Tue Mar 7th, 2006 at 08:53:07 AM EST
Here's a fascinating factoid thrown up in a brief piece by Guillaume Duval of Alternatives Economiques in their March issue (not online). Under the title Foreign Investment : The Real "Patriots" he points us to a January 2006 report from OECD, Product market competition and economic performance in France.
Now this OECD working paper would be a wonderful linguistic deconstruction site. Just take a look at the abstract:
Over the past decade, French economic growth has been insufficient to bring down high and persistent unemployment. Available cross-country evidence suggests that enhancing competition is an important means to improve economic performance. France is catching up with best practice in competition policy reform. However, other policy considerations often hamper the emergence of effective competition. Relatively weak competitive pressures remain in a number of sectors, particularly in sheltered service industries. Restrictions on competition reduce productivity growth and hinder job creation in regulated sectors. Policy must focus on giving more weight to overall consumer welfare in the face of opposition from relatively small but vocal special interest groups.
Hmm, let's see:
- insufficient, hamper, weak, sheltered, restrictions, hinder, regulated, opposition, small but vocal -- stigmatize what is BAD.
- growth, enhancing, important, performance, best practice, reform, emergence, effective, creation, welfare -- hype up what is GOOD.
STO-O-O-OP!! That's not what this diary's about. As Guillaume Duval says of this kind of OECD report:
Leur lecture est généralement fastidieuse car très répétitive. On en connaît de toute façon la conclusion avant d'avoir commencé la première ligne: il n'y a pas suffisamment de concurrence et c'est pour cela que l'économie va mal, qu'il y a du chômage, etc.
They are generally tedious to read because they're very repetitive. Anyway, you know the conclusion before you start the first line: there's not enough competition and that's why the economy's doing badly and there's unemployment, etc.
No, the point about this one is in a graph shown on page 9 of the report, comparing restrictions on Foreign Direct Investment (FDI) in the OECD countries. Here's what the authors of the report say about it:
Indeed, import barriers are lower [in France] than in most other EU countries and there are relatively few direct restrictions on inward FDI. (Figure 3). But it is possible that inward FDI may be somewhat hampered by the perception of political influence weighing on certain investment decisions - a perception which is perhaps fuelled by merger control not being the responsibility of the competition authority.5
Oh, so what's that footnote n° 5 all about?
5 Empirical work suggests that European regulatory intervention is more likely to take place when European firms are harmed by increased foreign competition, indicating that European regulatory stance is protectionist and only to a little extent focused on combating monopoly power and protecting consumers (Aktas et al, 2004). Moreover, other empirical work shows that lenient merger policy to create "national champions" may damage a country's international competitiveness, possible because the basis for strong international competitiveness is fiercely competitive domestic markets (Clougherty and Zhang (2004) and Høj and Wise (2004a))
Oh my, that's some footnote! It says "Europe" (the EU? who knows?) is duplicitous in claiming it is fighting trusts and monopolies and protecting consumers when it is in fact being protectionist! Ouch! And creating "national champions" can harm your health! Oooh! And "empirical work suggests" all that! Golly gosh!
So we'd better take a look at Figure 3, on which all this is a commentary. (I know, I've been taking you round the houses...). Here it is (click to enlarge) :
Where's protectionist "national champions" France? Er, to the left there (yellow). And who are the winners of this (silly, imho) OECD index race? Which are the countries that practise the most "protectionism" re direct foreign investment in their economies?
(Drum roll) To the right (orange): 1) USA 2) UK.
Well I never.
There must be some explanation. Like, lots of regulation in the American and British economies is GOOD, while less regulation in the French is BAD. Or, this OECD report is written by overpaid hacks who develop, first against France, then, by extension, to "Europe", a slew of propaganda that flies in the face of the facts they themselves present. But I don't want to believe that. Isn't it taxpayers' money that funds the OECD?