Globalisation and De-Industrialisation in Belgium. On the Role of Imports and International Sourcing

As an open economy with a strong dependence on trade and activities of multinational firms, Belgium is one of the countries most sensitive to the economic globalisation process. We show how imports of intermediate products have risen strongly, especially in those industries where local manufacturing activities are strongly dependent on the presence of multinational firms. We make a distinction between ‘relocating’ sectors where growing imports go hand in hand with a decrease in value added to output ratio, and ‘upgrading’ sectors where rising imports go together with an increase in the value added to output ratio. In terms of industry dynamics, we find that upgrading sectors are showing strong expansion of output and employment, while relocating sectors show strong declines in employment. In particular, our paper highlights the finding that if upgrading is possible, foreign sourcing can help to expand activities in Belgium and improve the competitiveness of the Belgian economy.