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French Guiana represents the largest territory of any region in France. Still, in 2019 its population came to just 296,847. In recent years the economy, while showing positive signs, has faced several significant challenges. The factors associated with growth and development in French Guiana are examined in detail in this chapter with particular emphasis given to the short-term period from 2000–10 and the long-term growth path from 2000–17. Given the dearth of relevant data in the English literature, much of the discussion is confined to documenting the economy’s movements over these periods.
Historically, French Guiana’s growth and development suffered from poor geographic location, deficient infrastructure away from coastal areas, and an absence of critical labour force skills. These deficiencies have all limited the development of critically important agricultural, mining, forestry, fishing and tourism sectors. Currently, the mismatch between supply and demand remains a significant feature of the labour market. While the unemployment rate has fallen in recent years with salaried employment on the increase, the youth unemployment rate remains high at slightly over 30% despite the government’s attempts to improve education and training. The major optimistic sign is the uptick in space activity. The European Space Agency’s (ESA) satellite launching centre at Kourou, Arianespace, continues to expand and represents a significant element of the economy, generating approximately 15% of French Guiana’s gross domestic product (GDP). In 2018 ESA was responsible for approximately 4,620 direct jobs and, in total, accounted for 9.3% of salaried workers. The centre concluded 20 new contracts in 2015 for future launches that are anticipated to generate €2,500 million. A significant expansion programme, Ariane 6, was expected to be operational by 2023. However, structural obstacles persist [1-5]. The first involves the imbalance between the growth of collective needs and the provision of public services, and the second, a private sector that is both underdeveloped and insufficiently diversified. In addition to these two characteristics, there are also several unfavorable cyclical phenomena leading to difficulties in
many of the traditional sectors. Prime examples include fishing (mainly shrimp), which suffers from high operating costs and unstable external markets. For similar reasons, agri-food exports remain weak. The vital gold sector suffers from illegal mining and volatile prices, while domestic air transport is experiencing disruptions resulting in a significant decline in tourism activity. Other problem areas include excessive government deficits financed by bank credit, excessive governmental interference in the economy, and protectionism that increases the costs of local production. There is considerable intervention on the part of the territorial communities of French Guiana, the municipalities and the urban agglomerations. These interventions cushion difficulties by helping to maintain activities and limit social tensions. Public procurement thus plays a leading role, particularly in sectors such as construction (buildings and public works). Salaries paid to civil servants in the state, local authorities, and the hospital civil service have provided stimuli to a variety of sectors, including those in the trade, catering and services. They have also stimulated business start-ups with 900 new companies registered since 2001. Government salaries and procurement have created an environment in which household consumption dominates the economy [6-10].
The following sections shed light on French Guiana’s pattern of development and the imbalances incurred. The lack of relevant data hinders this effort, yet several developments reflect the
underlying currents. During the period 2000–10, there was severe
social unrest and weak growth of 1.5% in 2001 following the
collapse of sugar, rice, gold and especially bauxite exports. As a
result of the downturn and associated financial and debt crisis, the
authorities had to enter into an agreement with the International
Monetary Fund. A severe decline in tourism in 2003 further
compounded the crisis. From 2000–10 foreign trade showed an
increase in value with the trade coverage rate ranging from 19.6%
to 21.2%. On average, during the period the five main exports were
gold (around €82 million), fishery products (€17 million), rice (€5
million), measuring instruments (€3.8 million) and sawn timber
(€2.5 million). These products represented 85% of exports. The
gold sector accounted for 63% of exports. Metropolitan France
remained the leading market. The Netherlands Antilles and Brazil
were the second and third largest markets, respectively, with the
USA fourth. Exports of agriculture and fisheries declined during
this period, with the increase in citrus fruit not compensating for
the collapse of fisheries and aquaculture. Only Guadeloupe, French
Guiana’s third largest customer of these products, increased its
imports (by 21%), while metropolitan France and Martinique
decreased theirs by around 37% and 11%, respectively. Although
exports of rice (33%) and rum (35%) increased, their small
volumes were not enough to offset the decline in other areas. As
a result, the agri-food sector experienced an export decline of 5%.
There were some bright spots, however. During this period Spain
became an important customer of rice as did Colombia (2% of
exports). Other areas such as footwear (97%), pharmaceuticals
(53%) and domestic appliances (85%) experienced significant
export declines. However, communication equipment grew
by 12%, but not enough to offset the collapse in demand from
During this period imports came mainly from Trinidad and
Tobago, and Martinique. Intermediate goods represented 12% of
imports with metallurgical products and textiles accounting for
approximately 21% and 9%, respectively. Imports of consumer
goods increased in value with relatively stable quantities. The
most substantial growth occurred in optical and photographic
equipment (36%) and clothing (22%). On average, during this
period the trade balance was in deficit (€532 million) with
imports at €660 million and exports (€128 million). Also, during
this period most financial assets were held by individuals (65%).
The balance accrued to companies, government entities and
insurance companies. Deposits collected by credit institutions
amounted to approximately €694 million, with growth during
this period at nearly 11% per annum. Savings in French Guiana
averaged approximately €349 million, or 50.2% of assets. Shortterm
and liquid investments amounted to €211 million, or 30.4%.
Liquid investments consisted mainly of passbook accounts (61%)
and long-term deposits (20%). Long-term savings averaged €134
million, or less than 20% of all assets. The data suggest that financial
markets in French Guiana were underdeveloped at this time with
the Institut d’émission des départements d’outre-mer (IEDOM)
indicating that the cost of credit remained high throughout the
period with the overall weighted average rate for companies
at 8.89%. However, during this period banks remained highly
profitable, with net banking income increasing at 17% despite the
amount of credit granted remaining low. French Guiana’s public
finances during this period were relatively underdeveloped.
The total amount of tax revenue collected from households and
businesses averaged €330 million. These revenues came from
direct taxation and local taxation, with the latter affecting both
households and businesses, namely housing taxes, business taxes
and revenues from developed property. Indirect tax revenues
were mainly those received from dock dues and averaged €98.5
million. However, fuel tax revenues fluctuated considerably due to
volatile world oil markets.
During this period tax revenues were generally in line with
the structure of the economy, with an over-reliance on revenues
derived from consumption and imports. For the most part, tax
revenues financed local authorities, with municipalities receiving,
on average, about €59 million in indirect taxes. On the expenditure
side, population growth played a significant role during this period
with French Guiana facing structural constraints brought on by
rapidly growing collective needs. State and local governments
spent, on average, €1,179 billion. The state’s operating expenses
averaged around €108 million, with equipment accounting
for 21%, defence 18%, and education 16%. National capital
expenditure (direct and equipment subsidies) remained at an
average level of €91.8 million with direct investments representing
between €24.5 and €28.5 million. Government personnel costs
averaged between €255 million and €268 million. With a total
amount of €560 million, the public sector played an essential role
in the economy. During this period a limited number of activities
dominated the economy. Fishing occupied third place in exports
after space industry activities and gold mining. On average, fishing
generated €19.6 million in export revenues, with the shrimping
port of Larivot remaining one of the leading French fishing ports. In
2003 shrimp production reached 3,557 metric tons, following two
years of low production of around 2,600 tons. Production peaked
at 4,000 tons in 1986. On average, production per boat/year was
65 tons – the highest in the French Guiana-Brazilian zone with
Amapa and Suriname fleets averaging 35 to 45 tons per boat. The
biggest problem faced by the French Guiana fleet was that of illegal
fishing. Red snapper fishing was carried out in French Guiana by
handline from 41 Venezuelan vessels under European licence.
However, due to over-fishing production fell after 1998 [12-13].
From 1998 production and fishing efforts decreased, allowing
the fishery to recover. In 2003 landed production in French
Guiana was 862 metric tons. However, the average weight of fish
decreased from 1.0 kg to 750 grams. In 2002 the volume exported
was 734 tons and generated €2.7 million. This Figure compares
with around 1,481 tons or €6 million in 1998. Whitefish is another
important species for commercial fishing in French Guiana and includes all species of fish other than snappers. In French Guiana’s
case, this includes mainly machoirans, acoupas, croupias, rays and
sharks. Fishing for this species involves a professional sector with
registered ships and an informal sector operated by lower-income
individuals. A variety of fishing techniques are utilized, including
straight net, set net, longlines, trolling line, and rod techniques.
According to the evolution of the snapper fishery from 1988
to 2006, based on the author’s compilation, the whitefish sector
represents, on average, between 2,000 and 3,500 tons of fish
peryear. It averaged about 100 boats with a minimum of 209 sailors
registered on board. Despite its inefficiency and poor organization,
the sector has the potential for a significant expansion in output
and employment. Construction represented a significant segment
of the economy, with public procurement being the driving force.
Housing construction underwent a significant expansion with a
shift towards that already taking place in the municipalities. In
this regard, local authorities gradually assumed a more critical
role. On average, the private sector accounted for 33% of housing
starts. Expansion in non-residential buildings (shopping centres,
space industry buildings) also occurred. Several indicators of
construction, such as sales of bagged cement, which increased
to 6% and in roofing sheet expanding by 3% paint a picture of
slow growth (2003). However, in contrast, building permits for
the public sector increased by 34%, and those for the private
sector by 62%. In any case, the imbalance between the supply and
demand for housing remained high, with an average waiting time
of 20 months to obtain housing. In part, the gap between demand
and supply for housing stemmed from a severe shortage of skilled
labour in the building trades. Overall, in 2004 construction
contributed €360 million or 15% of GDP. At this time, the sector
employed 2,500 workers in the formal sector and 1,600 in the
informal sector. There were also 800 craftsmen and small business
owners, and 500 temporary workers. In 2004 public procurement
accounted for 66% of construction activity compared to only
37% in metropolitan France. Construction activity picked up
considerably in 2006 with value added increasing by 27%. At this
time, the driving force expanding construction was the activity
related to the preparation of the new Soyuz and Vega space ports.
This stepped-up activity involved the hiring of 500 additional
employees at the end of 2007. Expenditure on these programmes
amounted to approximately €160 million. Air transport represents
another segment of the economy, although its contribution has
been affected significantly by international, national and regional
cyclical phenomena. During this period these included the
structure of the global economy marked by an upward trend in oil
prices and the global recession. Furthermore, the small size of the
regional market created a disincentive for diversification with less
than 400,000 passengers per year limiting profitability. During
this period French Guiana ports averaged 644,000 metric tons of
goods. In terms of volume, the main items moved through the ports
involved hydrocarbons with rice exports also a valuable item. On
average, 3,900 new vehicles were imported. The space industry
made a significant contribution to economic activity during this
period, employing between 1,750 and 1,800 workers (Table 1).
The industry’s budget (Table 2 & 3) was one of the largest in
French Guiana. Tourism represents another important sector
(Table 4). During this period the government attempted to expand
tourism with the 2000–06 State-Region Plan Contract indicating a
renewed commitment to making tourism one of the critical areas
of economic development. In the past, many tourism operators
had avoided French Guiana owing to disruptions on domestic
routes. The main thrust of the State-Region Plan was a large-scale
publicity effort (valued at €1 million per year) designed to enhance
French Guiana’s image as a tourist destination. Its goal was to
increase the annual flow of tourists to 100,000. Unfortunately, the
programme was not successful and tourist activity deteriorated
by 13% in 2006, with the hotel occupancy rate remaining at 52%.
Tourist spending fell by 2% in 2007 [13-15].
The TABLO-Guyana model, a Keynesian quasi-accounting
model, can be utilized to identify longer-term trends in
the economy1. The model incorporates several underlying
assumptions concerning the evolution of the supply and demand
for goods and services. The model consists of 25 branches and
25 products. The results for the period 2000–10 are presented in
Table 5. In 2006 it was estimated that the French Guiana economy
grew by 6.4% in terms of volume. CEROM’s estimates showed
that the economy grew by 3.6% in the previous year. According to INSEE, this result is unusual given that in 2006 [16-20] growth
was almost 2.5 percentage points above the average over the
decade (3.9%) and 4.4 percentage points above the national rate
of growth. With GDP per capita at €13,800, the increase in volume
was 2.8%. In part, per capita income growth was limited by a
population increase of about 3.8% per annum. The high rate of
growth at this time stemmed mainly from the exceptional level of
investment in the space industry. Furthermore, the infrastructure
works of the Soyuz and Vega programme, the resumption of public
procurement, and private investment have helped to amplify this
dynamic. Investment increased by 27.7% in terms of volume and
contributed 5.7 percentage points to GDP growth. Government
expenditure has also been on an upward trend. The construction
sector has benefited from the effects of investment, with value
added rising to 27% of GDP. Private services, industry and gold
mining also benefited from growth. In 2007 overall value added
increased to 6.8% in volume, or by 3.5% compared to 2005.
Industry and construction also accelerated sharply. Several
patterns are apparent. French Guiana is experiencing growth that
is mostly absorbed by population growth. On the other hand, the
United Nations Development Programme Human Development
(HDI) ranks French Guiana among the high human development
countries such as Trinidad and Tobago, and Brazil. The business
climate indicator is based on quarterly business surveys. It
is centred around a long-term average of 100 and a standard
deviation of 10. The higher the indicator, the better companies’
perception of the economy. In this regard, as Figure 2 shows, there
has been a marked improvement in recent years, although the
disruptive social movements interrupted this positive trend [21-
French Guiana’s economic context corresponds to that of a
transfer economy, not specifically of public transfers, even if there
is an abundance of them. Private transfers are significant and
provide the basis for an increasing role to be played by that sector.
The other characteristic of the economy is the role played by the
French state in defining the institutional framework, administering
prices, and regulating monetary and financial availability. Many of
these activities have acted to constrain the private sector.
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