France’s economy combines extensive private enterprise (nearly 2.5 million companies registered) with substantial (though declining) government intervention (see dirigisme). The government retains considerable influence over key segments of infrastructure sectors, with majority ownership of railway, electricity, aircraft, and telecommunication firms. It has been gradually relaxing its control over these sectors since the early 1990s. The government is slowly selling off holdings in France Télécom, Air France, as well as the insurance, banking, and defence industries.

A member of the G8 group of leading industrialised countries, it ranked as the sixth largest economy in the world in 2005, behind the United States, Japan, Germany, The People’s Republic of China and the United Kingdom. France joined 11 other EU members to launch the Euro on January 1, 1999, with euro coins and banknotes completely replacing the French franc in early 2002.

According to the OECD, in 2004 France was the world’s fifth-largest exporter and the fourth-largest importer of manufactured goods. In 2003, France was the 2nd-largest recipient of foreign direct investment among OECD countries at $47 billion, ranking behind Luxembourg (where foreign direct investment was essentially monetary transfers to banks located in that country) but above the United States ($39.9 billion), the United Kingdom ($14.6 billion), Germany ($12.9 billion), or Japan ($6.3 billion). In the same year, French companies invested $57.3 billion outside of France, ranking France as the second most important outward direct investor in the OECD, behind the United States ($173.8 billion), and ahead of the United Kingdom ($55.3 billion), Japan ($28.8 billion) and Germany ($2.6 billion).

In the 2005 edition of OECD in Figures, the OECD also noted that France leads the G7 countries in terms of productivity (measured as GDP per hour worked). In 2004, the GDP per hour worked in France was $47.7, ranking France above the United States ($46.3), Germany ($42.1), the United Kingdom ($39.6), or Japan ($32.5).

La Défense, Paris is the heart of the French economy.Despite figures showing a higher productivity per hour worked than in the US, France’s GDP per capita is significantly lower than the US GDP per capita, being in fact comparable to the GDP per capita of the other European countries, which is on average 30% below the US level. The reason for this is that a much smaller percentage of the French population is working compared to the US, which lowers the GDP per capita of France, despite its higher productivity. In fact, France has one of the lowest percentages of its population aged 15-64 years at work among the OECD countries. In 2004, 68.8% of the French population aged 15-64 years was in employment, compared to 80.0% in Japan, 78.9% in the UK, 77.2% in the US, and 71.0% in Germany. This phenomenon is the result of almost thirty years of massive unemployment in France, which has led to three consequences reducing the size of the working population: about 9% of the active population is without a job; students delay as long as possible their entry into labour market; and finally, the French government gives various incentives to workers to retire in their early 50s, though these are now receding.

As many economists have stressed repeatedly over the years, the main issue with the French economy is not an issue of productivity. In their opinion, it is an issue of structural reforms, in order to increase the size of the working population in the overall population. Liberal and Keynesian economists have different answers to that issue. Lower working hours and the reluctance to reform the labour market are mentioned as weak spots of the French economy in the view of the right and lack of government policies fostering social justice by the left. Recent government attempts at adjusting the youth labour market, to combat unemployment, have met with fierce resistance.

With over 75 million foreign tourists in 2003, France is ranked as the first tourist destination in the world, ahead of Spain (52.5 million) and the United States (40.4 million). It features cities of high cultural interest (Paris being the foremost), beaches and seaside resorts, ski resorts, and rural regions that many enjoy for their beauty and tranquillity (green tourism). Aside of casual tourism France attracts a lot of religious pilgrims to Lourdes, a town the Hautes-Pyrénées département, that hosts a few million tourists a year.

France has an important aerospace industry led by the European consortium Airbus and is the only European power (excluding Russia) to have its own national spaceport (Centre Spatial Guyanais). France is also the most energy independent Western country due to heavy investment in nuclear power, which also makes France the smallest producer of carbon dioxide among the seven most industrialised countries in the world. As a result of large investment in nuclear technology, nearly nine tenths of the energy needs of the country are met by nuclear power plants (86.9% in 2005).

Large tracts of fertile land, the application of modern technology, and EU subsidies have combined to make France the leading agricultural producer and exporter in Europe. Wheat, poultry, dairy, beef, and pork, as well as an internationally recognised foodstuff and wine industry are primary French agricultural exports. EU agriculture subsidies to France total almost $14 billion.

Since the end of the Second World War the government made efforts to integrate more and more with Germany, both economically and politically. Today the two countries form what is often referred to as the “core” countries in favour of greater integration of the European Union.