France’s Strategic Entrepreneurial Spirit

Author: Manesha Sampath

Published:

Long before the financial crisis hit in 2009, private debt clouded the economics of developed countries and emerging markets.  Between 2004 and 2009, as seen on this interactive map, shows the private-sector non-financial debt rose by an average of 43% of GDP in the Western countries.  Since then, the public sector’s ledger has taken on the debt burden.  The frequency and amount of government bailouts and fiscal stimuli dished out by lethargic economies sent the ratio of government debt to GDP spiraling.  The Corporate sector have begun to deleverage while Households and Financials are taking on more.  This is especially evident in France, where sustainable growth is expanding in five strategic areas: education, research, industrials, infrastructure, and financial technology.

Being Europe’s second largest market, France is now considered the most secure launching pad for young entrepreneurs.  According to RSM, approximately 560,000 new business cropped up in France, compared with compared with 95,000 in the U.S. and 75,000 in Germany.  This trend is rooted from President Sarkozy’s small business initiative—Auto Entrepreneur— to decrease the legislation and tax rate for start-ups. Maybe this is why France gained more new businesses than the rest of the wealthy economies in the G-7 since the crisis.

The country offers the highest tax credit in the continent for Research & Developing.  This public-to-private partnership provides accessible funding to drive innovation and economic growth.  Moreover, it encourages angel investors, the most powerful venture capital instruments, to empower future sector leaders.  Private equity can support startups at every stage: from subsidized office space to, legal/marketing/risk consultations, and network facilitation for innovative entrepreneurs.  And according to KPMG’s Guide to International Business Location (2012), hedging operations and labor costs during the set-up process has yielded the most rates in France.  Hopefully entrepreneurs bring the same zealous energy, healthy competition, and capital mobility to other parts of European Union.