2016 France Attractiveness Scoreboard
For the seventh year in a row, Business France presents the “France Attractiveness Scoreboard”, in conjunction with the French Treasury Directorate (DG Trésor) at the Ministry for the Economy and Finance, and the French Commission for Regional Equality (CGET). This publication brings together a wide array of economic data compiled as indicators into the investment attractiveness of a country by comparing the performances of France with 13 other countries. Meanwhile, the results of an opinion survey* conducted with 779 key business opinion formers provide valuable insight into France’s perceived strengths and weaknesses.
The report highlights France’s ever-stronger structural advantages and key advances in innovation. In addition to its longstanding openness to international investors, France is also Europe’s second leading recipient of job-creating foreign investment (Business France Europe Observatory figures for 2015), and has been the leading destination in Europe for job-creating foreign investment projects in industry for the last 15 years. (EY, 2016)
Five of France’s key strengths in particular underpin its enduring attractiveness as a business location:
Market size (the world’s fifth largest economy after the United States, China, Japan and Germany) and location combined with outstanding infrastructure make it a natural springboard to other countries throughout Europe, Africa and the Middle East. Its vibrant demographic profile, including the highest fertility rate in Europe, also lead it to feature in new investment strategies by multinational firms.
In terms of perception*, 82% of foreign companies surveyed considered the size of France’s domestic market to be a key advantage in France’s attractiveness to business. Foreign companies with operations in France stated that France serves as an export hub to countries in Africa (81% of respondents) and Europe (88%).
High labor productivity: Up 3.6% in 2015 (compared with a 1.1% increase across the EU-28). Labor costs are also improving following the introduction of the competitiveness and tax credit (CICE), which has helped manufacturers in France to enhance their cost-competitiveness. For example, hourly labor costs in the French manufacturing sector (€36.90) in 2015 were lower than in Germany (€38).
Perceptions* of French labor costs are also improving, with 55% of respondents (up six percentage points since the previous survey) stating that labor costs made France an attractive investment location in 2015.
Innovation capacity: France was ranked sixth in the world in 2014 for gross domestic expenditure on research and development (GERD), which amounted to US$58.8 billion (OECD, 2014). R&D costs are very tax-effective due to France’s research tax credit, while between 2008 and 2013 France also saw a larger increase than anywhere else in the world in private-sector research as a share of the active population. (French National Research and Technology Association – ANRT)
* Survey conducted in September 2016 by Kantar Public with 779 business leaders in seven countries: China, France, Germany, India, United Arab Emirates, United Kingdom, United States.
The survey* results concerning innovation show that 72% of decision-makers see France as an innovative economy, receiving particularly good marks on human capital criteria, with a particular focus on well qualified R&D personnel and research partnerships with academia. Moreover, nearly half of all business leaders are aware of the “La French Tech” initiative, for example.
Buoyant enterprise creation: The total number of active enterprises grew by 230,187 (up 7.2%) in 2014, compared with an EU-28 average of 0.9%. This wave of business development and creativity is fostered by a favorable administrative and financial environment, especially for startups. And in terms of red tape, only four days are required to found a company in France, compared with 4.5 in the United Kingdom and 10.5 in Germany.
As far as perceptions are concerned, France is seen as a country that actively seeks to attract foreign investors (79%), and French companies are viewed as being creative by business leaders, with three-quarters of foreign investors and eight in 10 exporters stating as such.
High quality infrastructure: France’s infrastructure needs no further introduction, starting with first-class airport facilities, such as Paris Charles de Gaulle, ranked first in Europe for cargo and second by passenger numbers after London Heathrow. It also has an excellent broadband penetration rate, coming in second place ahead of the United Kingdom and Germany. Electricity rates are also especially attractive for companies due to careful management of electricity generation and the national grid.
“Investors readily recognize France’s enduring structural advantages, the flair displayed by French companies for innovation, high productivity and a wide industrial base. Perceptions among foreign decision-makers have improved markedly across the board over the last two years, particularly in Germany, the United Kingdom and the United States. The path to excellence and growth continue to reside in France’s talent and creativity in all fields,” said Muriel Pénicaud, CEO of Business France.