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Tech Industry

What is it about the French?

They invented the word "entrepreneurial," notes CNET's Charles Cooper, so why has the hexagon failed to create its own Silicon Valley?

Why is it that only a handful of French companies are listed on the Nasdaq compared with more than 100 for Israel, a country with roughly one-tenth the population? The blunt truth is that France, a country with a $1.7 trillion economy, is still better known for its fromage than its technology.

I don't mean to pick on the French. Truth be told, I'm an unabashed Francophile. I love their food, adore their language and admire their culture. But when it comes to high-tech innovation, there's no escaping the fact that France does not punch its weight.

About 200,000 French men and women, graduates of their country's best technical schools, are living in the Bay Area.

The Israelis may be a special case. Still, when conversations turn to technology, France regularly gets overlooked in favor of economic basket cases-turned-tigers such as South Korea, Taiwan, Japan, China, Singapore and India. Considering that the French invented the word "entrepreneur," this is a source of some irritation among the French political elite who bristle when outsiders innocently offer up the comparisons.

"There is the sense that we are old-fashioned, unproductive, too obsessed with the quality of life," said Clara Gaymard, president of the Invest in France Agency and a special representative for international investment. "France actually has a higher percentage of 20- to 29-year-olds with qualifications in science or technology than the U.S. or the U.K."

Gaymard was in Silicon Valley this week to try to puncture some of the myths she said have grown up around what has been referred to as the French Paradox.

Paradox it sure is. There's no shortage of technical ability in France--but a brain drain is hurting the company's economy. About 200,000 French men and women, graduates of their country's best technical schools, are living in the Bay Area, part of the reason there's a technology gap. However, for all of Gaymard's optimism about her country's future as a tech leader--and she was spot-on message during a two-day conference devoted to the subject of France and high-tech, the problem isn't easily given to resolution. Consider some recent history...

When France's then-Prime Minister Lionel Jospin returned home from a tour of Silicon Valley in 1999, he was determined to spur job growth and innovation. One idea he pushed through was a tax cut on stock-option earnings. So far, so good. But Jospin also made government responsible for promoting industry incubators, directing seed money to tech start-ups. That's where history and political culture trump the needs of the market.

Chrysler got away with it, but when was the last time a U.S. tech company walked away with a federal bailout?

There's a long history of "etatism" in France that you can trace back to the days of Mazarin and Louis XIV. So it was no shock to see the French government come to the assistance of Bull in 2002 to prevent the collapse of that one-time flagship company. There was hardly a murmur of domestic protest when the government provided a 450 million euro rescue loan. (However, the move got Paris in trouble with the then-EU competition commissioner Mario Monti. The French government announced a year later it would no longer be a stakeholder after Bull completed restructuring.)

On this side of the Atlantic, that approach to the market is simply radioactive. Chrysler got away with it, but when was the last time a U.S. tech company walked away with a federal bailout? When Digital Equipment was on all fours, it got sold to Compaq Computer. And when Compaq got wobbly, Hewlett-Packard snapped it up. You're never going to see Gates or the other digerati testifying before Congress on why bailouts are in the national interest.

For better and for worse, the French government was also the driving force in the development of the Minitel network.

In response to a presidential request, a report got written in the early 1970s by a couple of bureaucrats named Simon Nora and Alain Minc. Their work, The Computerization of Society, went on to become a best seller in France and provided the intellectual backdrop for the country's politicians to push into the digital age. At the time the government controlled France Telecom, and the phone company's customers received free electronic terminals.

Minitel was a fit for the 1980s but it was tres passe once the tidal wave that was the Internet hit the shores on both sides of the Atlantic. It's no accident that France is still waiting to produce its first Internet powerhouse. That sort of thing comes out of the rough-and-tumble of chaotic competition.

I spoke with Valerie Gauthier, dean of the prestigious HEC MBA program in Paris. She cautioned me not to fall for the easy stereotype--in many cases the problem is one of awareness.

"Lots of new technologies are getting developed in France," she said, "such as the ones that went into the Airbus. That's not being widely communicated."

Gauthier may have a point. But no amount of spin and marketing is enough if you don't have the goods. And so far France still has not risen to the challenge.