Nicolas Sarkozy won the French presidency on a platform of sweeping economic reform, and he is promising to enact a raft of new policies within his first 100 days. Will he succeed where others have failed and unleash France's full economic potential?
He faces a significant challenge. France has lost 300,000 jobs in industries ranging from aviation to automotive since 1995. Unemployment remains high despite some recent improvement. France's productivity growth has slowed. The country's large public sector is a drag on the performance of the economy as a whole. And France's share of global exports of manufactured goods has fallen. Indeed, the country's market share of exports to emerging economies has declined 16 percent in recent years—double the rate of the United States and triple that of Germany.
However, McKinsey research indicates that France has considerable potential to turn around its recent history of economic underperformance and declining competitiveness.1 The country boasts many thriving sectors that are creating jobs and enjoying growing productivity. If Mr. Sarkozy is to become a successful "presidential entrepreneur"—as former minister for foreign affairs and close aide Michel Barnier described him—he should build on these successes, rather than focusing on the inherently less competitive...