BELGIUM
Administrative center and leading in industry
productivity
A small country divided by language
2.7% of EU population 3% of income
Flames in the north, Wallonians in the South,
Bilingual Brussels as informal capital of the EU
Administrative center: Council and Commission
Founding member of EU
Pre integration with neighbors BENELUX
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Economic Performance
About average long run and short run growth:
Output + 2.3% 1975-2000
The same for productivity growth
5th in GDP /capita: 24,100 in 2000 (EU: 22,500 EURO)
3rd in GDP/hour
Low employment rate: 59% (EU: 65%, US 71%)
Moderate unemployment and inflation
Top productivity in manufacturing: 61,700 EURO 1999
2nd only to Ireland
despite rather traditional structure
Structure-productivity paradoxon
High share of services: Brussels as “capital” of European
Union
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Disappointing growth drivers
Low research intensity; 1.6 & of GDP
Very low rate of patenting: 1/3 of EU
Low share of ICT and technology driven industries
Medium position of use of ICT (less than Netherlands, Denmark)
Average position in education (high share of tertiary
education)
Low innovation rate, but high share of co-operations, joint
ventures
Low market capitalization, but high venture capital
Out of all determinants of long run growth
Only tertiary education
PC use and
co-operations are above average
The ability to market incremental innovations and
firm capabilities guarantees competitiveness
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Policy
Belgium is an open economy
High export/import share
High inward/outward FDI (in both directions, inwards slightly
larger)
Founding member and center of EU
Difficult regional structure (Flames vs. Wallonians)
High tax rates and tax wedges
Tax rate GDP 49% (3% above EU average)
Social expenditures and social contribution high
Highest statutory corporate tax(together with Italy) 40%
High effective rate (together with Germany, France, Portugal
Government expenditure/GDP 50% (down from 63% early 80s.)
Debt still high higher than GDP : 107% (2001)
No specific activating labor market policy
With coordination problems federal/regional level
Considerable regulation of labor and partly product markets
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Traditional industry structure in manufacturing
3.5% of European production 9% of exports
Both with rising trend
2nd highest labor productivity in EU (surpassed by Ireland)
High share of
capital intensive basic goods industries
basic chemicals + oil
Steel, cement, textiles
food industry
low skill industries
car manufacturing
Low shares of
Technology driven industry
ICT industries
High skill industries
Successful dynamic industries
Pharmaceuticals increased to 9% of EU exports
Audio/video apparatus
Publishing and printing
Low and non increasing export unit value
Low quality/high productivity characteristics
Large firms:
Fortis (bank), Tractebel (conglomerate), Almanij (bank),
Delhiaize (retail), Dexia (bank)
No leader in a manufacturing industry
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Overall evaluation
Success partly against the odds
Traditional structure in industry
High share of administration/government
High taxes, still regulated markets
Debt larger than GDP
No large industrial firms (top 5: banks and finance)
Difficult regional structure
Large center, Wallonia and Flandern
Skill drain to administrative jobs
A position between “dominating” neighbors (Germany, F, NL)
Upgraded by becoming the Center of Europe
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