FRANCE IS CHASING FOREIGN DIRECT INVESTMENTS

With 20,000 foreign companies already doing business in France, and 700 new foreign investment decisions are made annually. France  is a leading destination for foreign direct investment. Foreign direct investments are critical for France as the economy is barely growing and jobless claims are at a 14 year high. France has set the ambitious objective of attracting 1,000 foreign investment decisions and 300 new companies to France per year by 2017. 

As such, the French government is placing France’s investment and economic attractiveness at the heart of its policies to recapture global market share,  a process initiated under the ‘National Pact for Growth, Competitiveness and Employment.

To meet it targets, the French government will begin by ensuring the implementation of key measures of the Pact, namely

1/ implementing the new competiveness and employment tax credit to reduce company labor costs

2/ stabilizing five  key tax measures for companies, including a research tax credit in particular and simplifying administrative formalities for companies

3/ Providing finance for companies and innovation through the State Investment Bank and the ‘National Investment Program’, with the latter concentrating particularly on breakthrough innovation and future technologies. 

However, France's attractiveness as a site for some industrial jobs and plants does not make up for its long-term unattractiveness due to price competitiveness. Labor costs have been rising more quickly than in Germany over the last decade, gradually making it more expensive to produce in France. Also 9.9 billion of the 29.5 billion euros invested in France last year went into real estate and mergers and acquisitions, while investment in greenfield projects, stood  at 2.2 billion euros, was the lowest since 2003. 

Based on the key determinants of FDI’s attractiveness, France is behind Luxembourg, Finland, Switzerland, Sweden, Denmark, Estonia, Austria, Ireland, Germany, Iceland, Belgium, the Netherlands, the United Kingdom, and Norway.