Io

• Belgian economy


  • Modern, open, and private-enterprise-based
  • Central geographic location
  • Highly developed transport network
  • Diversified industrial and commercial base
  • Few natural resources (we depends on the countries which supplies us)
  • Imports substantial quantities of raw materials
  • Exports a large volume of manufactures
  • Vulnerable to shifts in foreign demand particularly with Belgium's EU trade partners
• GDP


  Gross domestic product (=produits intérieurs bruts)
• Major sectors in % of GDP

  • Services 76% (transports,banks, insurances)
  • Industry 23%
  • Agriculture 1%
• Belgian Foreign Trade Agency (ACE/ABH)

  • Operational since March 2003
  • Decides on and organizes joint trade missions
  • Arranges, develops and distributes information, studies and documentation concerning foreign markets
• Wallon Export Agency (AWEX)


  • Public interest organization in charge of the promotion of foreign trade and the attraction of foreign investments for Wallonia
  • Created on 1 April 2004 as a merger of the Walloon Export Agency (AWEX) and the Office for foreign Investors (OFI)
  • Headquarters in Brussels (AWEX) and Namur (OFI)
  • Seven regional centres, located in each Walloon province
  • Employs 450 persons
  • Global network of more than 100 economic and trade attachés covering around 100 markets and 20 international organizations
  • Promotes exports of Walloon companies
  • Attracts and supports foreign investment in Wallonia
  • Supplies international trade data
  • Organizes prospecting trips abroad with Walloon companies
  • Offers financial incentives to exporting companies
  • Provides specific trainings
  • Organizes the Wallonia International Business Awards
• Sofinex


  • Encourages exports and investments or the creation of new Walloon companies
  • Targets to generate economic activity and employment in Wallonia
• Finexo


  • Export financing body
  • Promotes the Belgian companies' image and reputation abroad
  • Supports free trade and exporters' competitiveness
  • Contributes to the economic and social development of the recipient country
• Belgian corporation for international investment (SBI/BMI)

  • Semi-public finance institution at federal level
  • Co-finances business ventures by Belgian private companies abroad
  • Offers tailor-made solutions to individual business projects
  • Provides capital and know-how for international investments made by Belgian private sector companies
• Foreign direct investment (FDI)

  • Investing directly in production in another country, by buying a company there or by establishing new operations of an existing business
  • Done mostly by companies as opposed to financial institutions
  • Now regarded as complementary to trade
  • Some investments, especially in services industries, are essential prerequisites for selling to foreigners
• FDI


  • BYD (largest company of electric cars) wants to export in EU but if they export, they will kill Belgium's car sellers, so BYD will get a lot of subsidies from other countries
• Offshore


  Where the usual rules of a person or firm's game country do not apply, it can be legal or it can be partly or totally illegal
• Outsourcing


  • Shifting activities used to be done inside a firm to an outside company
  • Gain of time, money and competence
  • Create new jobs in the company of outsourcing
  • Job losses in the country you outsource from
• Globalisation


  • Trend for people, firms and government around the world to become increasingly dependent on and integrated with each other
  • Driving force has been multinational companies
  • Cheaper, open a large supplier potential, increase competition of suppliers, rescue millions from poverty
  • Job losses here, dependency on foreign
• Emerging markets


  • Developing countries
  • Four-fifths of the world's 8 billion people live in developing countries, many of them in poverty
  • Developing countries account for less than one-fifth of total world GDP
  • Economists disagree about how fast developing countries are to become developed
• Barriers to entry (or exit)

  • How firms keep out competition
  • Owning a crucial resource or exclusive operating licence
  • Big firm with economies of scale having a significant competitive advantage
  • Spending lots of money on advertising to match rivals
  • Raising exit costs to discourage entry
• Cartel


  • Agreement among two or more firms in the same industry to co-operate in fixing prices and/or carving up the market and restricting output
  • Aim is to increase profit by reducing competition
  • Identifying and breaking up cartels is an important part of competition policy
• Antitrust


  • Government policy for dealing with monopoly, to prevent big companies from buying other big companies and creating cartels with monopoly
  • Antitrust laws aim to stop abuses of market power by big companies and prevent corporate mergers and acquisitions that would create or strengthen a monopolist
• Dumping


  • Selling something for less than the cost of producing it
  • Strategy known to antitrust authorities as "predatory pricing"
  • May be used by a dominant firm to attack rivals
  • Countries can add duties on cheap imports that they judge are being dumped in their markets
• Trade policy


  • Defines standards, goals, rules and regulations for trade relations between countries
  • Specific to each country and formulated by public officials
  • Aims to boost the nation's international trade but can't be unfair to other nations
• Constituents of trade policy

  • Trade barriers
  • Tariffs
  • Quotas
  • Subsidies
  • Safety regulations
• Free trade


  • The ability of people to undertake economic transactions with people in other countries free from any restraints imposed by governments or other regulators
  • Benefits explained by the theory of comparative advantage
• Protectionism


  • The opposite of free trade
  • Intended to protect a country's economy from foreign competitors
  • Protects (new) industry from foreign competitors
  • Temporarily creates jobs for domestic workers
  • Reduces innovation, overall higher prices, job outsourcing, reduces customer choice
• Closed economy


  • An economy that does not take part in international trade
  • The opposite of an open economy
• WTO


  • Global international organization dealing with the rules of trade between nations
  • Established on 1 January 1995, created by Uruguay Round negotiations (1986-94)
  • Membership: 164 countries
  • Head: Dr Ngozi Okonjo-Iweala
  • Targets: Liberalize world trade, settle disputes
  • Principles: Trade without discrimination, predictability, fair competition, freer trade, encouraging development
• WTO vs GATT


  • WTO replaced the General Agreement on Tariffs and Trade (GATT) in 1995
  • WTO has a much broader scope than the GATT
• Doha Development Round


  • Current trade-negotiation round of the WTO
  • Started in November 2001 in Qatar
  • Targets: Lower trade barriers, improve market access, promote investment, protect intellectual property, make trade rules fairer for developing countries
  • Disagreement on farm import rules, USA and EU reluctant to reduce farming subsidies, domestic producers' concern about reducing protection
• Regional trade agreements


  • Can support the WTO's trade system, provided 2 strict criteria are met:
  • Duties and other trade barriers should be reduced or removed on substantially all sectors of trade in the group
  • Non-members should not find trade with the group any more restrictive than before the group was set up
• Doha Development Round


  • Current trade-negotiation round of the World Trade Organization (WTO)
  • Started in November 2001 in Qatar
  • Targets: Lower trade barriers around the world, facilitate increased global trade, improve market access for developed and developing countries, promote international investment, protect intellectual property rights, make trade rules fairer for developing countries
• • Disagreement on farm import rules (China + India >< USA + EU)
  • USA and EU reluctant to reduce farming subsidies (protectionism)
  • Domestic producers' concern about reducing protection for their respective industries (lobbying)
  • Liberalization: at the expense of the developing countries?
• Indo-Pacific Economic Framework Prosperity (IPEF)

  • Launched by the US in May 2022
  • Not a free trade agreement but an economic partnership including 14 countries with Japan and the US but excluding China and Taiwan
  • Represents 40% of global GDP and 28% of global goods and services trade
  • Target: rebalance vs TPP
  • Negotiations on the following pillars: (1) Trade, (2) Supply Chains, (3) Clean Energy, Decarbonization, and Infrastructure, (4) Tax and Anti-Corruption
• AfCFTA


  • African Continental Free Trade Area
  • 54 signatories
  • Aims to create a single market for goods, services, facilitated by movement of persons in order to deepen the economic integration of the African continent
• APEC


  • Asia-Pacific Economic Cooperation forum
  • 21 countries bordering the Pacific Ocean (China, Russia, United States, Japan, Australia,...)
  • Account for 45% of world trade
• Types of trade agreements

  • Simple cooperation associations (APEC)
  • Free trade areas (USMCA)
  • Customs union where customs and trade policy is shared between the member states(MERCOSUR)
  • Single market with free circulation of persons and capital between the member states (ASEAN)
  • Economic union with a common market and coordinated monetary and trade policies (the EU since 1992)
• The first world war (1914-1918) killed 17 million people, caused massive destruction of infrastructure, industries and homes, overturned old empires and changed the world's political order
• The Treaty of Versailles was considered a Diktat by Germany, as it had to admit full responsibility for starting the war, pay a huge sum of money well beyond its ability to pay, and had terms that angered the German people
• The Great Depression (1929-1939) was the longest and most severe economic downturn ever experienced by the industrialized Western world, causing drastic declines in output, severe unemployment, and acute deflation in almost every country
• Dictators like Mussolini and Hitler came to power in Italy and Germany during the Great Depression, appealing to desperate citizens by promising to restore prosperity
• World War II involved virtually every part of the world during 1939–45, with the principal belligerents being the Axis powers (Germany, Italy, Japan) and the Allies (France, Great Britain, the US, the Soviet Union, and China)
• World War II resulted in 40 to 50 million deaths, including 6 million people killed in Nazi concentration camps, and marked a decisive shift of power in the world away from western Europe and toward the US and the Soviet Union
• The Marshall Plan provided subsidies and loans totaling about 13 billion dollars to 16 European countries to help with their economic recovery after World War II