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Cross-border
economic
development 54 Cross-cutting themes in cross-border economic development
These are some of the comparative advantages that are very
favourable for France, which appeal to foreign investors and
explain the international presence and openness of the French
economy, which in Europe, ranks just after the UK economy in
this respect. France is a prime destination for foreign investment
in chemicals, pharmaceuticals, certain food products, nuclear and
aeronautics – sectors that are mostly highly R&D intensive. French
research is internationally renowned and a significant reservoir for skills
in industrial and tertiary innovation.
However, this research is deemed to be ill-suited to the real needs
of French industry and the economy as a whole. The links between
public research and businesses, and therefore technology transfers,
appear to be weak (researchers with little incentive to find economic
applications for their work 91), while French companies’ R&D and
innovation expenditure remains limited to enable industrialisation and
the export of new products and services.
91 OECD, OECD Reviews of Innovation Policy: France 2014,
reviews-of-innovation-policy-france-2014-9789264214026-en.htm
France, unlike Germany, Italy and the United Kingdom, lacks
medium-sized SMEs, which have a higher capacity to innovate
because they enjoy easier access to financing (own funds and
external funding) and are flexible enough to take risks. In the latter
three countries, medium-sized SMEs play a greater role in the
production system and have a more significant impact on the trade
balance.
Ì Ì The Gallois Report also underscores the tightening of profit
margins in French industry, which French industry has been forced
into to maintain price-competitiveness in the face of competition
from Germany and the emerging economies. Lower profit margins
have resulted in a decrease in innovation investment, and affected
non-price competitiveness. A series of reforms have therefore
been implemented to provide fiscal, political and financial tools
to strengthen research and innovation, investment, as well as
French firms’ capacity to export and attract foreign capital.
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