Extract
[...] States around the world find themselves today in a paradoxical situation. On the one hand, it is led to play a crucial role in growth-driving sectors (innovation, education and infrastructure) and face current challenges in the field of environmental protection and defense. On the other hand, public finances are severely degraded around the world, which clearly reduces the state's room for maneuver to respond to current needs. A complementarity between public action and the private sector therefore seems necessary to face contemporary challenges and issues. Annex Graph 1. [...]
[...] Six of them display a public debt exceeding 90% of GDP, in decreasing order: Greece, Italy, France, Belgium, Spain and Portugal. 1.2 Risks posed by degraded public finances A 'snowball' effect manifests and is translated by an automatic increase in public debt when the interest rate on public debt is higher than the growth rate of the national economy. In the event of a public debt derailment, the latter becomes unsustainable and can even trigger a state default, as has been the case in the euro zone, with Greece in May 2010 or more recently in many countries: Belize, Zambia, Ecuador, Argentina, Lebanon, Suriname? [...]
[...] This deterioration of public finances of states in the world leads us to analyze the problem posed by a high public debt, as well as the role played by the state in the economy. More specifically, in the first part, we study the concept of public debt and the risks it poses when it exceeds an important, even unsustainable level. Then, in a second part, we highlight the essential role played by the state in economic growth, which justifies public action in strategic sectors, despite the current context of budget austerity. 1. [...]
[...] It is essential to distinguish between gross public debt and net public debt, which provides a more realistic image of the level of public indebtedness. In fact, with this concept of net public debt, the public assets held by the State are deducted from the gross debt stock of the State. In addition, it is essential to note that the 20 member states of the euro zone must respect rules in the field of public finances: the Stability and Growth Pact, which limits the budget deficit to of GDP and public debt to 60% of GDP. [...]
[...] In addition, the endogenous growth current of the 80s (Lucas, Barro, Romer) advocates for long-term public action in the fields of education and human capital, infrastructure and innovation. 2.2 New challenges for public action: combating climate change and defense In addition to these growth-driving sectors, the State has an active role to play in combating climate change and financing the energy transition, in order to limit the rise in temperatures to + 2°C by 2100 (Paris Agreement target) and to accelerate the carbon neutrality of many economic sectors by 2050. [...]
