BELGIUM

Kingdom of Belgium

Royaume de Belgique

Koninkrijk België

COUNTRY OVERVIEW

LOCATION AND SIZE.

Belgium is a nation located in Western Europe. It is between the Netherlands to the north, Germany and Luxembourg to the east, France to the south, and the North Sea to the west. Belgium is about the size of Maryland, has an area of 30,510 square kilometers (11,780 square miles) and includes 280 square kilometers (108 square miles) of inland waterways. It has 66 kilometers (41 miles) of coastline and its borders total 1,385 kilometers (861 miles). Belgium shares 620 kilometers (385 miles) with France, 167 kilometers (103 miles) with Germany, 148 kilometers (92 miles) with Luxembourg, and 450 kilometers (280 miles) with the Netherlands. The nation also claims an exclusive fishing zone that extends 68 kilometers (42 miles) into the North Sea. Belgium is the traditional crossroads of Europe and its capital, Brussels, also serves as the capital of the European Union (EU). Brussels also serves as the headquarters of the North Atlantic Treaty Organization (NATO) and the Western European Union (WEU). Brussels is located in the middle of the country and has a population of 954,460. It is one of the largest cities in Belgium. In contrast, Antwerp, Belgium's second largest city has a population of 447,632 and is located in the northern area of the nation. Lastly, Ghent, Belgium's third largest city has a population of 224,074 and is in the northwest.

POPULATION.

In July 2000, it was estimated that Belgium had a population of 10,241,506. The population growth rate is estimated at a low 0.18 percent. The fertility rate is estimated at 1.61 children born per woman and the birth rate consists of 10.91 births per 1,000 people. The death rate is 10.13 deaths per 1,000.

Like many advanced industrialized countries, Belgium's population is aging and 16 percent of the inhabitants are over the age of 65, while only 18 percent are between the ages of 0 and 14. The life expectancy for men is 74.47 years and 81.3 years for women. A majority of Belgians now live in urban areas and, as people from both the rural areas and immigrants settle in the cities, this trend is growing rapidly. The population density of Belgium is second only to the Netherlands in Europe.

The nation has 3 major ethnic communities: the Flemish, the Walloons, and the German-speakers. The Flemish make up about 58 percent of the population and speak a form of Dutch known as Flemish. The Flemish are concentrated in the northern regions of the nation. The Walloons speak French and mainly live in the southern areas of Belgium. About 31 percent of Belgians are Walloons. German-speakers are the third major group and they mainly reside in the east around the city of Liege. German-speakers comprise about 1 percent of the population. There are also numerous other ethnic minority groups in the country. Brussels alone has 19 different bilingual communities. Many of these other groups are from North Africa and the Middle East, particularly Turkey. There is also a significant Italian population. Since World War II, higher birth rates among the nation's foreign-born population have increased faster than that of native Belgians. The majority of new immigrants from the Mediterranean region tend to settle in the industrial areas of the Walloons—Brussels and Antwerp. There is a low migration rate of 0.98 per 1,000. Although a small number of recent Belgium immigrants return to their countries of origin each year, most emigrants go to nations within the EU or the United States.

Conflicts between the Flemish and the Walloons have traditionally divided Belgian society. Throughout most of the 19th and early 20th centuries, the French-speaking population dominated the region. However, the Flemish eventually gained reform, obtained regional autonomy, and then established Flanders as a unilingual region. The 1970 constitution created 3 autonomous political regions: Flanders, Wallonia, and Brussels. In 1984, the German community of Liege was also granted its own legislative assembly and began controlling its own educational and cultural matters. Disputes between the 2 groups continue and have led to numerous political compromises, including a new constitution in 1993, which changed Belgium from a unitary state (a country in which the central government has the most political power) to a federal system (a country in which the central government and regional governments collaboratively share power to a certain degree).

OVERVIEW OF ECONOMY

Belgium has a well-developed free market economy, based on both industrial and service sectors. It is heavily dependent on international trade and most of its economic sectors are geared toward exporting products. The nation's exports are equivalent to almost two-thirds of its GNP. On a per capita basis, Belgium exports twice as much as Germany and 5 times as much as Japan. In 1999, the nation ranked number 11 among the world's top exporters. In spite of its small size, Belgium's economy has consistently placed among the top 20 economies of the world and remains strong. The kingdom's exports have given it an account surplus that is the sixth largest among the highly developed economies of the world.

For most of its history, Belgium's economy was based on the nation's manufacturing capabilities. The country was the first in continental Europe to undergo the Industrial Revolution, and through the 19th century it was a major steel producer. Large coal deposits helped fuel the industrialization. At the same time, agriculture began to decline. This decline was even more pronounced after World War II, and by 2000, agriculture only accounted for a small percentage of the economy. Currently, agriculture is concentrated in West Flanders, Liege, and Eastern Namur. In the post-World War II era, heavy manufacturing and mining declined. However, there was significant growth in the service sector, and the country switched from heavy production to light manufacturing and began producing finished products instead of steel, textiles, and raw materials. Belgium imports basic or intermediary goods, adds value to them through advanced manufacturing and then exports the finished products. With the exception of its remaining coal resources, Belgium has no significant natural resources.

Belgium's economic strength is based on its geographic position at the crossroads of Western Europe, its highly skilled and educated workforce, and its participation in the EU. During its industrial period, Belgium developed a highly efficient and capable transportation infrastructure that included roads, ports, canals, and rail links. The multilingual nature of the workforce and its industriousness has made the workforce one of the most productive in the world.

The oil crisis of the 1970s and economic restructuring led to a series of prolonged recessions . The 1980-82 recession was particularly severe and resulted in massive unemployment. Personal and consumer debt soared, as did the nation's deficit. Meanwhile, the king-dom's main economic activity shifted northward into Flanders. In 1990, the government linked the Belgian franc to the German mark through interest rates. This spurred a period of economic growth. In 1992-93, another recession plagued Belgian history. During this period, the kingdom's real GDP declined by 1.7 percent. Foreign investments have provided new capital and funds for businesses and have consistently helped maintain the economy. Consequently, the government has consistently implemented programs to encourage foreign investment. Since Brussels is the capital of the EU, many multinational firms have relocated to the city so they can be near the bureaucracy and regional body's government seat.

There are major regional differences in the king-dom's economy. In the former industrial and agricultural areas of the countryside, unemployment rates tend to be higher. However, in the newer urban centers (where the service economy is dominant), unemployment rates are lower. For instance, in Wallonia and Brussels, unemployment rates are 2 to 3 times higher than in Flanders. Nevertheless, overall national unemployment rates continue to be lower than the EU average. In addition, wage levels are among the highest in Europe. In 1993, in an effort to give the regions greater flexibility to deal with economic problems, each region was given broad economic powers to control trade, industrial development, and environmental regulation. Each region has also endeavored to attract foreign investment, often to the detriment of other regions.

The government has also engaged in initiatives to privatize many companies that were formally owned by the state. Ongoing efforts are underway to privatize 2 of the largest remaining companies: Sabena (the national airline) and Belgacom (the main communications company). Since 1993, successive governments have privatized some 280 billion Belgian francs worth of business.

The kingdom has few energy sources. Consequently, it must import a substantial amount of fossil fuel (which provides 42.48 percent of Belgium's total energy needs). The country has a well-developed nuclear industry that provides more than half of Belgium's energy needs (in 1998, some 55.72 percent of total energy usage). The remaining energy needs are met by a limited number of hydroelectric and coal plants.

As the profitability of many industries declined in the post-World War II era, the government attempted to support them in order to maintain employment. Among the strategies used were subsidizing certain industries, mainly steel and textile companies. In addition, the government reduced interest rates and offered tax incentives and bonuses to attract foreign businesses. All of these measures helped maintain the economy by preventing massive unemployment, but they also led to drastic government deficits in the 1970s and 1980s. The government was then forced to borrow funds from international sources in order to maintain their imports and to continue social welfare programs. By the 1990s, successive governments diligently worked to reduce the debt. In fact, they even shifted from foreign to domestic sources in underwriting their debts. In 1999, Belgium's external debt was $28.3 billion or about 10 percent of the nation's total debt. Belgium is a net contributor of foreign aid. In 1997, the kingdom provided $764 million in foreign assistance.

Belgium was one of the founding members of the European Community (later the EU), and has been one of the foremost proponents of regional economic integration. In 2000, 80 percent of Belgium's trade was with other members of the EU. Membership in the EU was the culmination of longstanding national support for economic cooperation. For instance, in 1921, Belgium joined with Luxembourg to form the Belgian-Luxembourg Economic Union (BLEU). This economic union provides for an interchangeable currency and it established a joint customs union. Belgium and Luxembourg have also joined with the Netherlands to form the BENELUX customs union. This organization oversaw cross-border trade between the 3 nations. Belgium is also a member of the Organization for Economic Cooperation and Development (OECD), an organization of the world's most highly developed industrialized democracies.

Belgium has supported the main economic initiatives of the EU, including the elimination of trade barriers, such as tariffs , between the organization's 15 member states. The EU also coordinates the external trade of its member states. In 1999, Belgium was one of the founding members of the European Monetary Union (EMU). EMU will replace the national currencies of its members with a single currency, the euro. This is designed to further ease trade among the nations that adopt the euro by eliminating currency fluctuations.

POLITICS, GOVERNMENT, AND TAXATION

Belgium is a constitutional monarchy based on heredity. After political reforms in the 20th century, the monarch's role is now largely ceremonial and symbolic. The monarch's main political function is to appoint the prime minister following elections or the resignation of the government. In this often-divided country, the sovereign is a unifying symbol and plays an important role. The current king, Albert II, succeeded his brother Baudouin who died in 1993.

The executive branch of the Belgian government consists of the king, prime minister and cabinet. The number of cabinet ministers is limited to 15. By an unwritten rule, there is usually a rough balance between Flemish and French-speaking ministers in the cabinet. The kingdom's parliament is bicameral (it consists of 2 chambers). The upper house is the Senate and consists of 71 members—40 of whom are elected directly by the people; the 3 linguistic communities indirectly elect the other 31. The lower house is the Chamber of Deputies and has 150 directly elected members. Representatives in both houses serve 4-year terms. Citizens are required to vote in national elections. Elections are relatively short, usually with only a month of campaigning.

There are no national parties in Belgium. Instead the political parties are divided among the major linguistic groups. As a result, governments are usually by coalition (a government composed of members of several different political parties).

As a result of the 1993 constitutional revisions, Belgium changed from a unitary government into a federal system. There are now 3 levels of government: national, regional, and linguistic community. Including the national government in Brussels, there are now 6 different authoritative bodies. Flanders has a single 124-member assembly which represents the region and Flemish-language speakers. Wallonia has 2 assemblies, one 75-member chamber for the region and a 94-member chamber for all French-speakers. Finally, the Brussels region has a 75-member body and the German-speakers have a 25-member assembly.

The government's multi-layered structure means that each governmental body has considerable freedom over their region's economic activities. The regions and communities have jurisdiction over transportation, public works, education, housing, zoning, and industrial and economic policy. Regional governments also coordinate foreign trade with the national government. Of the total government spending, 40 percent is controlled by regional and community governments. These funds are provided through a system of revenue sharing with the national government. These governments also have the ability to levy additional taxes and borrow money.

Following the economic recessions of the 1980s and 1990s, the government attempted to stimulate the economy by implementing various programs. Initially, they tried to protect declining industries by subsidizing them. For those workers that lost their jobs because of cutbacks, generous social benefits were maintained. They also tried to attract foreign businesses and capital. However, in 1994, these efforts led to a massive national debt that exceeded the kingdom's GDP by over 137 percent. In 1992, the government attempted to reduce its debt by implementing various economic policies. Unfortunately, this task proved to be quite difficult because they did not meet EMU's official requirements (which called for a debt-to-GDP ratio of 60 percent). Nevertheless, Belgium was admitted in the first round of the monetary union. Its 2000 budget projected a deficit of 1.1 percent and a reduction of the national debt so that it equaled 112 percent of the kingdom's GDP.

In order to reduce this debt, the national government implemented various strategies. First, it privatized a number of industries. Since 1993, the government has privatized 280 billion Belgian francs worth of companies, and is expanding this process. For instance, in 1997, it privatized some 35 billion francs worth of assets, but in 1998, it increased its privatization campaign to 45 billion francs. Second, it has cut government spending. Some programs have been shifted to the regional governments, while others have been scaled-back. Third, the government has reformed the tax structure. The top rate on individuals is 55 percent, but companies, including foreign corporations, pay only 39 percent. However, small companies only pay between 29 and 37 percent. There are no taxes on capital gains and taxes on interest income are 15 percent. Foreign companies are attracted to special corporate tax breaks on corporate centers, such as call centers. Still, Belgium has the third highest taxes among the OECD nations.

The government utilizes various tactics to promote certain consumer behaviors and economic activities. For example, they utilize government-guaranteed mortgage loans to encourage home construction and building. They have projects that help immigrant workers build low-income housing. They have implemented special taxes, known as ecotaxes, designed to encourage consumers to purchase environmentally friendly products. In addition, they have implemented a number of programs to enhance foreign trade and also offer companies direct subsidies . Lastly, they provide funds for participation in trade fairs and the development of market research.

The government maintains price controls on products and services such as energy, rents, and pharmaceuticals. Pharmaceutical price restrictions have hurt competition and prevented foreign companies from entering the Belgian market. In addition, some U.S. firms such as Toys 'R' Us and McDonald's have had considerable problems in obtaining permits and licenses for new operations. Furthermore, the government-owned telecommunications company, Belgacom, requires new companies to pay relatively high fees in order to offer services to Belgian consumers. In spite of problems in the telecommunications sector, it is one of the fastest growing components of the Belgian economy. In order to promote the sector, the government continues to auction licenses for new mobile phone providers and to promote the use of the wireless Internet.

One of the more significant problems with the economy is that of procurement . Foreign companies have had difficulties competing with Belgian firms that are often given preferential treatment. Specific complaints include the failure of the government to issue public notification when it calls for bids on procurement and poor enforcement of rules.

Continuing government support for economic integration with the EU will further spur Belgian's economy. As trade barriers continue to be dismantled among members of the EU, Belgium should be able to expand its exports and enhance its role as a port of entry for goods coming into the region. Although the majority of Belgium's trade is with its EU partners, the kingdom conducts a significant amount of trade with the United States. In 1999, it was the ninth largest trading partner of the United States and imported some $11.9 billion in American services and goods.

Of special concern to the Belgian government are environmental problems. Centuries of industrialization have resulted in widespread pollution. Soil contamination and groundwater pollution exist at many former industrial sites. Steel production wastes have contaminated the Meuse River, a major source of drinking water. Other rivers are contaminated by pollution from agricultural practices, mainly fertilizers. Industrial air pollution has created significant amounts of acid rain, both within Belgium and in neighboring countries. There has been a steady increase in greenhouse gas emissions, including coal, natural gas, and petroleum emissions. From 1995 to 1999, there was a 12 percent increase in these pollutants.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Belgium has an excellent infrastructure of roads, waterways, ports, and airports. The kingdom has 145,850 kilometers (90,631 miles) of roads that includes 117,701 kilometers (10,999 miles) of paved highways and 1,682 kilometers (1,045 miles) of expressways. In 1997, some 395,505,000 tons of goods were transported across Belgium's roads. The kingdom is the only nation in Western Europe that has an average of 50 km (31 miles) of roadways for every 1,000 square kilometers (386 miles). Brussels is the heart of a dense highway network that extends beyond the borders of the kingdom to major destinations such as Paris, Amsterdam, and London (via the tunnel under the English Channel). There are 3,437 kilometers (2,136 miles) of rail lines, the majority of which are electrified. In 1997, the railways transported approximately 60,696,000 tons of products. There are 2,043

kilometers (1,270 miles) of waterways, of which 1,528 kilometers (950 miles) are in regular commercial use for the transport of goods. In 1997, there were some 106,978,000 tons of goods shipped across the nation's inland waterways. Finally, there is an extensive network of pipelines. There are 161 kilometers (100 miles) of crude oil pipelines, 1,167 kilometers (725 miles) of lines for petroleum products, and over 3,300 kilometers (2,051 miles) of natural gas pipelines. These pipelines transported 96,540,000 tons of fossil fuels in 1993.

Belgium's extensive transportation network and geographic position have enhanced its role as the major point of destination for goods entering Western Europe. The kingdom has 42 airports and a heliport. In 1995, 535,000 tons of goods were shipped via air. The government and the private carrier, SwissAir, jointly own Sabena, the national airline. There is also a low-cost air carrier, Citybird, which provides no-frills inexpensive fares. The international airport at Brussels has become the hub for several major U.S. air carriers. Antwerp is Europe's second largest port facility and is the center of the international diamond trade. The seaports handled some 157,413,000 tons of products in 1995. Ghent and Zeebrugge are also major seaports. Meanwhile, Brussels and Liege are major river ports. In fact, Liege is the third busiest river port in Europe. The Albert Canal can handle river barges of up to 2,000 tons, while other canals easily accommoda te barges of up to 1,350 tons. The kingdom has 22 medium to large merchant marine fleets that include 7 cargo ships, 7 petroleum tankers, and 8 chemical tankers. Combined, these fleets have a combined gross tonnage of 35,075 tons.

Belgians have an average of 427 automobiles per 1,000 inhabitants. The telephone system is highly developed and advanced. There is also an extensive nationwide system of cellular phones and 3.7 million mobile phones currently in use. Mobile phone usage is increasing at a rate of 20 percent per year. The kingdom also has 3 earth satellite stations. The Internet has gained in popularity and there are 51 Internet service providers in the nation. Approximately 1 million families use the Internet and 30 percent frequently purchase goods and services online. By 2004, e-commerce is expected to exceed $13.8 billion per year. In relation to the telecommunications industry, the government is in the third year of a privatization plan. Currently, there are 41 telecom operators besides the national carrier, Belgacom.

Electrical power production exceeds 78.7 billion kilowatts. Nuclear plants supply the majority of power (some 55 percent). Coal provides 12 percent of the king-dom's energy needs. Most of this coal is mined within the country. The nation meets 42 percent of its electrical needs through imported fossil fuels. Some 26.7 percent of these imports are natural gas. The majority of these natural gas supplies are imported from Algeria, the Netherlands, and Norway. The government has adopted a $9 billion program to provide for the modernization and maintenance of the nation's power system. Deregulation is also a priority of this program. Since Electrabel controls 84 percent of the energy market, new companies face significant obstacles while trying to enter this market. Although renewable energy sources, such as solar and wind power, currently only contribute about 0.17 percent of the nation's energy needs, the government continues to promote them.

ECONOMIC SECTORS

Belgium is located in one of the most industrialized areas of the world. Its unique geographic location and port structure make it ideally suited as a point for goods to enter Western Europe. The economy remains dependent on trade and any global market disruptions impact Belgium. Nonetheless, the nation's foreign trade bolsters its economy and helps it rank among the world's top economies. Unemployment remains a problem for the economy. The nation has made significant progress in unemployment. In 1984, it declined from a high of 14.3 percent. In the 1990s, the nationwide unemployment rate averaged between 8 and 9 percent, with the lowest rate, 4 percent, in Flanders, and the highest rate, 16 percent, in Wallonia.

Since the last century, Belgium's agriculture has been in decline and currently only accounts for around 2 percent of the kingdom's GDP. Agriculture is concentrated in the northern areas of Flanders. The nation is self-sufficient in a variety of farm products, including various dairy goods, and exports some vegetables and meats. Fishing has also declined over the past decades and currently most of the catch is consumed within the kingdom.

In the post-World War II era, industry has become less important for the national economy. In contrast, the service sector continues to gain in prominence. Most of the kingdom's natural mineral resources have been exhausted. Steel and textile production have significantly declined. The remaining industry produces finished products from reprocessed materials. After the industrial transformation during the 1970s, a number of new industries emerged, including chemicals, refining, metals and machinery, food processing, and pharmaceuticals. Even newer industries such as automobile manufacturing have faced significant obstacles. Belgium has emerged as the center of the international diamond trade. Traditional manufacturing remains concentrated in Wallonia, while the newer industries tend to be located in Flanders.

As with most of the OECD nations, the service sector dominates the Belgian economy. In fact, service sector jobs now account for 73 percent of the nation's employment. In addition, the service sector is also the main area of growth for the kingdom. Retail businesses and tourism increasingly account for a larger percentage of the nation's GDP, while financial services continue to expand and attract foreign investment.

Belgium is the home to a number of international corporations and has outlets or subsidiaries of many multinational companies such as Ford, Volvo, and Renault. In fact, some sectors of the Belgian economy have come to be dominated by foreign firms. For instance, U.S. software manufacturers now control some 40 percent of the Belgian market while companies such as Compaq, Dell, and IBM dominate the personal computer market.

AGRICULTURE

The kingdom's agricultural sector has been declining for some time. Currently, only about 2 percent of the population is employed in agriculture and it accounts for just under the same percentage of the nation's GDP. The main areas of the country under cultivation are in the northern region of Flanders; however, small farms exist throughout Belgium. Some 39 percent of the nation's territory is used for some type of agriculture, including the production of forest products. Approximately 1 percent of the land is used for permanent crops.

There are 2 main trends in Belgian agriculture. The first is the disappearance of the small family farm. Farming is increasingly dominated by large agribusinesses . Over the past 3 decades, the number of small farms has decreased by 80 percent. The second major trend is the expanding output of the sector. New technologies and scientific crop research have combined to produce greater yields. Therefore, even if farmers' total acreage declines, they are still producing more. Between 1995 and 1999, crop production increased by 9 percent.

Agriculture in Belgium is mainly divided between crop production and raising livestock. The nation's main crops include barley, corn, potatoes, sugar beets, wheat, and assorted fruits and vegetables. Sugar beets, potatoes, and barley are the main staples. In 1999, the country produced 6.15 million metric tons of sugar beets, 2.7 million metric tons of potatoes, and 1.63 million tons of wheat. The country is self-sufficient in sugar, and exports certain vegetables and fruits. About 35 percent of Belgium's farms are engaged in crop production. Belgium also re-exports a number of fruits. For instance, bananas are imported into Belgium from the Caribbean and then exported throughout Europe. The nation also imports raw crops, processes them, and then exports them as prepared foods.

Stock farming or livestock production dominates Belgian agriculture. It accounts for 65 percent of the nation's farms. A variety of livestock is raised, including beef, veal, poultry, lamb, pork, and turkey. In 1997, there were 3.1 million head of cattle and 7.3 million pigs on Belgian farms. The beef industry is still recovering from a dioxin scare in 1999. Cattle were accidentally given feed that was contaminated with the cancer-causing chemical dioxin. This led to numerous recalls and various countries around the world banned the import of Belgian beef.

There is also a significant dairy industry and Belgium is self-sufficient in eggs, butter, and milk. In 1997, the nation produced 3.2 million tons of milk, 3.97 million eggs, and 175,000 tons of butter. Belgium also produces a variety of specialty cheeses. Currently, fishing is mainly done for domestic consumption. In 2000, the nation exported $193 million worth of fish, but it imported $833 million worth. The majority of imported fish came from the United States and included lobster, salmon, and prepared seafood meals.

While the nation is a net importer of wood products, it does have a significant timber industry. In 2000, the timber industry was worth $9.9 billion. Total exports were $991 million while imports were $3.5 billion. The United States supplied some 50 percent of Belgium's softwood and plywood needs.

INDUSTRY

Belgium's traditional industries face a number of challenges. Historically, the main industries were concentrated in the French-speaking areas of Wallonia. However, since the 1970s, the principal areas of industrial growth have been in Flanders. Newer light industries and more sophisticated technologies have replaced the older and labor-intensive manufacturing systems. Between Antwerp and Brussels, a new corridor of industries emerged. The majority of these were less labor-intensive and required more skilled workers. The principal industries that have fueled this growth have been the petro-chemical and refining sectors. Nonetheless, the remaining industries tend to be highly advanced and technologically sophisticated. Light manufacturing and refining increasingly dominate the industrial sector. The entire industrial sector accounted for 26 percent of GDP in 2000.

STEEL AND PRECIOUS MINERALS.

From the 1800s through the 1960s, steel making was the heart of the nation's industry. By the end of the 1960s, Belgian steel manufacturers became less competitive when foreign companies began producing steel for less by using cheap labor and less expensive resources. The twin oil crises of the 1970s further undermined the industry by reducing the worldwide demand for steel. In order to preserve jobs, the government tried to protect steel manufacturers by subsidizing the industry.

The high cost of labor continued to impair the competitiveness of these and other industries. Industry also suffers from excess capacity and continued high fuel prices. These factors have led car manufacturers such as Ford and Renault to cut production in Belgium and shift factories elsewhere. The government has also made considerable attempts to restructure its remaining industrial base. The main thrusts of these efforts have been tax incentives for both domestic and foreign companies in exchange for industry investments. It has also offered incentives for investments in new technologies and the creation of new manufacturing methods.

The steel and plastics industries continue to decline. Since 1990, steel, iron, and coke production has declined by 20 percent. Nonetheless, about 1,000 companies remain in this industry that employs 52,000 people. Belgium remains the eighteenth largest steel producer in the world. In 1999, the sector produced 11 million tons of crude steel and had revenues of 260 billion Belgian francs of which 45 percent came from exports. This was a 4 percent decline from the previous year. The primary plastic products include parts for automobile construction and for engineering projects.

Europe's largest electrolyte copper, zinc, and lead refineries are located in Belgium. The nonferrous metals industry includes: base metals such as aluminum, copper, zinc, lead, and tin; precious metals such as gold, silver, and platinum; and rare or special metals such as germanium, cobalt, and indium. The metals industry employs some 8,600 people. Its exports were worth 127 billion Belgian francs in 1999. New industrial investments totaled 2.6 billion Belgian francs in 1999 and attempted to reduce production costs. The kingdom is also a major producer of limestone, dolomite, various synthetic materials, and construction materials such as marble and concrete. There is also a significant mineral sector that is focused on the refining of imported minerals such as copper, zinc, and diamonds.

Antwerp is the center of the world's diamond trade. The diamond industry employs some 30,000 people and represents 6.4 percent of the nation's exports. In total, 9 out of 10 rough diamonds and 1 out of 2 cut diamonds pass through Antwerp. The diamond sector represents one area of industrial growth. The sector experienced an average growth rate of 6 percent in the 1990s. There are 400 companies engaged in trading rough-cut diamonds, and 700 companies engaged in trading cut diamonds. In 1998, the industry's exports were worth 369 billion Belgian francs.

Glassmaking remains a profitable and expanding industry. It employs some 12,000 people and in 1998, its output was 1.5 million tons of glass. This generated revenues of 100 billion Belgian francs. The industry's exports go mainly to other European countries (some 85 percent of glass exports). In Belgium, glass production was 3 times that of consumption and Belgian workers have among the highest levels of productivity. In 1980, Belgian glass workers produced 55 kg (lbs) of glass per hour; by 1999 that output had increased to 109 kg (lbs) per hour.

CHEMICALS.

Belgium's chemical industry is highly diverse and efficient. From 1985 to 1999, the sector has grown by an average of 3.5 percent per year. It is the second largest industrial sector in the nation. The industry is geared for foreign trade and some 80 percent of its products are exported (75 percent of these exports went to EU nations). In 1999, chemicals accounted for 23.5 percent of the kingdom's total exports and were worth 1.574 trillion Belgian francs. In an effort to remain competitive, the chemical industry invested approximately 50 percent of its profits in research and the development of new products and manufacturing techniques. In 1999, there were 97,167 people employed by chemical companies, which represents an 8.4 percent increase since 1985. Chemicals and pharmaceutical products are now Belgium's top exports.

TRANSPORT.

Transport equipment is one of the strongest remaining industrial sectors in Belgium. This sector includes the automotive industry, shipbuilding, railway and tram construction, bicycles, and the aeronautical and aerospace industry. Although Belgium does not have its own national automotive manufacturers, it has a large number of international companies. Ford, General Motors, Opel, Renault, Volkswagen, and Volvo have plants in Belgium. In 1999, the nation produced 1.3 million cars. It also produces specialty vehicles including vans, trucks, buses, and minibuses. Of the vehicles manufactured in Belgium, 95 percent are exported. The main markets are France, Germany, and the United Kingdom. The automotive industry also produces a variety of specialty parts for cars. The industry specializes in "just in time" (JIT) manufacturing which involves producing products to be used immediately upon receipt. This process eliminates the need to stockpile items in warehouses.

Belgium no longer builds large sea-going vessels, but its shipyards still build smaller coastal and river craft. In addition, there are a number of firms that are capable of repairing and refitting larger ships. Companies also produce a variety of specialty products for marine use. Belgium invests considerable sums in aerospace. The government works with other European nations such as France and Germany on projects such as Airbus jet aircraft and the Ariane rocket.

TEXTILES.

The textile sector employs over 42,500 people in 1,320 textile factories. Belgium is now the largest carpet exporter in the world. Textile revenues accounted for 250 billion Belgian francs. Unlike many of the other traditional industries, Belgium's textile manufacturers have been able to adjust to changes in the global market. Belgium is also noted for its quality leather products. There have been widespread consolidations and advancements in manufacturing techniques. As a result, the textile sector remains one of Belgium's largest industrial employers.

ELECTRONICS.

Belgium produces a wide range of electronics equipment that includes both consumer and business products. This sector of the economy employs 49,000 people in 300 companies. These businesses produced products worth more than 300 billion Belgian francs. Two-thirds of the kingdom's electronic products are exported. The majority, 75 percent, goes to other members of the EU, while the remaining exports are divided among the United States, Eastern Europe, and Asia. Medical and hospital electronics are a major part of this sector. The electronics sector is the largest investor in the economy's infrastructure and research and development. The sector annually invests some 30 billion Belgian francs of which 60 percent is in research and development.

FURNITURE.

Furniture manufacturing has a long and distinguished tradition in Belgium. Adaptability and quality reputation are its keys to continued success. Increased mechanization and automation have helped contain costs and kept the industry competitive. It has strong exports to Germany and the United Kingdom and has recently enjoyed dramatic growth in the Netherlands. The sector has also aggressively targeted the markets in Eastern Europe. Belgium furniture exports have increased by 57 percent and have grown by a phenomenal 79 percent to Russia itself. In 1998, the industry had revenues of 1.89 billion euros that included 1.13 billion euros in exports.

CONSTRUCTION.

The construction industry in Belgium encompasses 2 different broad areas. The majority of activity is centered on the construction of new buildings and homes. There is also a considerable market in the restoration of older dwellings. Brick is the preferred building material and most homes are custom built. On average, only 10 percent of homes built are prefabricated. In 1998, residential construction accounted for 46 percent of new contracts, business construction accounted for 41 percent, and 13 percent of new contracts were in civil engineering. In 1997, Belgium's construction companies had revenues of 1 trillion Belgian francs. Belgian companies also carried out a number of projects abroad, mainly in developing nations. In 1998, total revenues from these projects were 88 billion Belgian francs. Government plans to eliminate slums and provide housing for low-income Belgians have significantly helped the construction industry grow.

SERVICES

The service sector is the largest area of the Belgian economy, accounting for 72.6 percent of GDP in 2000. It is well developed and diversified. Because of its geographic position as the gateway to Europe and the government's efforts to attract foreign banking and financial companies, Belgium is now the eighth-largest financial center in the world. In 1999, there were 130 different banking companies in Belgium. Of these, 81 were Belgian and 39 were foreign-owned. The majority of the foreign-owned banks were from EU nations (23 of the 39). The implementation of EMU will make it even easier for foreign banks to establish a presence in Belgium as the members of the EU begin to use the common currency. The Belgian government encourages foreign banks to establish a presence in the kingdom. For instance, the government allows foreign banks to operate as either subsidiaries under Belgian law or to operate under the laws of the nation in which their parent bank is licensed.

FINANCIAL SERVICES.

The financial sector has 3 main subdivisions: commercial banks, public credit institutions, and private savings banks. However, the divisions between these 3 types of institutions became less noticeable in the 1990s. There have been a substantial number of mergers across these fields. For instance, in 1999 the international banking corporation Dexia merged its Belgian and French subsidiaries to create a banking group worth $11 billion. Belgium's Banking Commission supervises private banks, finance companies, and the oversight of mutual funds. Investments in the country's financial sector ballooned from $55 billion in 1996 to $300 billion in 1999.

The 3 main trading banks in Belgium are the Fortis Bank, Brussels Bank Lambert, and KBC. Fortis has a workforce of some 40,000 and 3,000 branches. It services some 7 million customers in Belgium, Luxembourg, and the Netherlands, and is one of the leading banks in northwestern Europe. Brussels Bank Lambert has 900 traditional branches and 500 automated teller machines. It is the twelfth largest bank in Europe. KBC is the nation's third largest bank and is also one of the largest insurance companies. It has 1,500 bank employees, 500 insurance brokers, and 8,000 other brokers. This multinational bank has branches in 30 different nations. The fourth and fifth largest banks in Belgium are foreign-owned. Number-four is Dexier, a joint Belgian-French multinational, and number-five is Morgan Guaranty Trust of New York (a subsidiary of J. P. Morgan & Company). Other major international banks in Belgium are Citibank, Bank of America, and Chase Manhattan Bank.

In 2000, the EU enacted new rules that allow insurance brokers to operate in any other EU state as long as they are registered in their home nation. For instance, Belgian insurance companies will be able to set up offices in Germany or France without having to be licensed in that nation. This offers a variety of advantages to Belgian companies. For instance, 60 to 70 percent of the insurance bought by Belgian consumers was non-life (including car or home insurance). In contrast, in other EU states, non-life insurance typically accounts for some 20 percent of the market. Hence, Belgian insurance companies see these new markets as sources of great opportunities.

TOURISM.

The main centers of the Belgian tourist industry are the country's coastal region and the Ardennes.

The coastline has 65 resorts and numerous beaches. Most are designed for family-oriented vacations and draw tourists from France, the United Kingdom, and the Netherlands. Situated in the southeast of Belgium, the Ardennes forest is one of the few unspoiled natural areas in Western Europe. The area attracts campers and daytrippers. It is known for hiking, fishing, canoeing and kayaking, and mountaineering in the spring and summer months. In the winter, tourists engage in both downhill and cross-country skiing.

The total value of tourism in Belgium is $11.425 billion. Of this total, Belgians traveling within the country spent $4.9 billion. The United States is the number-one destination for Belgians traveling abroad. In 1999, some 257,000 Belgians visited the United States and spent $652 million.

RETAIL.

Retailers in Belgium have rebounded from a period of stagnation in the early 1990s. Consumer spending has been increasing at a rate of 2.5 percent over the past few years and is expected to grow in the near future. Unlike many other markets in the EU or North America, independent companies still make up a large proportion of the retail market. For instance, although 78.5 percent of fashion merchandisers are independent, chain outlets control 16.7 percent of the market. The remaining 4.8 percent is in the hands of large department stores and supermarkets.

In 1999, there were 52,807 restaurants in Belgium. The largest chain is the Quick hamburger restaurant group that has 105 shops. The number-two chain is the U.S.-owned McDonald's. Other American chains such as Pizza Hut and Chi Chi's also hold significant market shares. Sales at foreign-owned restaurants were 10.45 billion Belgian francs while sales at locally owned stores were 7.53 billion Belgian francs.

INTERNATIONAL TRADE

Belgium's economy is dependent on international trade. From year-to-year, foreign trade accounts for approximately 70 percent of the nation's economy. This makes Belgium particularly sensitive to disruptions in global trade. Recessions or other economic problems around the world often cause reciprocal problems in Belgium's economy. Fortunately, the kingdom has a variety of trade partners so that problems in one export market are mitigated by export diversity. For instance, since companies were able to shift exports to other markets, Asia's economic problems in the late 1990s had little significant impact on Belgium.

The nation's main trade partners are in the EU. In fact, in 1998 some 76 percent of Belgium's exports went to nations in the EU. In that year, the main export market for Belgian goods was Germany (19 percent), followed closely by France (18 percent), the Netherlands (12 percent), and the United Kingdom (10 percent). Most of Belgium's imports also came from the EU that provided 71 percent of the kingdom's imported products. Germany was the main exporter to Belgium and provided 18 percent of goods, while the Netherlands provided 17 percent, France 14 percent, and the United Kingdom 9 percent. Total foreign investment in Belgium is $68.1 billion. The Netherlands is the principal source of foreign investment (21.9 percent), followed by Germany (17.1 percent), France (16 percent), and the United States (11 percent).

The United States is a major trading partner of Belgium. The kingdom is the ninth largest trading partner of the United States. In 1999, the United States exported $11.3 billion to Belgium. About half of Belgium's imports from the United States are processed and re-exported to other markets. The kingdom is home to 1,300 U.S. companies. American investment in Belgium totals $18.9 billion. The majority of this investment is concentrated manufacturing ($8.969 billion), services ($5.262 billion), and wholesaling ($2.716 billion). Belgium also has significant investments in the United States that total $6.7 billion. The majority of these investments are in manufacturing ($2.6 billion), petroleum ($1.265 billion), and retail ($882 million).

Goods and products from EU nations enter Belgium without any tariffs or duties . However, goods from nations outside of the EU face import duties and a value-added tax (VAT). Depending on the product, these taxes amount to an average of 5-6 percent of the total value of the product. Consequently, many goods from outside of the EU face a price disadvantage.

Since Belgium is home to the headquarters of the EU and over 100 international organizations, it has a unique perspective on world trade and global markets. It also has significant influence on trade. Since it joined the European Community (now EU), Belgium has supported free trade and advocated measures that lower tariffs and reduce other barriers to the free movement of goods and services, labor, and capital within Europe. Belgium and Luxembourg also continue to be economically linked through BLEU. Despite its membership in the EU and BLEU, Belgium has bilateral trade agreements with 29 different nations. It has separate investment accords with Poland and Russia. It also has treaties with Bulgaria, Cuba, Liberia, Mauritania, and Thailand. Under the auspices of BLEU, it has jointly signed with Luxembourg. Many of these agreements have yet to be fully implemented.

Besides the national trade agreements, each of the 3 regions has the authority to grant financial incentives and other inducements to attract foreign goods and services.

Among the tactics used are loan or interest rebates if the project is financed, financing by the regional government, and tax breaks for foreign companies.

MONEY

Through BLEU, Belgium and Luxembourg linked their currencies in 1921. Although the Belgian franc has declined in relation to the U.S. dollar, it has maintained its value against major European currencies. In 1995, 1 U.S. dollar was equal to 29.48 francs, but by 1999, 1 dollar equaled 34.77 francs. In 1999, Belgium joined the EMU that created a single currency, the euro, for all of the EU nations. The euro is fixed at a rate of 40.3399 francs per euro. Since its introduction, the euro has been weak against the dollar. In 2000, 1 U.S. dollar equaled 0.9867 euros (when the euro was introduced it was equal to $1.1789). The euro was only used in non-cash forms (such as electronic payments and transfers) until January of 2002, when euro coins and notes were issued and national currencies were phased out.

The Belgian National Bank acts as the state bank. It prints and issues the nation's currency and acts as the lender of last resort in certain credit operations. The bank also manages monetary policy by controlling interest rates. The Banking Commission oversees the operations of the nation's banks while the Finance Ministry regulates credit institutions.

In September of 2000, the Brussels stock exchange merged with the exchanges of Amsterdam and the Paris Bourse exchange to form Euronext. The new stock exchange is the first truly transnational exchange that combines stock, derivative, and commodity trading. The new exchange lists 1,861 different companies and has a value of 1.1 trillion euros. The merger will streamline trading and reduce transaction costs. It will also save approximately 50 million euros per year. The exchange also increases the transparency of stocks and gives investors greater cost comparisons. The stock-trading component of Euronext is divided into 3 broad areas: blue

chip traditional industrial companies, high tech stocks, and traditional securities. The new multinational exchange is actively seeking further integration and consolidation and may merge or absorb additional national exchanges.

In order to become a member of EMU, Belgium had to maintain low inflation . The government took steps that kept inflation low—as low as 1 percent in 1999. Low prices on imported goods are likely to aid efforts to keep inflation low for the foreseeable future.

POVERTY AND WEALTH

Belgium, like many Western European nations, enjoys a high standard of living and a high per capita income. Each year the United Nations ranks the world's countries in its Human Development Report. Belgium consistently ranks among the top nations in its human development index that measures the quality of life in countries. In the 2000 report, the UN ranked Belgium number-seven—just behind Switzerland and ahead of the Netherlands. Its per capita income was $28,790. Belgium ranked 8th out of 191 countries in terms of per capita income.

There are extremes of wealth and poverty in Belgium. However, the nation's generous social welfare programs prevent abject poverty. Only 3.7 percent of the population falls into the lowest 10 percent of income levls

while 20.2 percent of the households are in the top 10 percentile.

The nation's social welfare programs are extensive. There are 5 main elements to the Belgian social welfare system : family allowance, unemployment insurance, retirement, medical benefits, and a program that provides salary in the event of illness. Employers contribute the equivalent of 35 percent of a worker's pay to the social welfare system and workers contribute 13 percent of their pay. Many companies also offer supplemental retirement and medical programs. Almost all Belgians are covered by medical insurance. Payments to medical providers were $12.97 billion in 1999. Belgium ranked thirteenth among the 24 OECD nations and fifth among the 15 EU nations. Each region has special councils that provide public assistance and aid to the poor. The National Housing Society provides low-income housing for the poor and immigrants. The Society is also in charge of eliminating slums and revitalizing urban neighborhoods.

Belgium's educational system is among the best in Europe. Freedom of education is a constitutional right in Belgium. Both public and private schools exist, but the government subsidizes private schools since the legal system abolished fees in 1958. Children must attend

school between the ages of 6 and 18. The nation has 7 universities (4 that teach in French and 3 that teach in Flemish). There are also a number of specialized and technical schools.

WORKING CONDITIONS

Belgium's workforce is highly skilled, educated, and productive. Belgian workers are the most productive in the EU. The workforce is well paid and has both generous employer and government benefits. However, there are wide regional differences in wages, unemployment, and quality of life. Generally, conditions are better in Flanders and the German-speaking areas than in the French-speaking areas.

The nation's educational system is designed to prepare workers for entry into the workforce. From the age of 15 onward, children may work part-time while they attend school. In addition, industrial apprenticeship programs are available for students between the ages of 16 and 18. There is also vocational training available for both students and adults. The national government and regional governments offer a variety of incentives for retraining workers. These initiatives are designed to reduce the national social security burden.

There are laws against forced labor. The minimum age for a person to begin working is 15. Since education is mandatory until age 18, students may only work part-time during the school year. Youths may work full-time during school vacation periods. Both the national and regional governments aggressively enforce child labor laws.

In 1999, the government revised its legislation on equal opportunity in the workplace. The new laws outlawed sexual harassment, and continued the ban on gender discrimination in hiring, working conditions, wages, and termination. Equal treatment of men and women is guaranteed by the constitution. In 1999, legislation was passed requiring that women make up one-third of all candidates running for office. Economic inequities between men and women continue. For instance, the female unemployment rate was 10.9 percent in 1998, while the male unemployment rate was 6.7 percent. In addition, women only earn 84 percent of the salary that men earn in the same professions.

The constitution guarantees the right of workers to organize and to collective bargaining. Union membership is high and 63 percent of workers belong to unions. In addition, 90 percent of workers are covered by collective bargaining agreements. National laws limit wage increases to 5.9 percent per year. Special labor courts oversee disputes between workers and businesses. Although Belgian unions often have links to political parties, they are independent of the government. While there have been several significant strikes in the past decade, including those by teachers, railway workers and air traffic controllers, these disputes were settled peacefully.

National law sets a 40-hour workweek and mandates overtime pay for work beyond 40 hours per week and for more than 8 hours a day. In addition, each workweek must include a 24-hour rest period. However, many agreements between unions and companies have separate agreements that lower the workweek to either 35 or 38 hours per week. The minimum wage for workers over the age of 21 is $1,228 per month. Workers under the age of 21 are paid on a graduated scale. Workers who are 18 years old must be paid 82 percent of the minimum wage, 19 year olds must be paid 88 percent, and 20 year olds must be paid 94 percent. There are strong safety laws and many of these regulations are supplemented by collective bargaining agreements. Although companies with more than 50 employees must have health and safety committees made up of both management and workers, the Ministry of Labor oversees workplace laws.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

500-200 B.C. The area that is now Belgium is settled by a Celtic tribe, the Belgae (who gave their name to the region).

57 B.C. Julius Caesar begins conquering Belgium. The province comes to be known as Gallia Belgae. For the next 400 years, the area prospers under Roman control.

400 A.D. As Rome declines, the Franks gain control of the territory.

431. The Franks establish the Merovingian dynasty in Belgium.

466-511. Reign of Clovis I. During his reign, the last Roman territories in Gaul are captured and the kingdom is expanded to include areas of France and Germany. The Belgian people are converted to Christianity.

751. Pepin III deposes the Merovingians and starts the Carolingian dynasty.

768. Charlemagne succeeds his father, Pepin III. Charlemagne expands the empire to include all of Western Europe, and the king is crowned Emperor of the West by the Pope in 800. During his reign, organized trade begins along Belgium's rivers. After his death, the empire declines.

843. The Treaty of Verdun divides the empire among 3 of Charlemagne's sons. The western areas of Belgium come under France's control, while the eastern territories are controlled under the Middle Kingdomof Lothair. Ultimately, Germans control the eastern territories.

867. In order to protect people from Norse raids, walled cities are created. The first of these is Ghent, followed by Bruges and Ypres.

977. Brussels is founded by Charles, the Duke of Lorraine.

1000. As the Norse raids subside, trade dramatically expands. This period is the golden age of Flanders. Merchants import wool from England that is woven into fine cloths and tapestries. Flemish cities become populous and wealthy.

1300. Because of their wealth, Ghent, Bruges, and Ypres gain virtual independence from the aristocracy. A civic culture flourishes. This independence is confirmed by the defeat of the French nobles in the Battle of the Golden Spurs.

1329. Aristocratic control is re-established and the independence of the Flemish cities is revoked.

1337-1453. There is a Hundred Years War between France and England. The English support their trade allies, the Flemish, in their continuing efforts to gain autonomy from France.

1384. Flanders comes under the control of Philip the Bold, Duke of Burgundy.

1419-1467. Philip the Good reigns. The Burgundian Empire in Belgium expands and includes the southeastern areas of Brussels, Liege, and Namur. Trade, arts, and culture expand. Prominent artists include Van Eyck, Rubens, and Van Dyck.

1490s. The canals around Bruges fill with silt and trade shifts further north to Antwerp.

1519-1713. Religious conflicts between the Protestant areas of Flanders and Catholics, led by Philip II of Spain, lead to the occupation of Belgium by Spain.

1648. The Protestant United Provinces of the North gain independence from Spain and become the Netherlands. The center of trade shifts from Antwerp and Ghent to Amsterdam. Meanwhile in order to avoid high labor costs and taxation, textile mills increasingly move from the urban areas to the countryside.

1719-1794. Austria occupies Belgium according to the terms of the Treaty of Utrecht. A revolt in 1790 leads to the establishment of the United States of Belgium, but Austrian control is soon re-established. During this period, landowners begin to mine various products, mainly coal and iron ore.

1795. France occupies Belgium and institutes a variety of civil reforms that serve as the foundation of the modern Belgian government. Encouraged by the French, industrialization begins during this period. By the turn of the century, factories with more than 100 employees become common. Ghent, home to numerous cotton mills, becomes the textile center of the country. Mining also continues to spread, especially in the French-speaking areas and in Liege.

1815. Belgium becomes part of the Netherlands by the Congress of Vienna. Dutch becomes the official language and William I of the Netherlands adopts a variety of programs to encourage industrialization in the south. However, the industrialization exacerbated the regional differences in the nation as the agrarian North sought free trade, while the industrialized South sought tariffs and other trade protections.

1831. Belgium gains independence from the Netherlands. Leopold of Saxe-Coburg becomes the Belgian king. Industrialization continues to sweep across the nation.

1835. The Banque du Belgique is founded. It provides financing for industry and serves as the model for similar banks in Germany, England, and France.

1844-46. Famine in Flanders leads to widespread economic problems and marks the final decline of the traditional linen industry. These combined problems slowed the economic development of the region well into the twentieth century.

1850. The National Bank of Belgium is formed.

1885. Congo becomes a personal possession of Leopold II.

1886. Worker unrest, which began in Liege, spreads throughout the nation. The government harshly suppresses this unrest, but it results in worker housing and wages reform.

1908. The Congo is annexed as a colony of Belgium.

1914. Germany invades Belgium at the start of World War I. During the war, some 20 percent of the nation's wealth is lost or destroyed.

1918. Universal suffrage is enacted.

1921. The Belgium-Luxembourg Economic Union (BLEU) is formed.

1930. Flanders and Wallonia become legally unilingual.

1940. During World War II, Germany invades Belgium and the Netherlands.

1944. Belgium joins the Benelux Economic Union, formed between Belgium, the Netherlands, and the Grand Duchy of Luxembourg.

1949. The nation joins NATO.

1952. Belgium joins the European Coal and Steel Community.

1957. Belgium is one of the founding members of the European Community.

1960. The Congo gains independence.

1961. Massive strikes lead to the creation of a permanent linguistic barrier between Flanders and Wallonia, while the Brussels region is officially bilingual.

1962. Rwanda and Burundi are granted independence.

1971. Flanders and Wallonia are granted cultural autonomy.

1973. The worldwide oil crisis initiates a period of deep industrial decline, which is exacerbated by the second oil crisis in 1979.

1989. A revised constitution grants greater autonomy to Flanders and Wallonia, and Brussels is granted the status of a region.

1993. King Baudouin dies and is succeeded by his brother, King Albert II.

1999. The kingdom joins EMU.

FUTURE TRENDS

Belgium is well positioned to continue its economic growth well into the 21st century. Its export-driven economy has created a trade surplus that will continue for the foreseeable future. In addition, Belgium's geographic position and its infrastructure indicate that the country will continuously serve as a point of entry for goods and services going into Europe. The introduction of the single European currency in 1999 will continue to make it easier for Belgian firms to trade within the EU.

While the 370 million people of the EU create one of the biggest commercial markets in the world, Belgium's dependence on intra-EU trade makes it vulnerable to economic slowdowns in the region. However, Belgium's trade with North America, namely the United States, continues to grow and may serve as a means to partially offset economic downturns in the EU.

Domestically, Belgium faces a variety of problems. Continuing tension between the Dutch-and French-speaking populations has led to the division of the nation into semi-autonomous regions that compete with one another for economic growth and investment. In addition, the unemployment rate remains stubbornly high, although it is lower than the EU average. Because of the high unemployment rate, the government is forced to maintain a high level of social welfare programs.

DEPENDENCIES

Belgium has no territories or colonies.

BIBLIOGRAPHY

Belgian Foreign Trade Board. "The Belgian Assets: AnIntroduction." <http://obcebdbh.be/import_en/info-center/belgium-assets/home_en.html>. Accessed September 2001.

Hermans, Theo, editor. The Flemish Movement: A Documentary History, 1780-1990. Atlantic Highlands, NJ: Athlone, 1992.

Organization for Economic Cooperation and Development (OECD). OECD economic surveys: Belgium-Luxembourg, 1998/99. Paris: OECD, 1999.

Stallaerts, Robert. Historical Dictionary of Belgium. Lanham, MD: Scarecrow, 1999.

U.S. Central Intelligence Agency. World Factbook 2001. <http://www.odci.gov/cia/publications/factbook/index.html>. Accessed September 2001.

U.S. Department of State. Background Notes: Belgium: 1998. <http://state.gov>. Accessed August 2001.

U.S. Department of State. 1999 Country Reports on Human Rights Practices: Belgium. <http://state.gov>. Accessed August 2001.

U.S. Department of State. FY 2001 Country Commercial Guide: Belgium. <http://state.gov>. Accessed August 2001.

Van Meerhaeghe, M.A.G., editor. Belgium and EC Membership Evaluated. New York: St. Martin's Press, 1992.

—Tom Lansford

CAPITAL:

Brussels.

MONETARY UNIT:

Belgian franc (BEF). One franc is equal to 100 centimes. However, the centimes denominations are no longer used. The Belgian franc is exchangeable on an equal basis with the Luxembourg franc. In 1999, Belgium began using the euro, the common currency of the European Union. The franc is set at a fixed exchange rate of 40.3399 per euro. The euro will replace all local currencies within the EU in 2002.

CHIEF EXPORTS:

Machinery and equipment, chemicals, diamonds, metals and metal products.

CHIEF IMPORTS:

Machinery and equipment, chemicals, metals and metal products.

GROSS DOMESTIC PRODUCT:

US$259.2 billion (purchasing power parity, 2000 est.).

BALANCE OF TRADE:

Exports: US$181.4 billion (f.o.b., 2000). Imports: US$166 billion (c.i.f., 2000).