Our publications

At low points in the business cycle when the declines in asset prices reach the bottom and the cost of capital is particularly low, there are also some valuable opportunities. In short, the world today oscillates between particularly uncertain signals stemming from financial and economic indicators, as well as a proliferation of advertisements on product innovations or sectorial circumstances that are surprisingly dynamic, for instance in aeronautics.

How should this heterogeneity be taken into account when trying to realistically project for the future without facing problems such as over-simplification, excessive optimism or catastrophic circumstances? The problems regarding long-term growth are often conventional and can lead to dangerous simple conclusions: strong potential growth as a result of dynamic demographics, strong labor mobilization, technical capital accumulation at a satisfying pace backed by technical progress, etc.. This argument is somewhat tautological: a country that properly invests in its human resources, research, and job mobility through adequate reforms will be better off than one that does not. This approach is not wrong in itself but it can lead to a point of view filled with "what ifs”, or be limited to traditional invocations in the education and research economies. One cannot simply assert that we must invest in material and non-material goods: it’s also necessary to specify who will be doing the work, and with what constraints on funding and feasibility.

To move forward, we need to identify both the creative and the destructive areas for long-term jobs, as well as the conditions under which the dynamics of economic activities are able to unfold. On the one hand, what are the endogenous drivers, what factors lead to another creative destruction movement? On the other hand, how will the areas affect macroeconomic uncertainty on economic activities? This report seeks to answer these questions. The scenario created applies the NEMESIS model developed by the laboratory Erasmus. It is based on a double hypothesis. In the first one, we start off with an interrogation of the way in which growth can be made clearer based on what we know now about future adjustments. For example, we know some shocks may affect the economies and we were able to estimate the past reactions to these averages. This knowledge should be used to reduce uncertainty.

For the second one, we have chosen a model that looks at growth as "thick", by introducing an abstraction of aggregate GDP. This will add a physical reality to the model. The future’s growth will be a result of specialization and the ability for specific skills to mobilize. It will also be the result of sectors interacting and their ability to gain market share.

Looking at sector dynamics, the question of the capacity of our economy to withstand the crisis and to stimulate future growth arises. Doing so can also be a way to identify resources that can support the changes and that can assist the employment restructuring in affected sectors, as well as facilitating the policy change transition made by the government on a micro and macro level. There are areas that require more attention not only because they are the key drivers of our economy in the mid and long run, but also because they are particularly vulnerable to international competition and methods of financing. A decline could permanently affect the growth drivers and our competitiveness. The same goes for the construction sector and the most dynamic industry sectors and business services, which remain the innovation melting pot. Another example is public utility or health care sectors that meet structural requirements and that reflect our collective preferences through public transfers that they are subject to. These sectors will also be subject to greater variability because of budgetary restrictions caused by public debt.

Industry and services are both closely linked together today through outsourcing. The challenge thus lies in how French production can continue in the future. Aggregate GDP is a poor indicator for learning more about this. Instead, identifying comparative advantages and sectors that generate productivity gains, as well as creating ripple effects will be the decisive factors.

This is the most important aspect of the report and highlights the sources of growth. While its potential may not be taken advantage of under the effects of weak macroeconomic conditions, this report shows that traditional industries have the potential for reinvention, that France is able to position itself for the future and that the future’s service indicate considerable progress in terms of productivity and quality. Growth is a bet that can be won.

• Authors: Cecile Jolly, Maxime Liegey, Olivier Passet in collaboration with the Erasmus Laboratory 
  Pierre Le Mouë, Baptiste Boitier, Arnaud Fougeyrollas and Paul Zagamé
  

Press Contact:
Jean-Michel Roullé, Head of Communications
Tel. + 33 (0) 1 42 75 61 37 - jean-michel.roulle@strategie.gouv.fr