By Serge CATOIRE and Grégoire POSTEL-VINAY
Engineers from the Corps des Mines
By Grégoire POSTEL-VINAY
Engineer from the Corps des Mines
The state has a part in organizing the system of production in all major countries, this role having evolved considerably since WW II along with the objectives set for competitiveness and the public structures for reaching them. The General Direction of Enterprises (DGE) is now a major figure among these structures. French industrial policy has had to address the accrued opening of the national economy, the restructuring of whole sections of industry in the country and the evolution of its field of activity owing to increased pressure from EU competition and trade policies. The first two sections of this article present the constants (development and regulatory tools, the role of technology), the objectives pursued (with regard to sovereignty, the economy and society) and the principal changes in administrative structures for reaching goals. The third part describes the main current issues (in particular, the three transitions: digital technology; energy and the climate; and health and demography) while the fourth focuses on a few responses to them.
By Rémi LALLEMENT, Vincent AUSSILLOUX and Philippe FROCRAIN
France Stratégie
Over the past decade, the resurgence of industrial policy has been driven by the rise of a series of global systemic issues. The Covid-19 crisis has reinforced the need to reorient the industrial base, including its interactions with the service sector. In France, where deindustrialization has been particularly salient, these necessary changes are based on a double logic. On the one hand, they must strengthen the production system by improving environmental sustainability, the competitiveness of companies and the attractiveness of the country as a business location, in particular via cross-cutting policy tools in terms of taxation, training, venture capital and public research. On the other hand, the productive specialization has to evolve through targeted measures. In this respect, focusing on radical innovation and disruptive technologies will probably require more risky bets, when the stakes justify it.
By Sylvaine BRUNEAU
President of the Germany Committee of advisors on France’s foreign trade
France and Germany have adopted a ‟2030 industrial strategy” oriented around three axes. This policy calls for both countries to undertake major initiatives in all sectors of the economy in order to see to the international competitiveness of their industries. However the economic structures and sociocultural environment in each of these lands lead to the adoption of different measures based on the country’s advantages and disadvantages. These differences should be seen as typical of the complementarity between these two countries, which form a solid basis for Europe’s development.
By Alain CADIX
Member of the Academy of Technologies
France has to solve two related problems: make its industry competitive and improve the skills and qualifications of its labor force. The three fundamental levers for firms to obtain a competitive advantage (the OHM Act) are: human capital, organization and management. Skills in technology, a major component of human capital, are unstable, since the diffusion of key technologies, not to mention their hybridization, is unpredictable. New skills and qualifications are required. The quality of the organization and management contributes to this. In this context, policies centered on qualifications, at both the company and society levels, are decisive. The other levers are the quality of organization and management. Industry will make a strong comeback only if skills and qualifications are adapted to this new context.
By Valérie MIGNON
Paris-Nanterre University, EconomiX-CNRS et CEPII
This paper explains why French academic research is losing ground on the international scientific scene. After a general overview of the French research stage, it focuses on the specific case of the French university system. We point out that the financial constraints of universities, the lack of recurrent funding for laboratories, the scarcity of human resources, the cumbersomeness and multiplicity of administrative tasks, the low attractiveness of salaries and careers in academia, but also the obstacles to partnerships between public and private research constitute challenges that must be overcome if France is to regain a leading position in research at the world level.
By Jean-Paul TRAN THIET
Attorney, the Paris Bar
Industrial and competition policies are often perceived as an oxymoron, particularly at the level of the European Union. The following article does not reject EU competition policy, which contributed to the integration of the member States’ economies, but is questioning certain rules imposed by Brussels because they are impeding the implementation of a well-informed industrial strategy at a time where globalization is turning into economic fighting with third countries. Merger and State aid controls are particularly questioned, as well as reciprocal access to markets. And the rising of the importance of the digital economy requires an aggiornamento of EU competition rules to allow the recovery of efficiency of public authorities.
By Quentin NAVARO AUBURTIN and Mathieu WEILL
Direction Générale des Entreprises – Ministry of the Economy, Finances and Stimulus
On 15 December 2020, the European Commission released drafts of the Digital Markets Act (DMA) and Digital Services Act (DSA). The objective is to set up a regulatory framework for the big online platforms for the next ten to twenty years, for both their business practices (now hegemonic) and their processing of contents (an action for which they must, democratically, be held accountable). These texts are a long awaited, major policy initiative whereby Europe asserts its values and determination to lay the grounds for an ambitious model, the precursor of regulation ‒ as happened in the case of the protection of personal data under the General Data Protection Regulation (GDPR) in 2016. For several years now, France has been a driving force in this novel construction of EU law for regulating digital platforms. Its presidency of the EU in 2022 will be the occasion to set these advances in concrete.
By Henri LAGARDE
Head of a firm
Among the OECD’s 38 member states, France is the leader in terms not just of public expenditures but also (and by far) of its mandatory levies on firms. A comparison of the official operating statements of three small/medium-sized firms (German, Danish and French) reveals the poorly grounded choices made by France and their impact on the competitiveness of its firms, all this against the backdrop of the country’s granular economic policy which has, since 1974, mainly relied on stimulating growth via consumption (which is undertaxed in France) to the detriment of production (which is overtaxed). Foreign competitors thus enjoy a fantastic free ride! How to break out of this trap? Not with granular measures, but by pursuing a global strategy as in the ‟phoenix lands”, these old industrial basins that have dealt with the same difficulties. Two pillars of this strategy are to lower the mandatory levies on firms and raise the VAT.
By Jean-Paul BETBEZE
Professor emeritus of economics, Paris Pantheon-Assas University
Are French firms going to continue experiencing strong growth as they now are? How to help them sustain their growth? This is what is now at stake given that firms entered the pandemic deeply indebted and less profitable (the latter accounting to a large degree for the former) than many of their foreign (in particular German) competitors. They will come out of the pandemic stronger only if they innovate more and invest in information technology and training, while generating more profits and, too, debt.
By Arnaud DELAUNAY and Paul CATOIRE
Division on innovation (SDI), Direction Générale des Entreprises (DGE)
Legitimated by contemporary economic theory, innovation is a central axis of current economic policies for raising productivity gains, improving competitiveness (excluding costs), developing new services and sectors, and accelerating economic growth. Innovation policy in France, which relies on well-established fiscal, financial and regulatory tools, is regularly adjusted to bolster its efficiency in a context conditioned by dynamic trends in innovation in other countries. Since 2018, emphasis has been placed on breakthrough innovations, the reassertion and modernization of the support for future markets and technologies, and the importance given to startups and ‟scale-ups”.
By Denis FERRAND and Emmanuel JESSUA
Rexecode
The loss of competitiveness is a major economic fact in the history of France since the turn of the century. It is the main factor accounting for the growing difference over the past twenty years between per capita GDP in France and Germany. In France, the cost competitiveness of industrial firms fell at the start of this period while international competition was dictating the prices for selling their products. Several industrial firms were gradually unable to keep up given the margin squeeze in France. Meanwhile, those that managed to pull through were induced to emphasize productivity gains by increasingly replacing labor with capital ‒ to the detriment of less skilled employees. The loss of competitiveness of French firms in exports and the country’s deindustrialization in comparison with neighboring European lands are analyzed along with the persistently high level of unemployment in France and the per capita income spread between France and Germany.
By Olivier APPERT
Member of the Academy of Technologies, president of France Brevets and advisor at the Energy Center, IFRI
and Patrice GEOFFRON
Professor, Paris- Dauphine University
Although the low-carbon transition shifts the balance within the ‟energy trilemma” towards environmental imperatives, industrial issues are nevertheless an essential component. Without engaging in a wide-ranging sectoral discussion, we propose to review the conditions for the structuring of two energy sectors in the 20th century, oil and nuclear power, and then to set out some of the elements of a set of specifications for the emergence of a hydrogen sector in the 21st century. This ‟exercise” allows us to reveal both permanencies (an effort throughout the chain value, including training) and differences (the rules of competition within Europe and in globalization). Beyond France, if Europeans already have industrial assets, the construction of a hydrogen industry will involve a very long-term effort, with limited effects on the European Union’s environmental objectives in 2030. We are convinced that the construction of a hydrogen industry will serve as a test of the capacity of a Union, in search of sovereignty, to be consistent over the long term.
By Luc BENOIT-CATTIN
President of France Chimie
The chemical industry ‒ the second branch of the French economy in terms of exports: €62 billion in 2019 ‒ has a high added value and irrigates the whole productive sector in the economy. Owing to its capacity for innovation and a policy for differentiating business activities upstream in the production process, this industry has managed to adapt to a planetary situation that has deeply changed over the past fifteen years, given the rise of Asia and the shale gas revolution in the United States. Nonetheless, it has lost ground in relation to its European competitors. A new phase is opening with the twofold challenge of the environment and digital technology. This challenge must be seen as an opportunity. Society is undergoing a radical paradigm shift that highlights the key place of chemistry in the large-scale technological and industrial trends that will play out during the coming decade. The awareness of this situation has been made clear by the COVID-19 pandemic; and the stimulus plan represents the first step toward supporting this sector ‒ an effort that should be sustained by giving priority to investments in the breakthrough technologies that will reinforce the European chemical industry while creating the conditions for a sustainable competitiveness of installations in France so that the country can take part in competition within Europe.
By Olivier BOGILLOT
President of Sanofi France
COVID-19 has made the healthcare sector a strategic priority for France and the European Union. A major issue is to overhaul the budgetary policies based on cutting prices that have, for more than a decade, hampered the necessary growth in private investments and thus jeopardized this industrial tool, as plants and the jobs there have been moved out of the country. During the crisis, companies producing health products took part in exceptional initiatives: cooperative efforts to produce as many doses of vaccine as possible, the pooling of data on the genome of the SARS-CoV-2 virus, and the investments made to reconvert plants and production facilities. France has the potential of becoming the leading health product supplier in Europe on condition that the necessary factors are brought together for supporting its independence in bioproduction, chemistry and digital technology. Considerable financial means have been mustered in budgets (France’s and Europe’s), through projects (PIIEC) and via the creation of an agency of prospective studies (HERA). Efforts are already being made to realize these ambitions, such as the creation of a European leader (EuroApi) in the production of active principles, the development of Alliance France Bioproduction, and the Biotech Digital Campus, which has the objective of fostering the skills needed in this field of activity. Once France and Europe consider health to be a strategic sector, they will have to draft long-term strategies and policies for accompanying the healthcare sector; and investments for future innovations will have to be made by taking account of all the dimensions indispensable for success in this sector, such as data management and platforms for data analytics.
By Patrice CAINE
President and chairman of the board of Thales
Cybersecurity is not just a tedious formality we have to accept to protect our information systems. It is, according to Patrice Caine, ‟ The key to success of our digital economy” . Thales’s Chairman and CEO looks at the diversity of threats and the plethora of contexts that the term ‟cybersecurity” covers, and asks: can France and Europe maintain their digital sovereignty when ‟hardware and software from the United States and China are permeating every information system?” Patrice Caine believes they can, provided that they shape a French and European sector into which the necessary financial and human resources are injected. The skills exist, in particular in industrial groups such as Thales. It is therefore up to the authorities – in France and across Europe – to call for the widespread mobilisation that will enable us to ‟assert ourselves as leaders in areas as vital as the cloud, the Internet of Things and post-quantum cryptography ”.
By Jean-Claude ANDRÉ
Former director of CERFACS, correspondant of the Academy of Sciences and member of the Academy of Technologies
and Gérard ROUCAIROL
Former scientific director, Bull Information Systems, and honorary president of the Academy of Technologies
The ability to perform calculations on the edge of what is possible has major advantages for increasing knowledge, designing new competitive products and services, and developing effective weapon systems. Advances in the physics of semiconductors and the enhanced capacity for collecting and using big data are setting off a literal revolution in the architecture of supercomputers and model-building methods. Following a description of examples of advanced uses of intense computing power in research, industry and defense, the breakthroughs are presented that are being made in physical systems and methods. The opportunities thus arising for shaping a market for high performance IT are pointed out. They place France among the four countries in the world (and the only country in Europe) that can take part in this race toward computational intensity and thus enable Europe to lay the grounds for a policy of digital sovereignty.
By Marion GUILLOU
Independent administrator and member of the High Council on the Climate
Hugues de FRANCLIEU
Director of projects in charge of the food industry, Direction Générale des Entreprises (DGE, Ministry of the Economy, Finances and Stimulus)
and Claire SAINT-FÉLIX
Statistician and economist
What has happened to the competitiveness of the French food industry since May 2020? The fundamentals in farming and the economy have hardly changed. The country’s balance of trade in the primary sector is still running a surplus, but is slowly decreasing: market shares in comparison with major European rivals are definitely tapering off. This trend is set down to a lack of ‟competitiveness”, whether due to labor costs in the sector, the slight gains made in productivity, non-price competitiveness or structural causes. Not all stakeholders deem it urgent to undertake action; nor do they agree on the remedies to be applied. What is new since 2020 is that ‟sovereignty over the food supply” has become a publicly debated issue. ‟Delegating our food supply is insane”, in the words of the president of France at the start of the COVID-19 pandemic, when supermarkets were having problems restocking shelves with flour, milk or eggs while the French were rediscovering at home the pleasure of baking. This sector’s resilience has become a preoccupation motivating interventions; and some inputs now used in this sector have been listed as ‟sensitive” products.
By Pierre-André de CHALENDAR
President of the board of administration of Compagnie de Saint-Gobain
The construction industry must address three major issues. The first is related to the raising of the goals for reducing by 55% greenhouse gas emissions by 2030 and attaining ‟carbon neutrality” by 2050. Several countries ‒ representing 70% of the planet’s GDP ‒ have pledged to reach this twofold objective. The second issue has to do with the use of primary resources, which has tripled over the last fifty years. The construction industry is a big consumer of raw materials; and the pace of extraction and production is hurling us toward a depletion of these resources. The third issue is demographic. The urban population will, it is predicted, increase by two billion over the next thirty years. The construction industry is faced with a predicament: how to reach carbon neutrality by 2050 and reduce its consumption of primary resources while responding to the growing demand for housing that results from the increase in the world’s population?
By Caroline LEBOUCHER
Engineer from the Corps des Mines, managing director of France Tourism Development Agency (Atout France)
In March 2020, France, the first tourist destination on the planet, went into ‟confinement”. Museums, monuments, amusement parks, theaters, restaurants and bars were shut down; airports and railway stations, deserted; trade fairs, shows and meetings, canceled; traveling was restricted. The pandemic caused business in tourism worldwide to drop as never before. This sector should recover slowly, gradually, depending on the health situation worldwide. This crisis has highlighted how important tourism is economically and socially (whether as a leisure or business activity). It amounted to 7.4% of the GDP in 2019, and weighed heavily on France’s balance of payments with a surplus of €11 billion in 2019. Eighteen months later and mainly thanks to massive support from public authorities (more than €30 billion between March 2020 and June 2021), French tourism is rebounding, proving its resilience. The question will eventually arise, however, of whether firms will be able to reimburse the loans guaranteed by the state. The health crisis has accelerated innovation and the digital transformation of the tourist industry. It has also been the occasion for realizing how fragile this sector is given its dependence on international travel and airline connections, and how necessary it is to improve on its environmental and societal impact. What if the worse crisis in tourism were to be an opportunity for it? The opportunity to adapt, to change, to innovate… opportunities for making new investments, creating new business activities and making jobs more attractive? The analysis of the impact of this crisis and the observation of new trends have provided information for drafting an ambitious national policy on tourism that will make this sector more competitive, attractive, innovative, resilient and sustainable. This is the purpose of the plan to be presented by the president of France in November 2021. Atout France has played an active part in drafting this plan and will have a full part in implementing it.
By Tracy LAABS
PhD, Chief Development Officer, Wyss Center for Bio and Neuroengineering
New technologies raise ethical questions and responsible innovation is needed at every step of the development process. Here we describe two research projects breaking new ground in neurotechnology and neurobiology respectively. The first, a brain-computer interface, enables people who are completely locked-in to communicate in real time using their brain signals to control a communication device. The second assesses the feasibility of using photobiomodulation (PBM) as a therapy in the fight against neurodegenerative disorders like Parkinson’s and Alzheimer’s disease. We briefly consider the ethical aspects of both projects and conclude that organizations developing new neurotechnologies should consult with experts in neuroethics and put quality systems which require development in line with accepted international standards in place early in the development process. They should additionally engage in an open dialogue with society around the impact of their technology. Finally, they should anticipate potential unintended use of new technologies and engage with professional organizations to facilitate the translation of applied research ethics into government policy.
