Why Was Belgium so Late in Adopting Keynesian Ideas and Devising Regional Development Policies?

In this paper we analyze the influence of economists on post-war economic policy in Belgium, both as producers of theoretical schemes and as advisors, commentators or critics of public policy. In some instances economists became minister or even prime minister and therefore played a key role in decision-making processes. The term ‘economist’ is preserved for academic scholars. Persons working at research departments of central banks, ministries or at planning offices are considered as policy-makers. We focus on two related issues. First, the very slow penetration of Keynesian ideas in Belgian economics and policy-making. Second, the late adoption of regional development policies. Both issues are connected because in classical theory spatial inequality is only a temporary phenomenon. In highly developed areas labor will become scarce and expensive, while it remains relatively cheap in ‘backward’ regions. Consequently a capital flow will emerge from strong to weak areas, so that spatial income differences will automatically decline and perhaps even disappear. Keynes however showed that poor regions can get stuck in a downward spiral as unemployment encourages emigration. This undermines local demand and makes an area uninteresting for new investment. Keynes did not propose specific remedies to reduce spatial inequality but it was clear that in his view only the government could enhance such a process (Richardson, 1973). Several general overviews investigate Belgium’s post-war economic development (e.g. Van der Wee, 1987; Vandeputte, 1993; Cassiers et al., 1996) but they usually devote little attention to spatial inequality. There are a few useful biographies, but concerning the history of economic thought the harvest is fairly limited (Sirjacobs, 1997; Buyst et al., 2005). We integrate this material and confront it with a substantial number of detailed contemporary studies following largely a chronological approach. First we analyze the legacy of the interwar period. Next the economic ideas developed during World War II on reconstruction and their implementation are investigated. More specifically we look at the reasons why Keynesianism penetrated so slowly in Belgium. Next the focus is on the emergence and effects of regional development policies