Blog: French protectionism
Catherine Sleep | 7 March 2006
The French government says it will protect its 20 leading companies from foreign aggressors. That’s overseas investors, to you and me. Touching, perhaps, but economically dubious. Protecting your market from inward investment runs contrary to most economists’ vision of a healthy business strategy.
Danone, Carrefour and the like do not need to be protected from Pepsi or indeed any other potential investor. They operate globally and employ an international workforce. They can run their businesses perfectly well in a free and competitive marketplace without contrived defence measures.
The immediate impact of the news of the government’s bizarre initiative was to send both companies’ share price down. Rough justice.
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