Industry, Trade … What does Corsica’s economy weigh?

With more demands for autonomy being heard on Corsica, the IESEG School of Business sought to assess the economic implications of the island’s independence.

The outbreak of violence on Corsica has reintroduced certain demands for more autonomy for the island’s independence. Beyond political issues, there are economic issues.

What will happen to the independent island of Corsica? A study by Eric Dor, Dean of the Faculty of Economics at the IESEG School of Business, is trying to answer this question. The conclusion could cool some proponents of a pure and hard separation from Metropolis.

Weak GDP

Before evaluating the results, we need to consider the economic condition of Corsica. And that’s not good.

Gross domestic product at the current price per inhabitant of Corsica available in 2020 is equivalent to € 25,500. Not only is it well below the national average of 34,000 euros, but it is also declining (27,400 euros in 2019).

“With the exception of Picardy, Limousin and Franche-Comté, per capita GDP in all regions of the French metropolitan area is higher than in Corsica in 2020.” “Corsica is one of the regions of France with the lowest GDP growth per capita in the decade 2009-2010. Of course, we will observe this between 2010 and 2020. You can also grow by 5%, for example, against 12% of Noor Padcare.

A little diverse activity

In terms of production activity, Corsica is characterized by its trade and catering advantages, accounting for 16% of metropolis and 26% of island employment, compared to 21% of added value. The share of construction is also higher than the national average.

In particular, the share of public and managed services such as health and education is much higher than the national average, emphasizing research with 33% of added value, compared to 23% of metropolitan cities and 33% of island employment. doing.

Conversely, manufacturing is almost non-existent (3% compared to 10%). Agriculture by small artisans in Corsica “provides little added value.” Information and communications-related services, including computing and all new related technologies, are “much less than on the continent.”

Independently, Corsica will not be able to maintain GDP levels

On paper, this economic boundary puts the independent island of Corsica in 12th place in terms of GDP per capita in the euro within the European Union.

To neutralize the impact of price differences between EU countries, “Corsica will be 19th in GDP per capita in purchasing power,” estimated at € 23,400, slightly above Portugal.

“But this ranking relies on the unrealistic assumption that Corsica can initially maintain the same level of per capita GDP as within the French framework by gaining independence. In fact, this GDP will decrease initially, “the study said.

And I will explain as follows. “It is actually unrealistic to think that Corsica will benefit from the same flow of income from abroad, whether it is in the French metropolitan area or in European funding. Also, Corsica from an international trade perspective. I don’t know the situation on the island either. The official doctrine of the European Union is that if the territory of a member country gains independence, it will automatically be outside the European Union and, inevitably, outside the metropolitan area. ..

In addition, the over-diversified production structure of Corsica risks forming a growth brake, unlike other “small” independent European countries that benefit from a wide range of activities such as Malta.

Towards significant reductions in social benefits and wages

Above all, the importance of public and controlled services clearly constitutes a risk. “If Corsica was independent and had to raise funds on its own, Corsica could hardly maintain this share of public and non-profit services.”

“This kind of service must be funded by the rest of the activity. Such a high share of these services in the overall added value is only due to the contribution of national solidarity from other parts of France. Funded. Independent Corsica must be funded. They are, entirely on their own, very difficult to maintain this amount of public and controlled service and provide. It will be forced to reduce the amount of public, health and educational services that will be provided, which is certainly not what the locals want, “Eric Dole emphasizes.

As a result, “if an independent island of Corsica has to raise money on its own, it will be difficult to maintain the level of severance and social benefits currently enjoyed within the French framework. The same applies to minimum wages, which are difficult to maintain. All of these incomes need to be steadily revised downwards first and approach what is observed in countries with similar per capita GDP. Would be. “

Eric Dor recalls that the minimum monthly wage in France is 1603.12 euros, and therefore in Corsica is currently limited to 792.26 euros in Malta and 822.5 euros in Portugal, for example. These are countries with a per capita GDP similar to Corsica. Therefore, these are the minimum wages that can be observed on an independent island.

Half-mast foreign trade, surge in public debt

According to a survey, Corsica has an annual deficit of € 1.5-2 billion in trade balance of goods and services with other countries in the world and other countries in France.

“If Corsica becomes independent, it is very difficult to cover such an external deficit. To reduce this external deficit, Corsica is obliged to first reduce aggregate demand and thus GDP. There is, “the study estimates.

This trade deficit could also increase, as trade under WTO rules is less favorable to Corsica than trade under the European Union.

The only solution: Very large foreign direct investment in Corsica. “It is highly uncertain whether this is the case. It will also result in subordinating the growing part of Corsica’s business sector to foreign interests, which will contradict the aspirations of the local population,” we read. I can.

In terms of debt, independent Corsica starts with public debt of 115% to 155% of GDP. “This GDP is actually much higher because it will decline at first. It’s hard to understand how Corsica can handle such public debt remaining in the euro. Of course France has this. Unless you agree to keep all public debt in euros. “

Without money, prices will skyrocket

Independently, Corsica is outside the European Union and therefore outside the euro. In that case, it is difficult to make money, which means the creation of a central bank, and to have an important bank and financial system, but it is not.

“This new currency will fall very sharply against the euro, dollar and other” hard “currencies, reducing purchasing power and soaring prices on Corsica, where most consumer goods are imported,” Eric said. Warns.Dollar

The solution is to adopt the Montenegro model. “That is to use the euro without being able to participate in the matter. This is to give the euro legal tender and therefore to use it officially, even if you are not a member of the union’s currency. am”. However, the study estimates that “for this to work, we absolutely need enough euros to voluntarily return to the country.”

Olivier Chicheportiche Journalist BFM Business