Impact of Industrialization in France and Madagascar: 1930-Present - Report Example

Impact of Industrialization in France and Madagascar: 1930-present Your s Impact of Industrialization in France and Madagascar: 1930-present The industrial revolution made many states go through a hard transition, and both France and Madagascar were one of them. Initially during the twentieth century, France was going through a political transition due to which it had to suffer economically as well. That is, France was an authoritarian state and thus, nationalization led to certain barrier due to which it wasn’t able to enjoys the fruits that industrialization had left behind for these states. Furthermore, during the 1940`s there was a critical change in governments which further led towards stagnation in economy. Later, when democratization took place and the government took steps to improve the economy, France became a competitive economic giant in the European region. However, French government realized that most of the capital was being concentrated in France and thus, measures were taken to expand the economy. With Madagascar, as long as it was a colony of France, it was considerably stable and modern economic institutions were set up which benefitted France for the most part, yet left blueprints for economic wellbeing. Yet, the authoritarian governments followed the socialist model of development which failed for the most part, and later in the 1980`s when the IFI`s intruded did the economy again started signs of improvement. Impact of Industrialization in France Prior to understanding the economy of France since the 1930`s, it is crucial to briefly shed light on the historical perspectives as well. During the eighteenth century, the economy of France was considerably well. Though France was one of the major powers in the eighteenth century, yet as compared to Britain it was still rather under-developed1. However, the geography of France alongside its demographic size stands at an advantage due which France was an important state actor in the context of the economy and politics of the region. Also, the educational indicators of France were quite low, yet the intellectual indicators were quite high in the sense that a few of the most distinguished scientists, mathematicians and scholars in other fields belonged to France. Moreover, France was a state comprised mostly of peasants at the time when Britain was going through a drastic industrial revolution. Also, an inherent competition was going on between France and the Britain where England was seen parallel to the Soviet Union in comparison with Western Europe and the US. Furthermore, though France was a huge military power due to the quality and quantity of soldiers, its strategic position, yet it was considerably vulnerable in sea and abroad2. Economically, France was less reliant on coal as compared to its competitors, Belgium and England though there were deposits of coal found in the northern region of France. Yet, due to lack of coal in most of France, it used to import coal from both France and Belgium however the quantity required was low as there wasn’t much need for it at that time. Also, at the time France was an authoritarian state with a centralized government where businesses were suffering. The aristocracy in France was largely oppressing the businesses in France which was then overthrown by the radical regimes. This development further deterred economic development in France where the rest of the world was reaping benefits from industrialization. Resultantly, the industries in France became even smaller and rather controlled by a few aristocratic families more reliant on strong government control with the aim of surviving rather than developing. Coming to the 1930`s, when Germany was defeating France during the six weeks war campaign. By 1940, Germany had occupied the northern France along with Paris while the rest of the France was being ruled by a puppet Fascist regime functional from Vichy. Thus, the French economy was now being run by a corporatist and a state capitalistic system during the war. However, there was a resistance movement going on in France which had managed to combine the protagonists from all schools of thought i.e. the conservative, the communist as well as the conservative segment of the society. However, the united front didn’t completely shatter after the war ended and instead, the resistance movement now aimed at reinvigorating the French economy and promoting a renewal of France to counter the economic stagnation which had existed before the war. All political parties, at this point when the war had ended, were on the same page considering the agenda that economic planning was crucial which led towards the establishment of the Ministry of National Economy in France. During the war, General Charles De Gaulle had taken over the free France, and after the 1945 elections he was elected as the Head of the Government. On election, he declared nationalization of credit as well as electricity. Also, he pursued nationalization in France on almost all industries including coal mine, huge insurance companies, electrical companies, gas companies, large banks, Auto companies and also Air infrastructure. As a result, around 20 percent of all the industries were now under direct control of the government. There was a consensus amongst the large companies at the time towards the nationalization of economy; however the small companies were lobbying against these measures. As a result, the resistance from the united front grew stronger and eventually in 1947 the communists withdrew from government while in 1949 even the socialist withdrew government. However, the entire world was reaping benefits of industrialization while Frane was still going through a transition where the economy was suffering. In 1945 Jean Monnet decided to mend the ways and thus set up goals for the economy of France which must be accomplished by 19503. Also, Monnet called for the modernization of the economy and industries of France to compete with the global world. At the same time, Monnet was also aware of the fact that France was short on resources which would be deterrence thus he suggested public investment in a few economic sectors. The public investment would thus take place in coal industries, electricity, transportation infrastructure as well as the agricultural machinery in France. Later, fertilizers industries and fuel sectors were also sought for public sector investment. The entire plan which was then extended to around 1952 was terms as the Monnet Plan. For the purpose, modernization committees were set up and each sector identified in the plan sought planning from these committees. These committees comprised of members from the planning commission, those representing major firms, public sector corporations, technical experts as well as major unions to execute the job. However, these committees didn’t have the legislation to exercise their decisions and thus compliance was a voluntary decision. The process was technically being termed as indicative planning. Another issue that France was facing due to industrialization was that of inflation, however, pricing control wasn’t being considered as an option during the time. The statistics were quite shocking during the time, which had increased from 469 in 1945 to around 2409 in 1950. Private enterprises were supporting the Monnet Plan, in part because they were in compliance with the goals set up for France, however the government of France also guaranteed bonds to be issues in approved sectors which was a tad disappointing for a few4. The Monnet Plan was quite successful, as productivity gains were high and target were also met to a considerable level. However, the political scenario during this time must also be analyzed. The communist domination government led by Generale Dy Truvail was alienating the union coalition created during the war time. However when the confederation called for strikes extensively during 1947, the rival factions acquired legitimacy. On the other hand, the military spending on Vietnam as well as Algeria was affecting the fiscal status of France during the time. Budget deficits further depreciated the value of currency leading towards inflation issue as well. To counter inflation, a program was incorporated to allocate subsidies to enhance efficiency in the market. In the aftermath of the events occurred during the time, the French economy did show signs of improvement, yet they weren’t as deep as the West German economy. Most importantly, the agriculture sector was showing signs of weakness. Still, the Monnet Plan succeeded to the extent that it led towards the initiation of another similar plan from 1954 to 1957. This plan was perceived as the Hirsch Plan. On one hand where the Monnet Plan intended on an increase in the economic targets to about 10 percent, on the other hand the Hirsch plan aimed at enhancing the indicators to about 25 percent and that too over a period of three years where a broad spectrum of industries would be covered. France also managed to seek success in achieving the targets set by virtue of the Hirsch plan. In 1958, Charles De Gaulle again acquired to Presidency after winning the election, and thus he chose a Prime Minister solely committed to the task of economic planning for France. The third plan was designed to be implemented during the tenure between 1958 to 1961, with an aim to increase the GDP of France to about 23 percent. However, there were added social goals to the program as well with an increase in intended national development indicators. Keeping agriculture sector aside, most of the economic as well as social targets were achieved conveniently. Furthermore the time period between 1962 to 1965 was allocated for the fourth plan with a highly complex and sophisticated planning objectives being incorporated. In this plan, the social goals were the focus along with the economic goals where the model of indicative planning was brought into practice. During this time, the French economy was successful in attaining a middle ground between the classic laissez faire economic model and the Soviet central planning based model. Moreover, the fifth plan introduce in 1966 to be implemented by 1970 was more or less similar to the fourth plan with an added strategy being perceived as the balanced expansion. In 1968, France also saw a near revolution, yet the targets were again met. However, in 1969, General De Gaulle finally lost the elections, and though the French economy was doing well yet it was not at par with West Germany5. Also, France has issues with foreign investment, also in terms of research and development during the era. The French Scale of establishments were also smaller than that of the German establishments, though the government of France was actively encouraging mergers. Still, agricultural sector of France showed no signs of improvement where the Farmers were still using outdated techniques and weren’t contributing towards enhancing efficiency measures for French economy. Public Policy Measures in France Gravier (1947) argues that during the twentieth century there was excessive growth in Paris, while the rest of the France saw stagnation in economic growth. In 1881, around 5% of the population of France was concentrated in France in contrast to the 19% concentration in 1975. Also, another point in consideration in this context relates to the fact that around 3.3 million people moved from other provinces to Paris which resulted in the decline in the population of France in other provinces, between 1880 and 1936. Moreover, between 1880 and 1936 the employment opportunities also enhanced to around 45% in Paris, while the conditions in the rest of the France declined considerably6. The increased economic growth may be accredited to the natural market forces or the invisible hand, however it may also be the result of the centralized government administration and the transportation infrastructure in Paris. A few scholars also argue in this context the overdevelopment of Paris was a mere illusion and was rather the reason for the under-development of the rest of France. In the given scenario, the French government took steps to enhance regional planning and accordingly design the public policy for the economic wellbeing of France. In this context, a national fund for regional planning in France was created. Also, subsidies were allocated for firms to assist firms in moving out of Paris to areas designated by the government in 1954 and 1955. Further extension to the legislation required firms to acquire prior authorization by firm to function in Paris, also the firms already operational in Paris to seek authorization before expanding their business in Paris. Furthermore, in 1963 the regional policy was further enhanced and an initiative termed DATAR (Délégation à lAménagement du Territoire et à lAction Régionale) came into being. This initiative served as a coordination guide to synchronize the regional planning for various firms. This initiative was also allocated a special fund for the Regional Development Planning (FIAT) in an effort to fund regional projects for which financial assistance wasn’t offered by other agencies. Also, DATAR offered an information network amongst the offices located outside France to enhance foreign investment in the French dominion. Furthermore, in 1966 to 1970, the fifth national plan was executed to assist the weaker agricultural industries along with the purpose of directing investment away from Paris and rather towards the low-income regions of France7. In addition special focus was placed towards enhancing the transportation infrastructure between the western cities of France and the rural areas. However, a few moderations were made to the Sixth National Economic plan which was executed from 1971 to 1975. In accordance to this plan, there was a shift from the regional planning initiatives due to the fear in French policy makers that the decline in the economic indicators in Paris might lead towards decline in France`s international economic competence. Though there were still a few provisions for encouraging industries in the west, yet there were programs aimed at urban development. The program enabled various contracts between the national and the local government of rather medium sized cities in France to carry out projects requiring urban infrastructure. The national government was required to cover around one-third of the costs of these projects while the local governments were responsible for the rest. However, DATAR was rather unsuccessful in the creation of two development poles i.e. one in the north and one in the south. Also, another factor contributing towards economic chaos was the hike in oil prices globally. Furthermore, the seventh national economic plan was implemented from 1976 to 1980 which incorporated around 25 action programs at national level to enhance the economy. Another moderation in this plan was that the contracts were now enabled between national governments and the small towns with population ranging from five thousand up to twenty thousand. Also, DATAR wasn’t as successful in practice as there was inherent sense of corruption in the projects. Most of the subsidies instead went to large firms, only five of the firms acquiring around 50 percent of all the subsidies. Also, the public enterprises which constitute a huge share of the economy, acquire one third of the subsidies with nine firms having received around one third of these subsidies. Also, forty percent of these subsidies directly went to old industries in the north which deterred the initiation of new industries. As a result the net migration statistics into the South from the industrial north can be retrieved. Also, a suburbanization can be observed in Paris with an expansion in the economic base. Furthermore, there is a reduction in employment in the large firms where the SME`s are enhancing employment opportunities for the labor class. There is thus considerable decentralization in employment owing to the regional policies implemented by the government. The eighth economic plan was to be implemented in 1980 onwards however the Socialist Party dismembered the entire project and the ninth national economic plan of 1984 to 1988 was designed to further enhance decentralization to increase economic prospects in France. Impact of Industrialization on Madagascar The republic of Madagascar which was formerly referred to as the Malagasy Republic and the Democratic Republic of Madagascar has gone through various socio-economic as well as political transitions over time through the nineteenth and the twentieth century. Since the island of Madagascar is located on a strategic location along the Southeastern coast of Africa, it was the focus for Britain and France during the colonization era, however, France managed to colonize the island by the end of the nineteenth century8. Madagascar finally got rid of its colonial masters in 1960, after which Philibert Tsiranana became the head of the First Republic, which later underwent certain changes. In 1975, a Marxist led communist government took over, while again during the 1990`s the second republic underwent transition to finally turn into an Islamic republic. It was in 1993 that marked the beginning of the third republic with Albert Zafy being the third elected head of the state since independence. In the beginning of the twentieth century, anti-colonialist movements were apparent in Madagascar led by a clergyman called Pastor Ravelojoana who was deeply inspired by the Japanese development model. Thus, a secret society was formed within Madagascar which was brutally suppressed by the French colonial masters. However, during world war I, as many of the Madagascar war veterans visited France, they were exposed to the ideals of modernism and anti-colonialist. On their return to their island, they began a movement for equal citizenship of the natives as well. The labor which was working hard to cope up with the industrialization needs of the European states were now advocating for labor rights and financial freedom as well9. As a result in 1924, a delegation was formed with two groups, one being representative of the French and the other one being representative of those from Madagascar, though material results were never achieved. It was however, only in the aftermath of the second world war that Madagascar attained true independence, in the 1960`s. The base of the economy of Madagascar can still be accredited to the French settlers or the Creole immigrants from the islands of Mascarne during the nineteenth and the twentieth century, since they established the first ever modern land projects in the islands. Also, these immigrants along with the colonial masters introduced cash crops like sugarcane, coffee, cloves, vanilla and sisal to be important export goods for the island. Moreover, in the beginning of the twentieth century, they also contributed towards the establishment of small-scale mines to further explore metals like chromite, graphite and most precious of all, uranium resources. In addition, for effective marketing and export of the goods a lot of small enterprises were also founded in the island, and the infrastructure was also developed in the form of a modernized railroad system. Later, during the 1930`s and the 1940`s, as a result of the massive industrialization especially in Europe, the Malagasy were exposed to the modern concepts of economy for instance the wage labor economy, foreign owned plantations and also the civil service and business administration for effective administration of resources. However, prior to independence, most of these enterprises were owned by foreign actors and the Malagasies were unable to seek any advantages out of it. Right after independence, the Tsiranana regime didn’t instantly took steps to completely remove the French domination of the economic sector of Madagascar. Thus, there was unequal distribution of wealth which led towards underdevelopment of the southern and the western parts of the island, thus in 1972, a shift in economic policy was inevitable10. Thus, the military regime during the era cut all ties from France and began slow development toward economic development and self sufficiency. Furthermore, Ratsiraka extended the policy towards ‘revolution from above’ which ensured not just the ownership over foreign firms, but also aggressive socialization and nationalization of major enterprises11. Also, the state took over almost all firms, financial sector, marketing and mining industries and also all major manufacturing enterprises. Moreover, the firms which were still under private sector domain were now asked to function at the government controlled prices. In rural areas, initiatives were taken to enhance the agricultural setup. Furthermore, institutional reforms were implemented and an economic plan was executed for the period between 1978 and 1980 with the aim to enhance government spending in all sector of economy. However, since the external world was now working as an open market system with IFI`s controlling the economic environment, Madagascar was certainly lagging behind in this respect. Thus, the government initiatives had started to fail in showing signs of economic development by the beginning of 1980`s. Also, the population boom in Madagascar was also apparent during the 1970`s and the economy also failed to serve the growing population. Though the resources were diverse and enormous in Madagascar, yet the productivity level and the GDP ratio was depreciating. Also, ironically on one hand where the foreign influence was minimized from Madagascar during the era, on the other hand Madagascar was deeply indebted by the foreign investors due to which Madagascar had to indulge into structural adjustment programs by the IMF and the world back. The IFI`s pointed out that that the GDP rate between 1970 an 1991 had dropped out to around 40 percent, and thus to return to its original level by 2003 it must enhance its growth rate to around six percent12. Thus, once Ratsiraka regime understood the fact that the entire socialist model was a huge mistake, they opened their doors for the liberal economic model being followed by the developed world by the 1980`s. Thus, the period after the 1980`s saw massive privatization along with the disbanding of major agriculture marketing boards, also the ratification of liberal investment standards to enhance foreign investment. Also the banking industries were privatized with a diversified export sector and enhanced investment on food expenditure. Thus, the Zafy regime made its priority to develop the economic sector of Madagascar. Coming to the industries of Madagascar, they also showed negative indicators of growth from 1981 to 1986 while 1987 onwards there were significant positive indicators which implicated the improvement in the industrial sector of Madagascar13. In 1993, one of the highest rates of 13 percent weas recorded for which the industrial sector was responsible out of the entire GDP of the economy of Madagascar. More so, the food processing sector, energy sector along with the mining sector contributed towards adding 65 percent to the 13 percent of the GDP, the industries were responsible for14. Thus, in the beginning of the twenty first century, Madagascar was well equipped with a stable economy to handle the modernized and the industrialized foreign market after going through massive transitions both economically as well as politically. Thus conclusively, the industrial revolution led towards massive transition for many states, and both France and Madagascar were one of them. In the beginning of the twentieth century, France underwent a political transition which turned out to be critical for the economy of France. That is, France was an authoritarian state and thus, nationalization led to certain barrier due to which it wasn’t able to enjoys the fruits that industrialization had left behind for these states. Furthermore, during the 1940`s France again saw change in leaderships with distinct ideologies which further depreciated the economy. Later, with democratization of the state with the regime being serious about the economy, France became a competitive economic giant in the European region. However, French government was again confronted with the issue of capital being entirely until the time it was a French colony, the economy was considerably stable and modern economic institutions were built to the advantage of the French colonial masters for the most part, though Madagascar is still relying on the infrastructure setup by the masters. Yet, the authoritarian governments followed the socialist model of development which damaged the economy and the industries of Madagascar, and later in the 1980`s when the IFI`s intruded and asked for measures to improve the economy, Madagascar again took off and continued its journey towards an economically stable state. Bibliography: Azam, Jean-Paul. 2000. Inflation and macroeconomic instability in Madagascar. Oxford, England: CSAE Pub., Dept. of Economics, University of Oxford. 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Britain, France, Russia, Prussia, Holland, and the United States : with an examination of Mr. Huskissons system of duties on imports. Philadelphia: Printed by J.R.A. Skerrett. http://www.gale.com/ModernLaw/. Cassis, Youssef, François Crouzet, and T. R. Gourvish. 1995. Management and business in Britain and France: the age of the corporate economy. Oxford, UK: Clarendon Press. Gordon, David M. 1985. Merchants and capitalists: industrialization and provincial politics in mid-nineteenth century France. University, Ala: University of Alabama Press. Graves, James L. 2000. The post-cold war armored vehicle industries in Britain, Germany, and France: a study in political economy and transition. Westport, Conn: Greenwood Press Hulsink, Willem. 2002. Privatisation and liberalisation in European telecommunications comparing Britain, the Netherlands and France. London: Routledge. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=70355. Leroux, Robert. 2011. Political economy and liberalism in France: the contributions of Frédéric Bastiat. London: Routledge. Pryor, Frederic L. 1990. The political economy of poverty, equity, and growth: Malawi and Madagascar. New York: Published for the World Bank [by] Oxford University Press. Sawyers, Larry, Daniel M. Schydlowsky, and David Nickerson. 2000. Emerging financial markets in the global economy. Singapore: River Edge, NJ. Wells, E. Christian, and Patricia Ann McAnany. 2008. Dimensions of ritual economy. Bingley, UK: Emerald, JAI. Read More