In 1987, Government led by Prime Minister Jacques Chirac signed the first French public-private partnership agreement with the Walt Disney Company also known as the ‘Agreement on the Creation and the Operation of Euro Disneyland in France’. Their purpose was to develop an Eastern area of Paris known as Marne-la-Vallée at a moment when the construction of La Défense Central Business District already boosted the West of the French capital. The crucial point of this topic was a public investment of 666 millions euros conceded by the Government to develop a plot of land populated by less than 5 000 inhabitants. In a few words, Jacques Chirac took a Keynesian approach by thinking that this public spending will boost the national income. So, we will use the fiscal multiplier theory developed by Keynes to explain the choice made by the French State.
The public money wasn’t invest in the park itself. Indeed, the park, its mall and the hotels were financed by the Walt Disney Company. However, the Government was mainly in charge of public transportations to cover the 50 km separating Marne-la-Vallée from Paris. In some ways, this approach is not that far from the liberal though. Indeed, they think that the financement of transportation infrastructures, including road and train, should be borne by the State in the aim with supporting trade development. However, this agreement targeted specifically the activities of a private company. Those transportation services were a condition sine qua none for the implantation of the Walt Disney Company activities in France. So this seems to get much closer to a make-work deal, with temporary costs to support. But the Parliament still voted the budget to build an highway passing by Disneyland, to extend the train railway from Paris to the park and to open a High Speed Train Station in Marne-la-Vallée. At this time, the unemployment rate in France was above 10 % and opponents argued that this public money would have been use to finance the public unemployment insurance.
Finally, Euro Disneyland opened in April 1992. In 20 years, it has creating directly and indirectly 55 000 jobs and the State gained 50 billions euro in accordance with datas of inter-ministerial commission on the development of Marne-la-Vallée. Those tax receipts are due to the value added tax from the resort and also from the corporate taxes. On average, the ratio for a public investment is 1 to 4 instead of 1 to 100 in this case, stressed former Euro Disney CEO Philipe Gas. This efficiency of the government spending is the basis of Keynesian theory ; the increase in national income is greater than the initial public amount of spending. Moreover, Disneyland has increased from one to two millions the number of foreign tourists in Paris. A year after the park opening, France took over from Spain the leadership on the tourism market. Government is now expecting to open an express railway service from Charles-de-Gaulle airport to Marne-la-Vallée in the aim aim with completing the multimodal hub in Disneyland before 2024.
To conclude, the public-private partnership to develop Euro Disneyland gives substance to the existence of the multiplier effect proposed by Keynes. The evolution in French aggregate demand has caused a change in aggregate output. But Governments should be aware of qualitative data before those kind of financing. The debt that has left over Greece from Athens Olympic Games in 2004 is maybe one of the best example that the multiplier effect is based as much on quantity of money invested as the quality of the developing project and its integration in the economic structure.
By : Paul REÏSSI, M00602378, Exchange student