La croissance confisquée - article ; n°1 ; vol.19, pg 5-136

Françoise Milewski, Jacques Adda

Description

Revue de l'OFCE - Année 1987 - Volume 19 - Numéro 1 - Pages 5-136
Confiscated Growth Département des diagnostics de l'OFCE In 1986 both the price of oil and the exchange rate of the dollar have come back to levels more in line with market equilibrium. But these have not had the expected stimulating effects. The improvements in the terms of trade — particularly large in Europe and Japan -- have slowed down the growth of general government and corporate net debt at a time when many developing countries have been forced to adopt severe financial measures. The flow of capital to the OECD countries has been balanced by a sharp reduction of the demand from the rest of the world, while important losses of market shares were conceded to the newly-industrialising countries. The recovery of private consumption has been significant, but not enough to stimulate investment. An important portion of corporate resources has continued to flow to the financial markets, contributing to keeping real interest rates high. In 1987 and early 1988 the slackening of demand in the United States and then its contraction, will dominate the international environment. In such a context the persistence of the American external deficit will aggravate monetary, trade and financial tensions. Faced with increased external competition and weak world demand, Japan and above all Europe will suffer seriously from any additional drop of the dollar. In France the likelihood of significant growth appears limited. Household consumption growth will slow down because of low wage increases, not fully compensated by a strong growth in non-wage income. The recovery of private investment will accelerate but its pace will remain slower than the improvement in profits. The growth of final domestic demand will tend to benefit foreign more than French suppliers, who are facing hightened competition in domestic and world markets from the South-East Asian countries. The trade balance could turn negative. A 1.7 per cent GDP growth in 1987 will not be enough to stop unemployment from rising. A more expansionist economic policy could curb this upward trend, but there is a continuing risk of any surge in demand being captured largely by foreign competitors. expected slowdown of household consumption, the near-stagnation of investment, and the weakness of exports. Destocking following involuntary stockbuilding in the second quarter of 1986 is expected to depress activity in the first part of this year, notwithstanding some strengthening of final demand. A modest pick-up is therefore not likely until the second quarter, led by investment and exports. Household consumption is likely to recover only moderately, given the weak growth of real incomes. The slowdown in the growth of world demand, projected for around the end of this year, will again limit growth in 1988. Overall, GNP seems likely to grow by 1.7 per cent in 1987 and 1.3 per cent in 1988. As a result only part of the considerable increase in profits in 1985-86 seems likely to be used for productive investment. The risk of an upturn in inflation in France in the coming quarters seems small. The policy of strict control of public sector salaries, combined with rising unemployment, seems likely to lead to moderation in the overall growth of incomes : hourly wage rates are likely to increase by a modest 2.8 per cent in 1987 and 2.4 per cent in 1988. Output prices seem likely to stop growing faster than unit costs, except in the tertiary sector, which has not yet restored its margins to the levels of the 1970s. On the assumption that the price of oil will stabilize around $ 16 per barrel at the end of the second quarter, the growth of the consumer price index will be around 2.7 per cent in 1987 and 2.4 per cent in 1988. Under the assumption of a progressive increase in the oil price to $20 by the end of 1988, inflation could be around 3 per cent both this year and next. In either case disinflation, as measured by the GNP deflator, will continue, with inflation falling from 5 per cent in 1986 to 3 per cent in 1987 and 2.5 per cent in 1988. Despite the modest growth of domestic demand and inflation, the external surplus of goods and services recorded in 1986 (around FF 21 billion) seems likely to be smaller this year because of a reduction in the manufactures balance of FF 15 billion. The decline in international competitiveness, due to the fall of the dollar since 1985, could be expected to result in some loss of market share. Nevertheless this is likely to be limited to 1.5 points in 1987 and 1 point in 1988, compared with 3 points over the course of the last two years. The slow growth of employment in the market sector seen in 1986 risks being interrupted because of modest growth of production and the perverse effect of the youth employment scheme Emploi des Jeunes. It seems that a number of people were taken into employment in 1986 in anticipation of an exemption from social charges. Despite the recent new measures in respect of long-term unemployed, unemployment will continue to grow significantly. The number of unemployed could reach 2.8 million in the spring of 1988. The pick-up of investment in industry in 1984-1985 seems likely to continue in the next two years (6.5 per cent in 1987 and 5.4 per cent in 1988 in 1970 prices for the total of non-financial enterprises). Is this likely to be sufficient ? It would seem to be so if compared with the likely growth of internal and external demand, but not if considered in relation to the now considerable capacity to finance productive investment out of retained earnings. The study reported in the last part of this article suggests that the reduction of corporation tax would probably not be effective in sparking off a significant increase in investment. For given budgetary cost a direct subsidy to productive investment in the form of a tax credit would be ten times as effective. But the benefits would be realised only over the medium term.
132 pages
Source : Persée ; Ministère de la jeunesse, de l’éducation nationale et de la recherche, Direction de l’enseignement supérieur, Sous-direction des bibliothèques et de la documentation.

Informations

• Publié par: REVUE_DE_L-OFCE
• Publié le: 01 janvier 1987
• Nombre de lectures: 16
• Langue: Français
• Poids de l'ouvrage: 12 Mo

Extrait

Département des diagnostics de
l'OFCE
Philippe Sigogne
Jacques Adda
Philippe Aroyo
Véronique Riches
Richard Wind
Françoise Milewski
Monsieur Alain Gubian
Véronique Przedborski
La croissance confisquée
In: Revue de l'OFCE. N°19, 1987. pp. 5-136.
Citer ce document / Cite this document :
Département des diagnostics de l'OFCE, Sigogne Philippe, Adda Jacques, Aroyo Philippe, Riches Véronique, Wind Richard,
Milewski Françoise, Gubian Alain, Przedborski Véronique. La croissance confisquée. In: Revue de l'OFCE. N°19, 1987. pp. 5-
136.
doi : 10.3406/ofce.1987.1092
http://www.persee.fr/web/revues/home/prescript/article/ofce_0751-6614_1987_num_19_1_1092Abstract
Confiscated Growth Département des diagnostics de l'OFCE In 1986 both the price of oil and the
exchange rate of the dollar have come back to levels more in line with market equilibrium. But these
have not had the expected stimulating effects. The improvements in the terms of trade — particularly
large in Europe and Japan -- have slowed down the growth of general government and corporate net
debt at a time when many developing countries have been forced to adopt severe financial measures.
The flow of capital to the OECD countries has been balanced by a sharp reduction of the demand from
the rest of the world, while important losses of market shares were conceded to the newly-industrialising
countries. The recovery of private consumption has been significant, but not enough to stimulate
investment. An important portion of corporate resources has continued to flow to the financial markets,
contributing to keeping real interest rates high. In 1987 and early 1988 the slackening of demand in the
United States and then its contraction, will dominate the international environment. In such a context the
persistence of the American external deficit will aggravate monetary, trade and financial tensions. Faced
with increased external competition and weak world demand, Japan and above all Europe will suffer
seriously from any additional drop of the dollar. In France the likelihood of significant growth appears
limited. Household consumption growth will slow down because of low wage increases, not fully
compensated by a strong growth in non-wage income. The recovery of private investment will
accelerate but its pace will remain slower than the improvement in profits. The growth of final domestic
demand will tend to benefit foreign more than French suppliers, who are facing hightened competition in
domestic and world markets from the South-East Asian countries. The trade balance could turn
negative. A 1.7 per cent GDP growth in 1987 will not be enough to stop unemployment from rising. A
more expansionist economic policy could curb this upward trend, but there is a continuing risk of any
surge in demand being captured largely by foreign competitors. expected slowdown of household
consumption, the near-stagnation of investment, and the weakness of exports. Destocking following
involuntary stockbuilding in the second quarter of 1986 is expected to depress activity in the first part of
this year, notwithstanding some strengthening of final demand. A modest pick-up is therefore not likely
until the second quarter, led by investment and exports. Household consumption is likely to recover only
moderately, given the weak growth of real incomes. The slowdown in the growth of world demand,
projected for around the end of this year, will again limit growth in 1988. Overall, GNP seems likely to
grow by 1.7 per cent in 1987 and 1.3 per cent in 1988. As a result only part of the considerable increase
in profits in 1985-86 seems likely to be used for productive investment. The risk of an upturn in inflation
in France in the coming quarters seems small. The policy of strict control of public sector salaries,
combined with rising unemployment, seems likely to lead to moderation in the overall growth of incomes
: hourly wage rates are likely to increase by a modest 2.8 per cent in 1987 and 2.4 per cent in 1988.
Output prices seem likely to stop growing faster than unit costs, except in the tertiary sector, which has
not yet restored its margins to the levels of the 1970s. On the assumption that the price of oil will
stabilize around $ 16 per barrel at the end of the second quarter, the growth of the consumer price index
will be 2.7 per cent in 1987 and 2.4 per cent in 1988. Under the assumption of a progressive
increase in the oil price to $20 by the end of 1988, inflation could be around 3 per cent both this year
and next. In either case disinflation, as measured by the GNP deflator, will continue, with inflation falling
from 5 per cent in 1986 to 3 per cent in 1987 and 2.5 per cent in 1988. Despite the modest growth of
domestic demand and inflation, the external surplus of goods and services recorded in 1986 (around FF
21 billion) seems likely to be smaller this year because of a reduction in the manufactures balance of FF
15 billion. The decline in international competitiveness, due to the fall of the dollar since 1985, could be
expected to result in some loss of market share. Nevertheless this is likely to be limited to 1.5 points in
1987 and 1 point in 1988, compared with 3 points over the course of the last two years. The slow growth
of employment in the market sector seen in 1986 risks being interrupted because of modest growth of
production and the perverse effect of the youth employment scheme "Emploi des Jeunes". It seems that
a number of people were taken into employment in 1986 in anticipation of an exemption from social
charges. Despite the recent new measures in respect of long-term unemployed, unemployment will
continue to grow significantly. The number of unemployed could reach 2.8 million in the spring of 1988.
The pick-up of investment in industry in 1984-1985 seems likely to continue in the next two years (6.5
per cent in 1987 and 5.4 per cent in 1988 in 1970 prices for the total of non-financial enterprises). Is thislikely to be sufficient ? It would seem to be so if compared with the likely growth of internal and external
demand, but not if considered in relation to the now considerable capacity to finance productive
investment out of retained earnings. The study reported in the last part of this article suggests that the
reduction of corporation tax would probably not be effective in sparking off a significant increase in
investment. For given budgetary cost a direct subsidy to productive investment in the form of a tax credit
would be ten times as effective. But the benefits would be realised only over the medium term.Chronique de conjoncture
La croissance confisquée
Département des diagnostics de POFCE *■ '
En 1986 le retour du prix du pétrole et du dollar à des
niveaux plus propices à un équilibre des marchés n'a pas eu sur
l'activité de l'OCDE les effets de relance généralement
escomptés. Les amples gains de termes de l'échange, en Europe
et au Japon, ont ralenti la croissance de l'endettement net des
administrations et des entreprises à un moment où de nombreux
pays en développement étaient contraints à une grande rigueur
financière. L'afflux de capitaux vers l'OCDE a eu pour contrepart
ie une nette réduction de la demande du reste du monde,
cependant que des pertes de parts de marchés ont eu lieu vis-à-
vis des nouveaux pays industrialisés. La reprise de la consomm
ation n'a pas suffi à elle seule à entraîner l'investissement. Une
part importante des ressources collectées par les entreprises a
continué à alimenter les marchés financiers, contribuant au
maintien de taux d'intérêt réels élevés.
En 1987 et au début de 1988 l'environnement international
sera marqué par le ralentissement puis la contraction de la
demande des Etats-Unis. La persistance du déficit extérieur
américain accroîtra les tensions monétaires, commerciales et
financières. Face à une concurrence extérieure accrue et à une
demande mondiale faible le Japon, et surtout l'Europe, subiront
durement toute baisse supplémentaire du dollar.
En France les potentialités de croissance apparaissent fai
bles. La consommation des ménages serait ralentie par la modér
ation des salaires, que la hausse des revenus non salariaux ne
compensera qu'en partie. La reprise de l'investissement des
entreprises s'accélérera, tout en restant en deçà de l'améliora
tion des profits. La progression de la demande intérieure conti
nuera à bénéficier davantage aux fournisseurs étrangers qu'à
l'offre française, toujours menacée dans l'hexagone et à l'expor
tation par les pays du Sud-Est asiatique. Les échanges de
marchandises deviendraient déficitaires. La croissance de 1,7 %
du PIB en 1987 sera insuffisante pour enrayer la montée du
chômage. Une politique économique plus expansionniste pourrait
l'infléchir, mais le risque demeure qu'une relance de l'activité
soit confisquée par la concurrence.
(*) Cette chroniqu