Global Business Context Assignment 2008
Part 1:
France’s economic performance over the last 40 years can be illustrated using three main macroeconomic variables; unemployment, inflation and GDP. When comparing them against each other, we can explain the relationships between each variable. (A table of the variables can be found in the appendix.)
This graph shows that although there appears to be no direct relationship between GDP and unemployment until after around 1986, a correlation begins after this point. As we would expect to see, GDP increases as the rate of unemployment falls and vice-versa. Unemployment has been increasing since 1970 and continued until around 1986, eventually peaking with very high rates of nearly 12% in 1994.
When analysing the French GDP, it is evident that although it fluctuates, it does not follow a predictable pattern between 1970 and 1986; all three variables seem to be unstable until around this time. It is worth noting that the economy seems to perform better from the time Jacques Chirac became president in 1995, which may have been due to new economic policies. Also, the substantial dip in GDP and sharp increase in inflation from the early 1970’s was probably attributable to the OPEC oil crisis of 1973 (and 1978) which would have affected both businesses and homes, resulting in less money to spend and less potential for output. (Zaleski, 1992)
This graph reveals French inflation taking on a surprising path, moving in the opposite direction to changes in GDP which we would not normally expect to happen. This, alongside an analysis of the inflation and unemployment graph indicates that France experienced cost-push inflation from 1970 until around 198 ...