France's post-war growth has gone through four phases. This is the conclusion of Research Affiliate Pierre Sicsic and Research Fellow Charles Wyplosz in Discussion Paper No. 1023. The strong growth performance of the 1950s, the first phase, was helped by a phenomenon of catch-up on best foreign practices, and by a positive effect of capital rejuvenation. Yet the best performance was in the period 1958–73, the second phase. The authors argue that the golden years in the 1960s were the result of the introduction of market forces in the wake of goods market integration, itself a response to the importance attached by France to the European Common Market. This in turn made widespread government intervention more difficult in the third phase, the 1970s. The macroeconomic treatment of the oil shock was less than successful, and supply-side measures came to a standstill. The 1980s, the fourth phase, proved no better, even though further liberalization measures were taken, this time in the financial markets, as well as the privatization of a significant part of state-owned industry.

The authors argue that France still appears to be struggling and suffering from lingering powerful rigidities. These now seem to be more concentrated in the utilization of the labour force. Labour markets are highly regulated and highly taxed, and the education system is hampering efficient accumulation of human capital.

French Post-war Growth: From (Indicative) Planning to (Administered) Market
Pierre Sicsic and Charles Wyplosz

Discussion Paper No. 1023, September 1994 (HR)