DP986 | Economic Growth in Post-War Belgium

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The growth of the Belgian economy since 1945 is surveyed with emphasis on the distinction between open and sheltered sectors. Relatively slow growth to around 1960 is explained by a move away from traditionally liberal industrial policies that began in the crisis of the 1930s, by the squeeze on open sector firms' profits in the 1950s that arose from the conjunction of social pressures for higher wages and deflationary monetary policy, and by weaknesses in innovation and new product development attributable to the system of corporate control. The subsequent acceleration in growth resulted from increased internal competition and greater technological and organizational transfers, both associated with membership of the European Community and substantial foreign direct investment. From the mid-1970s productivity growth in the open sector remained high but its overall growth has been hindered by cost increases resulting from an increasingly dysfunctional system of wage and income determination and from the deterioration of public finances.