroeconomic unemployment indicators, for example, do not have a clear correlation with the number of poor in France. Here, complex effects from the decline in GDP prevail, which lead to the need to import specific resources, which in turn contributes to the development of new jobs, albeit smaller.
However, poverty in developed countries is, by definition, below the global median and depends to a greater extent on social factors, often of external nature. The problem of refugees to Europe significantly increases the country’s actual population, even if the dynamics of citizenship remain at the same level (De Bruijn & Antonides, 2021). Refugees contribute to poverty by bringing it into the social circles of various strata, increasing such indicators as crime, and bad habits, while not contributing to the development of the economy due to the lack of true purchasing power. The burden on social and state institutions is growing disproportionately, and there is a need to create new jobs, quotas, and provisions. Crises that are global in nature and have become the prevailing trend in the modern world also require similar interventions (Yan et al., 2020). In turn, these measures weaken the budget and potential for the country’s development, which requires the search for additional sources of income at the national level, for example, an increase in the critical rate.
The diversification of imports of crucial resources is already laid down as an advantage for France in adapting to global challenges, despite the dependence due to the absence of many vital industries on the territory of the state. Relatively recently, the country has contributed to the development of important areas of scientific and technological activity (Cole, 2020, Fischer, 2022). All these activities create the foundation for the generation of long-term assets in the new reality. The speed of reaching the pre-pandemic level of macroeconomic indicators demonstrates the flexibility of the existing system of GDP components. The unemployment graph also shows a high degree of adaptation to constantly changing conditions and timely responses, except for the reaction in the form of coronavirus restrictions.
In fact, the positive trend of improving macroeconomic indicators relative to poverty has the effect of recovering from a deep crisis, and the example of France is not specified here. However, this rise and the mechanisms used can become a catalyst for opportunities in the long term, despite the downward trends in the world. Refugees can become a cheap labor force to boost industrial activity in the country. The tourism potential against the backdrop of preparations for the Olympics promises short-term economic injections into the budget, which, against the backdrop of raising the key rate and tax indicators, may return to positive dynamics in the long run. Most importantly, use the potential of new opportunities to contribute to long-term planning to eradicate the causes and consequences of poverty. Consistency in the activities of state and legislative institutions in choosing the suitable vector plays a key role here.
Conclusion
As a result, poverty becomes another catalyst and a potential threat to the integrity of the state, primarily at the macroeconomic level. A direct fight against it is necessary, despite the importance of the ongoing responses to global challenges. The acceptance of refugees and the fight against the aggressor are dictated, among other things, by reputational and moral motives, but they should also become a roadmap in the fight against poverty. In this situation, it is necessary to switch to long-term and international development plans, for example, for greening the consumption of energy resources. This approach threatens to worsen almost all macroeconomic indicators in the short term due to the need for new interventions here and now. However, favorable conditions for such methods have not yet arrived due to constant global challenges. However, France has sufficient reserve and diversification of resources to achieve such goals, which will require a more responsible policy both to treat the symptoms of poverty – increasing crime and deteriorating health of the population; and to create a course to reduce it due to the size of the market and innovative potential in the country, background of other states.
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