Belgium Economic Conditions Between the 1970’s and 1980’s

The Belgium (30,518 km 2) has not yet reached 10 million residents (9,875,717, according to a 1988 estimate, for a density of 324 residents per km 2). In fact, in the last decade there has been an increase of only 100,000 people, corresponding to a very low annual rate of increase (approximately 1 ‰). The birth rate, already low in 1974 (especially in Wallonia and altogether equal to 13 ‰), has further decreased (in 1987, 11.9 ‰), and only the parallel decrease in the mortality rate (from 12 ‰ to 11.3 ‰ in the same period) prevented Belgium from zero growth. The currents of immigration have practically ceased, but the percentage of immigrants is still high (9% of the total population).

On 5 August 1988, the parliamentary process that transformed Belgium into a federal country made up of Flanders, Wallonia and the Brussels region ended (see History below).

In essence, this painful decision marks the failure of the policy aimed at smoothing out the deep-rooted, and obviously incurable, rivalry between the Flemings and the Walloons. Since measures such as the delimitation of linguistic borders and the creation of municipalities with special status have been of no use, the federal division sanctions the definitive split between the two ethnic groups.

Economic conditions. – According to ebizdir, the Belgian economy also recorded big news, which was affected by the world crisis of the 1970s and early 1980s, with particularly negative consequences in the industrial sector and positive in the tertiary sector. In agriculture, however, evolution has followed fairly predictable paths. In terms of land use, compared to the previous decade, there was a marked increase in forest areas (from 19.7% to 21.0%), a decrease in grassland and pasture areas (from 24.4% to 21.0%). 3%) and a reduction in the cultivable area (from 27.6% to 24.0%). The portion of the territory consisting of uncultivated or unproductive land increased (33.4%).

Cereal crops occupy 45% of the arable area; the production of wheat (11 million q) and barley (7.5 million q) is on the rise, while that of other cereals is decreasing sharply. Among the industrial crops, sugar beet (56 million q) and tobacco (19,000 q) are always noteworthy. Among horticultural crops, only the production of tomatoes is increasing (1.4 million q). In fruit growing the production of apples decreases (2.4 million q) to the advantage of that of pears (820,000 q) and table grapes. Further strengthened, despite the reduction of meadows and pastures and thanks to the import of feed, cattle (3.1 million head) and pig (5.8 million), while it is in sharp decline (as much as 40%) the equine one, which also once stood out for the famous Brabant draft horses. Fish production was 40,374 t in 1987, landed in the ports of Ostend, Zeebrugge and Nieuwpoort.

The secondary sector now occupies a percentage of the active population only slightly higher than that of the ‘agricultural’ (once) Netherlands, as the latest evidence of an industrial specialization – compared to the neighboring country – which no longer exists today. This is the result not only of the industrialization process of the Netherlands but also of the profound transformation of the Belgian economy, as a response to the crisis that has affected above all those who were the pillars of the country’s economy: coal and the steel industry. The most painful consequence of industrial restructuring was the sharp increase in unemployment (12.5% ​​in 1988), which mainly affects Wallonia, an area of ​​ancient industrialization centered on the steel industry and therefore with obsolete structures and low relative productivity.

The coal production of Belgium, already drastically reduced from 27 million t in 1958 to 8 million t in 1974, in 1987 slightly exceeded 4.3 million t, mostly extracted from the Campine and Charleroi fields. -Namur. The decisive increase in natural gas production (73 million m 3 in 1986) and the expansion of nuclear power plants have contributed to significantly change the country’s energy balance. Electricity production (62 billion kWh in 1987) is supplied for 72.3% by thermoelectric plants, 26.4% by nuclear ones and 1.3% by hydroelectric plants.

Despite the crisis that has hit the sector, and despite being almost completely dependent on imported iron ores, Belgium remains a good steel producer (9.7 million t). The processing of non-ferrous metals (imported) is even on the rise.

In the chemical and petrochemical sector, the production of synthetic ammonia (270,000 t) and synthetic rubber is always high; on the other hand, compared to the previous decade, the production of sulfuric acid (2 million t) and nitrogen fertilizers (800,000 t) was reduced.

Still competitive, despite strong international competition, is the textile sector (wool: 87,000 t of yarn, 36,000 of fabric; cotton: 46,000 t of yarn, 50,000 of fabric; linen, which remains the pride of Flanders, 7,600 t).

The most important effect of the economic restructuring is the strong dominance achieved by the tertiary sector, which now occupies 66% of the active population, compared to the secondary sector, which has dropped to 31%. Favored by the central location and the development of the large ports of Antwerp, Ghent and Bruges-Zeebrugge (a merchant fleet of 344 ships with a gross tonnage of 2.4 million t), which compete, often successfully, with the neighboring Dutch ports, crossed by a dense and continuously enhanced network of waterways (almost 2000 km), railways (3618 km) and roads (128,000 km, of which 1500 are motorways), the Belgium represents, together with the Netherlands, a it is an important hub for commercial traffic to EEC countries from all over the world. Air traffic is also constantly increasing: over 5,

Economic and financial policy. – After the large imbalances that characterized the early Eighties, the economic situation of Belgium has shown a significant improvement.

At the beginning of this decade in Belgium the loss of competitiveness of firms, unemployment and the public sector deficit fed each other. The sharp rise in the state and trade deficits in 1980-81 highlighted the need for a drastic change in economic policy. The response of the authorities consisted, first, of a greater transfer of resources from households to businesses and, subsequently, to the public sector. To this end, two elements that had hitherto characterized Belgian economic policy were temporarily abandoned: on the one hand, the stability of the exchange rate against European currencies, and on the other, the indexation of wages.

To restore competitiveness to businesses, in February 1982, the Belgian franc was devalued by 8.5% against the other EMS currencies, with the exception of the Luxembourg franc and the Danish krone. Subsequently, the authorities returned to the goal of exchange rate stability.

As regards wages, the effects of indexation mechanisms have been reduced. In particular, real wages remained frozen until 1986, while a “competitiveness rule” authorized the government to intervene in the determination of wages if they were higher than those of the main commercial partners. Wage moderation was accompanied by measures aimed at making the labor market more flexible and facilitating the reintegration of the unemployed. Measures were also introduced to channel private savings to businesses and develop venture capital.

As regards the rebalancing of public finances, an extraordinary levy on wages equal to 2% per year was made in the three-year period 1984-86. In May 1986, a new recovery plan reduced or eliminated some expenses that had previously been borne by the state. These two measures resulted in a transfer of resources to the public sector of the order of 400 billion francs (equal to about 9% of GDP in 1984) and reduced the public deficit as a ratio of GDP by more than 11% in 1983. to 7% in 1987-88.

These measures, together with the improvement in the terms of trade, have meant that, after years of stagnation, since 1986 the growth of the Belgian economy has returned to levels not far from those of the main European countries. The unemployment rate, after reaching a maximum of 13% in 1983-84, began to decline in 1985. Furthermore, starting from the same year, the current account balance of payments, after eight years of continuous deficits, returned idle. The current account surplus grew rapidly, from $ 700 million in 1985 to over $ 3 billion annually over the next three years.

The reduction of the public deficit, in the presence of a large current account surplus, also allowed for a more flexible management of monetary policy. In the period 1986-88, the increase in consumer prices was less than 2% per annum.

In 1989 and 1990, in an economic policy framework consistent with the previous one, Belgium achieved good results: the ratio between public deficit and GDP fell; domestic demand continued to grow and the current balance remained in surplus. Unemployment fell further.

Belgium Economic Conditions Between the 1970's and 1980's