Benchmarking the framework conditions: a systematic test for Belgium

Belgium has traditionally been a country that has attracted a lot of foreign investment. Both in absolute terms, as in a share of GDP, the Belgian-Luxembourg Economic Union has for a long time been among the 10 most popular countries to invest in for an international investor. Even when Luxembourg is excluded from the data, this remains the case (see Federal Planning Bureau, Short Term Update 2001-1, February 2001). The reasons for this popularity are manifold. The Economist Intelligence Unit gi…

Belgium has traditionally been a country that has attracted a lot of foreign investment. Both in absolute terms, as in a share of GDP, the Belgian-Luxembourg Economic Union has for a long time been among the 10 most popular countries to invest in for an international investor. Even when Luxembourg is excluded from the data, this remains the case (see Federal Planning Bureau, Short Term Update 2001-1, February 2001). The reasons for this popularity are manifold. The Economist Intelligence Unit gives a list of possible determinants of foreign investment: the size of the host-country market, expected growth, input costs, geography, natural resources and the policy framework (EIU, World Investment Prospects, 2001). Most European countries provide sound economic conditions for foreign direct investments (FDI) and are, compared to the rest of the world, improving their attractiveness (AT Kearny, FDI confidence index, February 2001). The monetary stability due to the introduction of the euro, a healthy macro-economic situation and reforms in product and labour markets can be cited as positive factors of European’s attractiveness