The economy of Belgium: description, main directions, development trends

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:40

A small, highly developed country in the northwest of Europe with advanced industry and intensive agriculture. The Belgian economy has flourished for over half a century thanks to its favorable geographic location, the use of modern technology and a highly educated, multilingual workforce. Since ancient times, the country has been a world center for diamond cutting and diamond trading.

About country

The Kingdom of Belgium is located in Western Europe, between France and the Netherlands, and is washed by the North Sea in the north. The territory of the country occupies 30,528 square kilometers. km. (141st in the world). The regions of the country have their own economic specialization - almost all of Belgium's industry is concentrated in the Flemish zone, near the capital and in two large Walloon cities - Liege and Charleroi.

The country gained independence from the Netherlands in 1830year and was occupied by Germany during the world wars. Since the founding of the state, it has been a constitutional monarchy, headed by the king, now Philip I. In April 1949, the country joined the Northern Alliance, and in 1957 - the European Economic Community. In 1999, it became one of the countries that established the EU and Monetary Union. In 1980, it was transformed into a federation, which includes three regions - Flemish, the Netherlands and the Brussels capital.

The country's population is approximately 11.6 million people, the vast majority of whom live in cities - more than 94%. It has a high population density - about 342 people per sq. km. km, second in this indicator only to the Netherlands and some small European states. About 75% of the population belong to the indigenous inhabitants of the country (Flemings and Walloons), the next largest national groups are Italians (4.1%) and Moroccans (3.7%). An important ethnic group are the Germans, who form a German-speaking community in one part of Liège.

General characteristics of the Belgian economy

Modern industry and agriculture are largely export-oriented, up to 40% of industrial products are sold to other countries, mainly the European Union. A distinctive feature is the significant share of the public sector in energy, utilities and transport.

The convenient geographic location and highly developed transport system have created a widely diversified economy of the country. Belgium provides excellent transport services. They are important for manufacturing and the high-tech sector. Speaking briefly about the Belgian economy, it is a high-tech post-industrial economy with a predominant service sector (72.2% of GDP), efficient industry (22.1%) and intensive agriculture (0.7%).

Individual regions of the country have their own specialization, Belgian industries such as services and high-tech enterprises are mostly concentrated in the northern, densely populated part of Flanders. Steel and coal production is located in the southern regions of Wallonia. The service industry, especially the financial sector, and diamond processing are concentrated in the capital region.

International trade

The Belgian economy is export-oriented, selling about $300 billion worth of goods annually on the international market. The country occupies a leading position in the world trade in ferrous and non-ferrous metals. One of the leading European exporters of coal. It has a developed automotive, radio engineering and electronics industry. The world is also known for its wool carpets and synthetic flooring. Key export destinations are Germany (16.6% of volume), France (14.9%) and the Netherlands (12%).

With a small number of mineral deposits, the country is forced to import a significant amount of raw materials and export industrial products. This makes the economy dependent on price fluctuations in global markets thancharacterized by the openness of the economy of Belgium and the Netherlands (having a similar structure of the economy). The volume of imports is approximately 280 billion US dollars. The main import products are raw materials, machinery, rough diamonds and oil products. Key partners are the Netherlands (17.3%), Germany (13.8%) and France (9.5%).

Current state

Belgium is an industrialized country, with a predominant range of services, with a fairly high share of industry and a small amount of the agricultural sector. The country's GDP, according to 2018 data, is 536.06 billion US dollars, 24th in the world. In terms of GDP per capita last year, it was in 19th place with an indicator of $46,978.65. Belgium has significant government spending, amounting to more than 50% of GDP.

In 2017, the Belgian economy grew by 1.7%, and in the previous two years, GDP grew by 1.4% per year. The country quickly recovered from the global financial crisis of 2008, showing the next year GDP growth of 7%, but in subsequent years, growth rates were low. The unemployment rate differs significantly across regions, which is associated with differences in the structure of production. If in Flanders the figure is 4.4%, then in Wallonia it is much higher and equal to 9.4%. On average, unemployment in the country is quite high and reached a level of 7.3%. The Belgian industry and economy as a whole recovered quite quickly from the terrorist attacks in the spring of 2016, which had a greater impact on the hospitality industry and tourism in the capital region.

Budget issues

The budget deficit was about 1.5% of GDP, according to 2017 data. The government, formed by the centre-right party, intends to further reduce the state budget deficit. This is primarily due to pressure from the European Union aimed at reducing the country's rather high public debt, which is 104% of GDP, which is significantly higher than the recommended figure of 60% established by the Maastricht Treaty.

The country's budget deficit is associated with poor tax collection and an excess of employment in the public sector. In addition, the government subsidized certain unhe althy sectors of the Belgian economy, including coal, steel, shipbuilding, textile and glass industries. However, these measures also have a dampening effect on economic growth. A sustained recovery in private consumption could also be limited by lower government spending, low income growth and relatively high inflation.

Immediate measures and prospects

The country's government in the near future intends to carry out institutional reforms to improve the efficiency of the Belgian economy in the future planning period. These measures include significant changes in labor market rules and social policies, in particular the payment of social benefits. Which should have a positive impact on the competitiveness of Belgian wages in the regional labor market. Reforms worsenedworking conditions, which caused considerable tension with the unions, who held several long strikes in response.

The year before last, the country's government approved a program to change tax legislation, which provided for a reduction in corporate tax rates from 33 to 29% by 2018 and to 25% by 2020. The tax plan also includes the introduction of tax incentives for innovation and small and medium-sized businesses, which should stimulate private investment and increase competitiveness.

The country is completely dependent on foreign fossil fuel imports, and the planned closure of seven Belgian nuclear plants by 2025 will only significantly increase dependence on foreign energy. The country's role as a regional logistics center makes it vulnerable to fluctuations in external demand, which characterizes the openness of the economies of Belgium and the Netherlands, which are highly dependent on international trade, especially with trading partners in the European Union. The seaport of Zeebrugge handles about half of trade with the UK and three-quarters of trade with other EU countries.

Economic development trends

The country's economic policy is focused on developing new forms of participation in the international division of labor. Competition from developing countries is intensifying in traditional Belgian sectors of the economy. They include metallurgy, chemistry and light industry. Therefore, the main trend in the development of the Belgian economy in the near future will beexpansion of the role of high-tech industries. The government will increase support for the sectors of the "new economy" - telecommunications, microelectronics, digital technology and biotechnology. Which requires a significant influx of investment.

To do this, the country intends to increase investment attractiveness, at the first stage through the modernization of infrastructure facilities (sea and airports, highways). The main attention will be focused on maintaining the image of the "golden gates of Europe", which the country has carried out over the past 500 years, albeit with varying success. The state also intends to reduce its participation in the manufacturing and business sector, gradually privatizing about 150 large companies. Speaking briefly about the Belgian economy in the coming decades, it should become more high-tech and less state-owned.

Industry

Starting from the early Middle Ages, the country has been a developed industrial center of Europe. The oldest industry - textile production, which once exported the famous Flemish cloth, is still concentrated mainly in Flanders (up to 75%). Arms began to develop in the Walloon city of Liege, and diamond cutting and the global diamond trade in Antwerp.

For a long time, Belgian industry could be briefly described as developing and modernizing traditional production for the country. For many centuries the country has been a world leader in metallurgy. In the Middle Ages, there wereferon workshops, now modern metallurgical plants producing special grades of steel, car rolled metal and wire. The country owns 15-20% of the world exports of metallurgy products. Metallurgical plants are traditionally located in the suburbs of Antwerp and Liège, where imported raw materials are brought.

In mechanical engineering, it specializes in the production of equipment for metallurgy and chemistry, vehicles, electrical products. In the past few decades, the country has been producing an average of about one million cars a year, most of which were originally intended for export. In addition to the final assembly of machines in Belgium, many metal-intensive spare parts are made from local steel.

In terms of the cost of products, the chemical industry, which originated once on the basis of processing waste from blast-furnace production, is in second place after mechanical engineering. Belgium continues to be the largest producer of inorganic chemicals. However, competition with developing countries in this market is intensifying. Therefore, in recent decades, the country's chemical companies began to specialize in the production of pharmaceutical products. The country has become one of the world leaders in the production of medicines. Belgian companies are investing heavily in the development of new drugs.

The country's famous food industry is essential to the Belgian economy. Many global companies have located their production facilities here. The country produces about600 brands of beer, some of them are 400-500 years old. The world's largest beer producer - Anheuser-Busch InBev grew out of a Belgian company.

Particular attention is paid to the development of the high-tech sector, more than 140 biotech companies operate in the country, which account for about 16% of the turnover of the EU industry and about 10% of research and development costs. Leading Belgian high-tech companies include Agfa-Gevaert, Barco, Real Software, and several pharmaceutical firms.

Agriculture

Modern agriculture of the country is characterized by high intensity and excellent technical equipment. However, the role of the industry in the Belgian economy is insignificant, its share in GDP is only 0.7%. Agricultural land occupies about a quarter of the territory, of which about 65% is allocated for growing fodder and pastures. Approximately 15% of the land is grown cereals, which meet less than half of the country's needs. The production of some types of food exceeds domestic needs, such as vegetables, eggs, meat, butter and milk. The country is an importer of agricultural products, satisfying about 20% of the needs in the foreign market. The main purchased items are durum wheat, feed, tropical fruits.

The industry is dominated by farms, but more than half of them do not have their own land and are tenants of farmland. small peasantfarms have been preserved in the south of the country in the Ardennes. In agricultural production, machinery and hired labor are widely used. Especially in large farms (with an area of 50-200 hectares), typical for the central part of the country, in the provinces of Brabant and Hainaut.

Like industry, agriculture has its own regional characteristics. In Flanders, there are the main farms specializing in meat and dairy production, growing flax, chicory, tobacco, flowers, vegetables and fruits. In the mountainous regions of the Ardennes, animal husbandry is developed - cattle and sheep are bred. In the central part of the country, on loamy soils, vegetable growing and horticulture flourishes.

Energy

Belgium's energy consumption is based on nuclear energy and imported hydrocarbons. Oil is bought in the Middle East, liquefied natural gas - in Algeria and the Netherlands, uranium concentrate - in France, Canada, the USA and South Africa. Nuclear energy provides up to 54% of the country's electricity needs, burning mineral fuel - up to 38.4%, a small amount is obtained from renewable sources and hydro resources.

Following the accident at the Japanese nuclear power plant in Fukushima in 2011, the Belgian government decided to phase out seven Belgian nuclear power plants by 2025. However, already in the fall of last year, only one reactor was operating in the country due to maintenance work at other facilities. The operator of the Belgian nuclear power plants, Engie-Electrabel, announced earlier that in the modeOnly two out of seven reactors in Belgium remain in operation in 2018. Two power units have been shut down due to the deterioration of the concrete in the bunkers, and two more have been shut down due to leaks in the cooling system. Another reactor was shut down in November 2018 for scheduled maintenance.

The electricity deficit in the Belgian economy will be filled with imports from Germany, France and the Netherlands. According to a preliminary estimate of experts, there may be a shortage of electricity of 4,000 megawatts. The country's government does not even rule out the possibility of a rolling blackout in the winter of 2018-2019 and a rise in tariffs.