2014 Index of Economic Freedom

France

overall score63.5
world rank70
Rule of Law

Property Rights80.0

Freedom From Corruption69.9

Limited Government

Government Spending5.6

Fiscal Freedom48.4

Regulatory Efficiency

Business Freedom79.9

Labor Freedom51.8

Monetary Freedom76.1

Open Markets

Trade Freedom82.8

Investment Freedom70.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 63.4 million
  • GDP (PPP):
    • $2.3 trillion
    • 0.0% growth
    • 0.0% 5-year compound annual growth
    • $35,548 per capita
  • Unemployment:
    • 10.2%
  • Inflation (CPI):
    • 2.0%
  • FDI Inflow:
    • $25.1 billion
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France’s economic freedom score is 63.5, making its economy the 70th freest in the 2014 Index. Its overall score has decreased by 0.7 point due to declines in monetary freedom, fiscal freedom, and business freedom. France is ranked 33rd out of 43 countries in the Europe region, and its overall score is slightly higher than the world average but below the regional average.

Over the 20-year history of the Index, France’s economic freedom has been stagnant, recording the fifth worst performance among advanced economies. Despite notable score improvements in property rights and market openness as measured by trade freedom, investment freedom, and financial freedom, France’s overall economic freedom has been undermined by substantial declines of over 10 points each in freedom from corruption, fiscal freedom, and government spending.

France had been rated one of the “moderately free” economies for most of the Index history but dropped into the “mostly unfree” category from 1997 to 2003. The government still dominates major sectors of the economy as a large shareholder, and government spending accounts for over half of GDP. The government has pursued various reform measures to increase the competitiveness and flexibility of the economy, but overall progress has been slow.

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Background

Socialist François Hollande was elected president in May 2012, and the Socialist Party won control of the National Assembly. By October 2013, less than a third of French citizens approved of Hollande’s performance as president. Formally reintegrated into NATO’s military command structures, France was a leading participant in NATO’s March 2011 military engagement in Libya. It remains apart from NATO’s Nuclear Planning Group. France was a founding member of the European Union and has struggled to maintain its traditional influence over EU policy as membership has grown. It has a diversified economy but also is the top recipient of market-distorting agricultural subsidies under the EU’s Common Agricultural Policy. Unemployment remains high, and union strikes are a persistent problem. In May 2013, France entered its second recession in four years.

Rule of LawView Methodology

Property Rights 80.0 Create a Graph using this measurement

Freedom From Corruption 69.9 Create a Graph using this measurement

France has an independent judiciary, and the rule of law is firmly established. Property rights and contract enforcement are secure. Intellectual property rights are respected in accordance with international standards. Although anti-corruption measures are in place to ensure transparency and government integrity, a 2012 OECD report called for increased prosecution of French officials who bribe foreign officials to win contracts.

Limited GovernmentView Methodology

The top individual income tax rate is up to 45 percent, and the top corporate tax rate has been lowered to 34.3 percent. Efforts to increase the top marginal tax rate to 75 percent were ruled unconstitutional. Other taxes include a value-added tax (VAT). The overall tax burden equals 44.2 percent of gross national income. Government expenditures continue to make up over half of the domestic economy, and public debt has reached over 90 percent of GDP.

Regulatory EfficiencyView Methodology

The business start-up process is relatively straightforward, with no minimum capital required. The labor market continues to be stagnant. Ostensibly protecting workers, the labor code’s rigid regulations appear instead to have hurt competitiveness and employment prospects. Price controls affect a number of products and services, and state subsidies have increased under the Hollande government.

Open MarketsView Methodology

EU members have a low 1.1 percent average tariff rate and, in general, few non-tariff barriers to trade. France’s government limits the freedom to enjoy foreign-language films and songs. The government screens investment in some sectors of the economy. The financial sector remains under relatively strong state influence, with a small number of foreign banks operating.

Country's Score Over Time

Bar Graph of France Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing France to other economic country groups

Regional Ranking

rank country overall change
1Switzerland81.60.6
2Ireland76.20.5
3Denmark76.10.0
4Estonia75.90.6
5United Kingdom74.90.1
6The Netherlands74.20.7
7Luxembourg74.20.0
8Germany73.40.6
9Finland73.4-0.6
10Sweden73.10.2
11Lithuania730.9
12Georgia72.60.4
13Iceland72.40.3
14Austria72.40.6
15Czech Republic72.21.3
16Norway70.90.4
17Belgium69.90.7
18Armenia68.9-0.5
19Latvia68.72.2
20Macedonia68.60.4
21Cyprus67.6-1.4
22Spain67.2-0.8
23Poland671.0
24Hungary 67-0.3
25Albania66.91.7
26Slovakia66.4-2.3
27Malta66.4-1.1
28Bulgaria65.70.7
29Romania65.50.4
30Turkey64.92.0
31Montenegro63.61.0
32Portugal63.50.4
33France63.5-0.6
34Slovenia62.71.0
35Italy60.90.3
36Croatia60.4-0.9
37Serbia 59.40.8
38Bosnia and Herzegovina58.41.1
39Moldova57.31.8
40Greece55.70.3
41Russia51.90.8
42Belarus50.12.1
43Ukraine49.33.0
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