Belgium - Economy
Belgium, a highly developed market economy, belongs to the Organization for Economic Cooperation and Development (OECD), a group of leading industrialized democracies. With a geographic area about equal to that of Maryland, and a population of 10.8 million, Belgian per capita GDP ranks among the world's highest. In 2010, per capita income (PPP) was estimated to be €32,592 (approx. $43,220). The federal government ran large primary surpluses in recent years until 2009. Public debt remains high, at about 97.2% of GDP at the end of 2010. GDP growth in 2010 was estimated to be 2.1%.
Densely populated Belgium is located at the heart of one of the world's most highly industrialized regions. The first country to undergo an industrial revolution on the continent of Europe in the early 1800s, Belgium developed an excellent transportation infrastructure of ports, canals, railways, and highways to integrate its industry with that of its neighbors. One of the founding members of the European Community (EC), Belgium strongly supports deepening the powers of the present-day European Union to integrate European economies further.
Although Belgium had been a prosperous country from an early date, it entered the 1980s facing a difficult period of structural adjustment complicated by regional conflicts. The country's industrial economy is largely based on the manufacture of semi-finished and finished goods from imported materiel, and on the provision of financial and transport services associated with trade and public administration. Because of its small domestic market and lack of significant natural resources, the country is extremely dependent upon foreign trade (in the 1980s the port of Antwerp was the second largest in Western Europe and the third largest in the world) and is highly sensitive todevelopments in the international market and economy.
Traditional sectors of the economy including coal, steel, and textiles have been hard hit by changes in demand and international competition, and have resulted in a gradual shifting of the economic power base from Wallonia tothe Flanders region in recent years. Since the 1970s, high labor costs and an extensive social welfare system have served to undermine the competitiveness of Belgian industry, and to discourage private investment, thereby contributing to serious unemployment with an average 12.8 percent unemployed in the period 1984-1987. The 1973 oil embargo and resultant global recession hit the Belgian economy particularly hard, creating a record deficit in 1981 and stagnating economic growth.
In 1982 Parliament had to grant the government emergency economic powers to attempt to restore corporate competitiveness, control public expenditure (social security, unemployment benefits, and public services accounted for 26 percent of the total budget in 1982), and boost employment. The resulting economic austerity program was designed toreduce the govemment deficit of over 12 percent of GNP in 1983 to 8 percent in 1987 and 7 percent by 1989. As part of this austerity program, all government agencies, including the MOD, had to take severe budget cuts.
With exports and imports approximately equal to GDP, Belgium depends heavily on world trade. Belgium's trade advantages are derived from its central geographic location and a highly skilled, multilingual, and productive work force.
The Belgian industrial sector can be compared to a complex processing machine: It imports raw materials and semi-finished goods that are further processed and re-exported. Except for its coal, which is no longer economical to exploit, Belgium has virtually no natural resources. Nonetheless, most traditional industrial sectors are represented in the economy, including steel, textiles, refining, chemicals, food processing, pharmaceuticals, automobiles, electronics, and machinery fabrication. Despite the heavy industrial component, services account for 77.4% of GDP (2009). Agriculture accounts for only 1% of GDP.
For 200 years through World War I, French-speaking Wallonia was a technically advanced, industrial region, while Dutch-speaking Flanders was predominantly agricultural. This disparity began to fade during the interwar period. As Belgium emerged from World War II with its industrial infrastructure relatively undamaged, the stage was set for a period of rapid development, particularly in Flanders. The postwar boom years contributed to the rapid expansion of light industry throughout most of Flanders, particularly along a corridor stretching between Brussels and Antwerp (now the second-largest port in Europe after Rotterdam), where a major concentration of petrochemical industries developed.
The older, traditional industries of Wallonia, particularly steelmaking, began to lose their competitive edge during this period, but the general growth of world prosperity masked this deterioration until the 1973 and 1979 oil price shocks sent the economy into a period of prolonged recession. In the 1980s and 1990s, the economic center of the country continued to shift northward to Flanders.
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