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Perspectives on French Public Sector (21 August 2010)

Author: Dr. Christophe Aubin-Nury de Malicorne is Lecturer of Economics-Finance at University of Paris 10; Director-International Board for Government Asset Management at SCMS; and Member of CEDIN Research Center.

For public undertakings as for any undertaking, especially since the implementation of the European Single Act in 1985, the domestic market is now the European market. In light of the competing environment of the European market and the globalization of world markets, public undertakings require financing beyond the capacity of the State. The elaboration of an international strategy, which conditions the future of French public undertakings, requires an effort of efficiency, transparency in management and modernization in governance, as well as adjustment to European regulations. Some changes in the legal form of undertakings are therefore inevitable. This evolution is also the key to private financing and foreign markets. Consequently, public administration must undergo some deep changes because it burdens undertakings with cumbersome and intricate processes, like authorizations and approvals or with budget issues, which affect the dividends they give or the subsidies and grants they can receive.

The existence of missions of public service, whose necessity and legitimacy are not questioned, in no way exempts other undertakings from their indispensable modernization. These missions have to be clearly identified and financially compensated or opened to competition. Even in this domain, everything thus converges toward the need for increasing efforts of productivity. For the rest, everything that contributes to turning public undertakings into ordinary undertakings in terms of status, governance and relations with the State makes it possible to answer the criticism, which has been intensifying, of the unfair advantages granted by the State to the public sector in a market economy. Therefore, despite the recent financial crisis and overall State interference in the economy, French government policy needs to return to focus as soon as possible on its regalian domains of activity because turning public undertakings into ordinary undertakings also means giving them the means for competitiveness and consequently survival, as well as the ability to better contribute to national economic prosperity.


Disclosure: no position