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- Title
WHITHER FRENCH PLANNING?
- Authors
Balassa, Bela
- Abstract
This article discusses ways in which medium-term planning will be affected by opening the French economy through the dismantling of protective barriers and entry into the Common Market. The proposition is advanced that, in a system of fixed exchange rates, the opening of a national economy provides new constraints for the planning process and necessitates the transformation of the system of economic planning. In an open economy, increases in the prices of traded goods are subject to a micro and a macro constraint. On the one hand, entrepreneurs have to limit price increases in order to avoid the loss of foreign markets or the encroachment of foreign firms on domestic markets; on the other, governments cannot accept a continuing balance-of-payments deficit to which the inflationary process gives rise. At the same time, foreign competition increases uncertainty in the decision-making process and reduces the reliability of forecasts. The logic of planning in an open economy appears to have led the French toward a liberal solution, one that uses deflationary measures in the short run and sacrifices the objective of a higher growth rate in the long run for the sake of stability, and creates a détente on the labor market in order to restrain wage increases.
- Subjects
FRANCE; INTERNATIONAL economic integration; PLANNING; MARKET entry; INTERNATIONAL markets
- Publication
Quarterly Journal of Economics, 1965, Vol 79, Issue 4, p537
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1880651