Economy of France - Rise and Decline of Dirigisme

Rise and Decline of Dirigisme

France embarked on an ambitious and very successful programme of modernization under state coordination. This programme of dirigisme, mostly implemented by governments between 1944 and 1983, involved the state control of certain industries such as transportation, energy and telecommunications as well as various incentives for private corporations to merge or engage in certain projects.

The 1981 election of president François Mitterrand saw a short-lived increase in governmental control of the economy, nationalising many industries and private banks. This form of increased dirigisme, became criticised as early as 1982. By 1983, the government decided to renounce dirigisme and start an era of rigueur ("rigour") or corporatization. As a result the government largely retreated from economic intervention; dirigisme has now essentially receded, though some of its traits remain. The French economy grew and changed under government direction and planning much more than in other European countries.

Despite being a widely liberalised economy, the government continues to play a significant role in the economy: government spending, at 53% of GDP in 2001, is the highest in the G-7. Labour conditions and wages are highly regulated. The government continues to own shares in corporations in a range of sectors, including banking, energy production and distribution, automobiles, transportation, and telecommunications. These differ from countries such as the US or UK where most of these companies have been privatized.