Summer in the south of France and a young(ish) man's thoughts turn to...the local economy

Primarily a university town - which is how the scribe first came to spend time there over a decade ago - Montpellier now bills itself as a "technopole" despite tourism being the main support of the economy (and the reason scribe and wife just concluded a long weekend there).

The scribe's concentration not being required for the ample distractions of the seaside (or at least that's what the wife said) the beach at Carnon inspired the following thoughts instead:

* 80% or so of the region's population are squeezed into the littoral, reflecting the decline of agriculture, the rise of service industries around urban centres and the demographic trend of northern retirees seeking warmth;

* property prices are robust with an unscientific survey of apartment prices in and immediately around Montpellier showing them to be, in some cases, about 80% of London's;

* service industry is over 50% of local GDP; manufacturing is 13%; agriculture 4%; construction about 6%; and "administrative services" (code for government spending) about 25%;

* in spite of the arrival of foreign business attracted to the city by fiscal sweeteners, local unemployment at 14% is higher than the national average of 10%. It is said (though not by Adam Smith) that this persistent over-supply of educated graduates attracts firms looking for low cost labour;

* yet some evidence (other, that is, than the bald unemployment number) shows that only small numbers of the university students (25% of Montpellier's 400,000 population) end up employed by businesses attracted to the city by the various national and regional fiscal incentives on offer. IBM (the city's largest IT employer) claim, for example, to take on only 5 permanent staff from the universities per year; and

* plausibly related to high unemployment, this scribe was awoken on his first morning in the city, three floors up behind closed windows and air conditioning by the sounds of three men beating a fourth. The next morning he witnessed petty theft by a group of young men from a convenience shop. Both incidents occurred in the modern and new Parc Marianne area of the town.

It is certain the suite of fiscal incentives aimed at developing technology incubators, centres of biomed/pharma research excellence et al around Montpellier has attracted capital, including substantial foreign human capital, and had wider impact: the forerunner of the Palm Pilot was born there; the city now has a stunning blend of medieval and contemporary architecture; and infrastructure compared to the early 1990s is improved (but not perfect - the GPS mentioned in New York City notes proved essential).

Nonetheless, from some angles the economic recipe served up looks a strange brew if it was also intended to provide an outlet for all those grads pouring out of the (free, hence their hordes) Montpellier university system. The region still lags in national employment and productivity rankings; and government expenditures, including those spent on welfare, are a full 5 percentage points higher than the country's average.

Sources: National Institute for Statistics and Economic studies - France, Foreign Direct investment Magazine, Invest in Montpellier, official city website

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