During the 1930’s, Belgium suffered an economic depression in which economic growth was very low, due to a very small variation in output. However, the most important factor was that Belgium’s adherence to gold started having negative consequences, which led to the abandonment of this system. This was due to two facts: The crack of the stock market of 1929 and that Britain left the Gold Standard earlier than Belgium.
It did have certain good structural factors which aided future economic growth: the development of human capital (through an increase in scholarization), and the incorporation of the socialist government in 1935, which tried to apply policies to regulate the situation, and a stable foreign exchange position.
The 1940’s in Belgium, more known as the Belgian miracle, are characterized by the good economic position of the country. This good position meant that Belgium hardly needed aid from the Marshall Plan (initially).
Domestic production was really high, due to the fact that it satisfied the postwar demand through the sale of coal, metal, glass or cement (among other resources).
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In order not to lose control over the currency, the interest rate was high. This also prevented industrial borrowing.
During this decade, energy and labor costs (both wages and Social Security costs) for firms started increasing. The recovery of the rest of Europe from World War Two meant that Belgium’s demand started falling, and its economy could not face this increasing costs.
However, over 1950 (the silver fifties), the country needed to ask for direct aid in order to finance consumption and production and to maintain social peace. This aid ended up going almost entirely to the coal sector, because it favored the economy in the short-term and kept the population satisfied, and did not go to long-term economic measures such as financing investment.
The 1950’s were a time of economic splendor for Belgium (not as big as during the 1960’s), since the economy started opening up more to trade, savings increased, and the first international Belgian companies started emerging and investing in the Congo.
However, the region of Wallonia started losing economic stability due to the downfall of the coal industry, and the government was not able to attend to economic matters since it had to deal with the royal and scholar question during this decade, which could explain why the economy did not grow as much as it did during the 1960’s.
IMAGES:
- Pahissa, E. (2018, May 25). MEJORA TU COMPETITIVIDAD DE LA MANO DE UNA STARTUP: NUEVOS MODELOS COLABORATIVOS EN ENTORNOS INDUSTRIALES. Retrieved from Amec: http://www.amec.es/evento/mejora-competitividad-la-mano-una-startup-nuevos-modelos-colaborativos-entornos-industriales/
BIBLIOGRAPHY:
- Centre for Economic Policy Research. (1996). Economic Growth in Europe Since 1945.Cambridge; New York; Melbourne: Cambridge University Press
WEBGRAPHY:
- Murphy, A. B., Van der Wee, H. F., Doucy, A. J., Lamberts, E. L., Materné, J. M., Van Molle, L., & Britannica, T. E. (2018, December 10). Encyclopædia Britannica. Retrieved from Belgium: https://www.britannica.com/place/Belgium/Belgium-and-World-War-I
The economic and political history of Belgium 