COMMISSION OF THE EUROPEAN COMMUNITIES programmes Regional development programmes Belgium 1978-1980 REGIONAL POLICY SERIES - 1979 14 COMMISSION OF THE EUROPEAN COMMUNITIES Regional development programmes Belgium 1978-1980 COLLECTION PROGRAMMES Regional Policy Series No 14 Brussels, November 1978 NOTE It is appropriate first of all to draw the reader's attention to the essentially indicative character of these regional development programmes. This publication is also available in DE ISBN 92-825-0960-5 FR ISBN 92-825-0962-1 NL ISBN 92-825-0963-X Cataloguing data can be found at the end of this volume © Copyright ECSC - EEC - EAEC, Brussels - Luxembourg, 1979 Reproduction authorized, in whole or in part, provided the source is acknowledged. Printed in Luxembourg ISBN 92-825-0961-3 Catalogue number: CB-NS-79-014-EN-C Contents GENERAL INTRODUCTION 5 Detailed index 7 A. Socio-economic development trends in Belgium, 1960-1977 9 B. National political options 11 C. The regional development programmes 12 D. The constitutional institutions 15 Annexes 21 Maps 33 REGIONAL DEVELOPMENT PROGRAMME FLANDERS 1978-1980 37 Detailed index 39 Chapter I - Economic and social analysis 43 Chapter II - Development objectives 91 Chapter III - Development measures 105 Chapter IV - Financial resources 129 Chapter V - Implementation of the programme 139 Annex 145 REGIONAL DEVELOPMENT PROGRAMME WALLONIA 1978-1980 147 Detailed index 149 Chapter I - Economic and social analysis 151 Chapter II - Development objectives 189 Chapter III - Development measures 193 Chapter IV - Financial resources 201 Chapter V - Implementation of the programme 207 Annexes 213 General introduction Detailed index A. Socio-economic development trends in Belgium, 1960-1977 9 B. National political options 11 C. The regional development programmes 12 C.l. General observations 12 C.2. The legislation on economic expansion 13 C.3. The development areas 14 D. The constitutional institutions 15 D.I. Institutional organization, independent of the 1970 revision of the Constitution 15 D.2. Institutional organization arising from the 1970 revision of the Constitution 16 D.3. Institutional reform 17 D.3.1. At national level 17 D.3.2. At community level 18 D.3.3. At regional level 18 D.3.4. At subregional level 20 Annexes 1. The different methods used in the two regional development program• mes to calculate the employment shortfall 21 2. Future use of ERDF resources 22 3. The textile and clothing industry 23 4. Memorandum on the main lines of the restructuring plan for the steel industry 28 Maps 1. Zones eligible for ERDF assistance 33 2. Blocks of development 34 3. Less-favoured farming areas and zones eligible for ERDF assistance under EEC Directive of 28 April 1975 35 - 9 A. SOCIO-ECONOMIC DEVELOPMENT TRENDS IN BELGIUM, 1960-1977 After the war the economic trend was primarily marked by the absence of proper business cycles with the successive stages of upswing, expansion, boom, crisis, recession and/or depression. In addition, analysis was frequently confined to gauging a prosperity which seemed to be permanent, for it was thought that economic phenomena had been mastered. But this firm belief was seriously brought into question again by the event of 1975. A more attentive analysis in fact shows that the economic development of most industrialized countries in the post-war years went through a series of up- and down-swings. Between 1960 and 1977 the Belgian economy thus passed through four economic cycles, and the last of these, starting with the economic low of 1975, pre­ sents quite a different picture from the others. The first three cycles can be defined fairly closely: Growth cycle (minimum to Low High Low minimum) 1959-1967 1st quarter 1959 1st quarter 1964 3rd quarter 1967 1967-1972 3rd quarter 1967 2nd quarter 1970 3rd quarter 1972 1972-1975 3rd quarter 1972 3rd quarter 1974 4th quarter 1975 The first growth cycle (1959-1967), which was exceptionally long, showed up- ward and downward phases similar in both duration and profi le, each being marked by a period of stabilization. The unprecedented deve lopment of indus­ trial investment, and foreign investment in particular, and trie increase in the volume of foreign trade as a result of the establishmen t of the EEC, brought the Belgian economy during the 1959-1967 cycle to a higher level in quantitative terms than that reached in the previous decade . The rise in in- comes and the boost this gave to private consumption, espec ially of consumer durables (cars, electric domestic appliances), also contrib uted of.course, but at a later stage and in relatively marginal fashion whe η compared to the two factors mentioned earlier. The development of industria 1 investment gave muscle to the expansion process, since the decisive factors for investment - 10 were medium-term considerations (particularly in 1961, with the advent of foreign investors seeking to penetrate the European market) rather than the prospects of immediate returns. The tendency to invest was affected only slightly by the fact that demand grew less strongly, as was repeatedly the case. Investment capital was largely employed to develop production capacity. The long growth stage was not interrupted by any monetary or financial problems. The rate of increase of consumer prices was very moderate until the beginning of 1963, and then rose rapidly (at an average of 4% a year) until the first half of 1966 when the Government decided to apply a general freeze for three months. Rises in the index were deferred until the summer of 1967. The second growth cycle ran from the third quarter of 1967 to the third quarter of 1972, so lasting barely five years. Its high may be placed in the second quarter of 1970, followed by a two-year slowdown to the second quarter of 1972. Around mid-1969 the favourable trend of foreign demand, the development of foreign investment and, from the end of 1968 onwards, the increasingly notice• able growth in consumption in fact led to saturation of the production capaci• ty. The preponderance of demand over supply from then on caused actual growth to fall and prices and wages to rise. The balance between supply and demand was gradually restored by the boom in private investment, which offset the fall in exports; this fall to some extent preceded the high point in the cycle (second quarter of 1970) . A slackening of demand both abroad and in the domestic market, caused by fresh uncertainty following international monetary developments (suspension of dollar convertibility on 15 August 1971, Washington monetary agreements in December 1971), somewhat worsened the psychological climate in business circles. The improvement in economic conditions in Europe allowed rapid economic recovery at the end of the third quarter of 1972, with a peak in the first quarter of 1974 after the abrupt rise in oil prices in late 1973. Subsequently, however, the economy was rapidly affected by the accelerated run• down of accumulated speculative stocks in the middle of the cyclical upswing. The prospect of a severe and lengthy recession, for long disregarded, was clear. During the third quarter of 1975 the downswing reached its lowest point and this was followed at the end of the yaer by a slight recovery as a result of necessary readjustments, supported by increase in public investment and expen• diture of households, which had earlier been inhibited by the unfavourable prospects for prices and employment. But this improvement did not last long and was not very intensive; a drop in activity was noted by the third quarter of 1976, in fact, followed by a very slight improvement in early 1977. The Belgian economy has probably entered a period of basic change and restruc• turing of the balance of forces that has been obtained until now. These changes could in fact be observed back in the last cycle, 1972-1975. The last ten years, unlike the preceding decade, have been characterized by phenomena whose structural nature will become increasingly clear as the period proceeds. 11 - The rate of price increase, which rose steadily until the end of 1974 and stabilized at a high level in 1975 (11.8%), subsequently fell back in 1976 and 1977. This shows that strong inflationary forces with an essentially, structural component are at work in the economy, at both national and inter• national level. During the same cycle (1972-1975) increasing unemployment was noted. From 1964 onwards the difference between the cyclical minimum level of unemploy• ment and the maximum level in the subsequent cycle decreased, while the ac• tual minimum total of unemployment rose from cycle to cycle. The serious disproportion caused by the high level of unemployment over the last three years may be attributed to the increase in the working population - partly because more women are taking jobs - while fewer jobs are being created. The 1975 recession and the subsequent slack conditions have demonstrated the obsolete nature of some plant and the poor products of a considerable part of Belgium's traditional industries. For the whole of the period under consideration (1960-1976) there was average annual growth of 4.6% (market prices, at 1970 prices) in gross domestic pro• duct, 4.2% in private consumption, 4.6% in domestic gross fixed capital for• mation and 8.3% in exports of goods and services. Excluding the recent crisis years (1975 and 1976), these figures show a slight increase: GDP 4.9%, private consumption 4.3%, domestic gross fixed capital formation 5.3%, and exports of goods and services 9.1%. Exports of goods and services thus acted as a catalyst in Belgium's marked development in the 1960s. Privite consumption and investment, although playing a less noticeable role, have sometimes gone beyond the stage simply of supporting the economy.