Belgium’s Economy

Belgium is located in one of the most industrialized areas of Europe. Because of its industrial strength—­
and hence, employment opportunities—­it is also one of the most densely populated. The per capita gross national product (GNP) for the Flemish and Central regions ranks among the highest in the entire European Union (EU); the average figure for the Walloon region is approximately 25 percent less. As Belgium enters the twenty-first century, the economy has a dynamic service sector with strength comparable to that of the other leading European powers. Today, about 75 percent of the nation’s economy is based on the provision of services, and three of every four jobs are in the service sector. Agriculture, once important, now accounts for little more than 1 percent of the labor force. Clearly, Belgium has made the transition from an economy based on agriculture and industry to one dependent on postindustrial activities.

EARLY INDUSTRIAL GROWTH

Together with Britain, Belgium was a leader of the Industrial Revolution during the early nineteenth century. The first heavy industries, such as coal mining and steelmaking, grew during the decades that followed Belgian independence in 1830. These prospered until well after World War II, before the oil crises of the 1970s depressed the economy and started a recession. The mining industry was principally centered in the Walloon cities of Charleroi and Liège, where there were large coal deposits.

Consequently, steelmaking plants were built in the same areas to make use of this fuel. There are also coalfields north of Ghent, in East Flanders. The decline of these industries is the principal reason for the slowing of economic development in Wallonia and a shift of economic wealth to the north part of the country. The area that includes Brussels, Ghent, and Antwerp has become the main focus of recent economic development. This is the reason for the shift in per capita GNP that now favors the Flemish north.

MANUFACTURING

Belgium’s manufacturing industry now accounts for about half the value of the country’s exports. Most of the raw materials used in the country’s industries, however, must be imported. This is the case with steelmaking and the production of other metals, which mainly use ores from abroad. In Europe, Belgium is one of the principal industrial refiners and producers of metals like cobalt and radium and the metalloid germanium. It is also a leader in the chemical and petrochemical industries.

Plastics made from petroleum products are manufactured on a large scale, and glassmaking is another Belgian industry. About 80 percent of all diamonds marketed in the world come from Antwerp, where the raw stones are imported for processing. Professional diamond buyers, diamond dealers, diamond brokers, and jewelry manufacturers have made the city the center of the world’s diamond industry. In the sixteenth century, Antwerp was a flourishing and expanding city that already played a major role in the development of diamond cutting and polishing techniques. During the 1500s, for example, King Francois I of France did not call on the diamond cutters of Paris; rather, he placed his orders with the craftsmen of Antwerp.

The manufacture of heavy machinery and automobiles plays a significant role in the Belgian economy. Four well-known international carmakers have major production and assembly units here: Ford in Genk, Opel in Antwerp, Volvo Cars in Ghent, and Volkswagen in Brussels. Their combined average annual output of vehicles exceeds 880,000 units, with a total value of approximately US$13 billion. As a result, Belgium is still a world leader in terms of per capita annual production of motor vehicles. More than 96 percent of this output is for export, further emphasizing the international character of the industry. The parent companies have all confirmed their confidence in Belgium by means of ongoing and sustained capital expenditure programs.

ENERGY

Obviously, the Belgian economy, together with many other aspects of modern life, depends on sufficient energy supplies. About 70 percent of Belgium’s electricity is generated by nuclear power plants. The rest comes from hydroelectric power, which is generated in the Ardennes. The national electricity grid is interconnected with those of neighboring EU countries. This allows power, when needed, to be supplied by sources outside the country. Belgium’s surplus electrical energy also can be exported to these other countries.

Petroleum from the North Sea oilfields and the Middle East is refined in Antwerp. This is the second largest port in Europe and the fifth largest in the world. It handles most of Belgium’s overseas trade and is the destination for many giant tanker vessels that bring oil from around the world. Antwerp and Ghent are both centers for the petroleum and chemical industries following massive expansion in these sectors after World War II. In recent years, both oil and natural gas imports to Belgium have increased. Most of the supplies come from Russia and other parts of the former Soviet Union.

TRANSPORTATION

Located in the heart of the EU, Belgium’s economy is well suited to integration of its industry with that of neighboring countries. It is able to achieve this openness through extensive highway and rail networks, most of which radiate outward from Brussels. Modern expressways link all of the main cities in the country and the major cities of the neighboring Netherlands, France, and Germany.

The stateowned Belgian National Railways offers fast and frequent service to all of the main centers of population. The Thalys high-­speed train takes only 85 minutes to travel between Paris and Brussels. This covers the distance of 210 miles (336 kilometers) at an average speed of 148 mph (237 kilometers/
hour). Twenty-­five Thalys trains depart daily in each direction between Paris and Brussels. The Eurostar train service from Brussels to London, England, via the Channel Tunnel currently takes 2 hours and 45 minutes. A new Eurostar service between the two cities that began in late 2007 reduced the journey’s travel time to 1 hour and 51 minutes. Such rapid rail transport between EU capital cities is most competitive with corresponding air travel and is seen as a considerable asset to modern business.

Nevertheless, air travel to and from Belgium plays a major transportation role between this country and other EU countries, and also more distant destinations. Large international airports at Brussels and Antwerp serve many foreign airlines. Sabena, Belgium’s national airline, went bankrupt in November 2001. This resulted from the severe airline recession caused by the September 11 attacks on the United States.

Quite apart from road and rail travel, the canals of Belgium have for centuries carried many industrial cargoes, and they still do. These canals are mostly located in the northern part of the country, and today they are fully modernized to handle European-­size barges. The original purpose of the canals was to enable the transport of heavy industrial loads by water. Today, however, they have also become popular cruising and boating vacations. Waterborne tourists are well catered to on the canals that connect Nieuwpoort, Bruges, Ghent, Ypres, and many other Belgian towns.

OTHER INDUSTRIES

Farming in Belgium is mainly concerned with rearing livestock. Consequently, much of the country’s arable land is used as pasture or for growing fodder. The amount of grain planted for human consumption is fairly minimal in the country. Just over 1 percent of Belgium’s labor force is engaged in agriculture, which is why it only accounts for a small fraction of the country’s income. About 21 percent of the area of Belgium is forested, and there is a substantial lumber industry.

The annual value of lumber exports exceeds US$3 billion. Brewing is a major industry, and Belgian beer has considerable international prestige. Annual production for the year 2004 was 17,409,000 hectoliters (about 460,000,000 U.S. gallons). We shall return to the subject of Belgian beer in a later chapter.

Belgium’s fishing industry is comparatively small, but there are a number of trawlers that operate in the North Sea. These are principally based in Ostend, which is the country’s chief fishing port. The catch is mainly herring and flatfish, which include flounder, sole, plaice, and halibut. The industry is able to supply about 30 percent of the country’s market for fish.

The textile industry used to be a major force in the 1970s, when it employed more than 90,000 people. During recent years, however, it has gone into sharp decline, currently employing fewer than a quarter of that number. Ghent is the main center for the production of cotton and artificial fibers, and linen production is centered in Kortrijk. Verviers is known for its woolen industry. As noted earlier, Bruges was for 200 years a great center of the lace-making industry, which brought the city considerable prosperity. Until fairly recently, this was a dying craft, but the industry has been reenergized; once again, Bruges is the lace-making capital of Europe.

Media The Belgian press is made up of more than 35 daily newspapers, which are controlled by various groups. The circulation of these newspapers obviously depends on readership, which will either be Dutch speaking or French speaking. Because many people are multilingual, the major journals are available in all parts of the country. There is also a German-­language daily newspaper.

In a similar manner, there are Dutch-­speaking terrestrial TV and radio channels that are broadcast nationally, as well as French-­speaking channels. Many other commercial TV channels are available via cable access, and there are also satellite channels. The European Union’s TV information service, Europe by Satellite (EbS), was launched in 1995. Its TV and radio stations provide EU-­related pictures and sound in more than 21 languages. The programming consists of a mix of live events, stock shots, and finished programs on EU subjects produced by various EU institutions and directorates, as well as from other broadcasters. Much of what is broadcast by EbS originates in Brussels.

BELGIUM’S INTERNATIONAL ECONOMIC LINKS

As we have seen, Belgium’s economy is highly diversified and strongly oriented toward foreign trade. Most of its exports are based on high-­value, low-­bulk goods to which value is added by skilled and often highly specialized labor, such as cut diamonds. The main imports are food products, petroleum and petroleum products, chemicals, machinery, textiles, clothing, and uncut diamonds. Principal exports are automobiles, iron and steel, nonferrous metals, petroleum products, plastics, textiles, and finished diamonds.

Since 1922, Belgium and its neighbor Luxembourg have been a single trade market within a common customs and currency union, known as the Belgium-­Luxembourg Economic Union. Following the advent of the European Union, a similar trend has resulted in customs and frontier posts between Belgium and its EU neighbors largely being removed. Today, one can usually cross these national borders via high-­ways without passport controls or stopping for customs inspection. Travel is as free and open as it is between U.S. states or Canadian provinces.

In 2002, Belgium replaced its unit of national currency, the Belgian franc, with the euro, the single European currency. Euros had been introduced as valid currency three years earlier. This step removed any requirement for currency exchange and differential rates of exchange with the EU states that had also adopted the euro. Clearly this was a major advantage with regard to foreign trade between Belgium and fellow EU member states. Some EU members, like the United Kingdom, opted not to adopt the euro as a single currency. They were afraid that adoption of the currency would be a major step toward more complete economic and political integration. In contrast, Belgium, a founding member of the EU, strongly supports the extension of the powers of EU institutions to integrate the member economies.

Symbolic of Belgium’s economic power following the inauguration of the European Economic Community (which was to develop into the mighty EU) was the Brussels World Fair of 1958. Sometimes known as Expo ’58, this showcase for science, trade, and industry was the first major world fair to be held following World War II.

Nearly 15,000 workers spent three years building the nearly one square mile (2 square kilometers) site on the Heysel Plateau, 4½ miles (7 kilometers) northwest of the capital. The site is best known for its giant model of a unit cell of an iron crystal (each sphere representing an iron atom), called the Atomium. This consists of nine giant metalclad spheres, each 59 feet (18 meters) in diameter and joined by tubes that contain escalators. The whole futuristic structure weighs 2,400 tons and stands 335 feet (102 meters) high. Originally planned to last only six months, architect André Waterkeyn’s design has survived to become a popular tourist attraction that some feel is a national icon—­Belgium’s equivalent of Paris’s Eiffel Tower. It sits close to the King Baudouin Stadium in Heysel Park, next to the Congress Centre and the Mini-Europe Park.

Nearly 50 years later, the Atomium remains one of the best-known landmarks in Brussels. More than 42 million people have visited the World Fair site, which opened with a call for world peace and social and economic progress issued by King Baudouin I.