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 Policy Blog

INTERVIEW with Prof. Leo Sleuwaegen “Filling in the Gaps, where Belgium is lagging behind and how to fix it”

Date: 21/12/2010 17:05:00

An interview with Prof. Leo Sleuwaegen of the Vlerick Leuven Gent Management School, in which he discusses the impact and situation of US Direct Investment in Belgium following the release of AmCham Belgium's USDI Report 2010.

 

 

Leo Sleuwaegen is professor of Managerial Economics, Strategy and Innovation at the Katholieke Universiteit Leuven, Research Director of the Vlerick Leuven Gent Management School and part time professor at the Erasmus University of Rotterdam. He has recently been visiting professor at the University of California (Irvine), Bocconi University (Milan), the Université de Paris I (Panthéon-Sorbonne) and the New York University. He holds a PhD in economics from the Katholieke Universiteit Leuven, and his dissertation was awarded "Best doctoral dissertation” by the Academy of International Business, New York, in 1985.

AmCham Belgium: How is Belgium doing in terms of FDI and USDI?

Leo Sleuwaegen: It is nice to observe that Belgium is showing a good recovery, and we see that foreign investment is rising again, we see that US investment, even in the first half of 2010 ($7.2bn) is more than the full year of 2009, which really shows that there is a big recovery in US investment.
Of course we see that Belgium is doing well, but that other countries such as The Netherlands, Ireland, and Luxembourg, are relatively more US investment than Belgium.

ACB: What should Belgium be doing to move ahead of its competitors?

LS: If you look carefully at the data, we see that it is especially in the service sector that we are losing competitiveness, and attracting less US investment, so I think that one of the things that we need to do is that we become more competitive in this sector, and that we can offer American, and also other foreign companies a better environment in terms of labor conditions, but also in terms of infrastructure and in terms of the regulations that apply to this sector.

ACB: How can we explain why Belgium remains less attractive than its neighboring countries?

LS: Well it is especially the labor market, on which the functioning of the services sector depends, and there we see that in Belgium all kinds of regulations that apply to temporary workers or overtime make it sometimes difficult for companies to expand in Belgium and to use Belgium as a good platform for their activities. But in terms of infrastructure, we can do more; we can make sure that we offer more specialized educations, especially in what concerns the services and marketing domain.

ACB: How can we explain that The Netherlands has $471,567 and Belgium only $69,773 in USDI Stock? (In millions)

LS: Well, The Netherlands has done a lot in trying to attract more foreign investment, they have made it easy. They have a fiscal regime that is attractive for foreign investors, but they also have very active polices to attract foreign investors to The Netherlands, so they are very much focused on attracting these knowledge intensive services, and apparently it works.

ACB: Is Belgium also performing less well than The Netherlands in manufacturing or R&D?

LS: When it comes to manufacturing we see that Belgium is doing much better, it has a lot to do with the specialized cluster we have around the port of Antwerp, where many of the chemical companies are expanding and using our infrastructure in such a way that they can serve the European and wider market from here, and this is going on, so it is something that I think will stay, we have all the nice and the best conditions for these companies to develop here.

ACB: And non finance / holding related services?

LS: We see that in the high tech services, which are considered as high technology services, software companies and the like, we see that Belgium is losing competitive attractiveness. For these kinds of services, other countries, such as Ireland and the UK, are doing much better as we do; and also when we analyze data for Belgium in general, we see that Belgium is not doing so well in this kind of activities, there is room for improvement but it means that we should make it much more interesting for these companies to come to Belgium and invest here.

ACB: Could you rank the most important regulatory issues that need to be addressed?

LS: The most important ones have to do with the labor market so that there is more flexibility in terms of hiring and firing people, but also in terms of all kinds of restrictions that have to do with overtime and the use of temporary workers. I am also thinking about the fiscal burden on labor at this moment that makes it unattractive to invest here in Belgium.

ACB: Where should efforts be focused to make Belgium more competitive?

LS: If you look at all the data that we find on Belgium we see that Belgium is not doing so well in terms of institutional content, we should really focus on new policies to make our institutions support business rather than restricting business. To make sure that labor markets become more flexible, that there is more freedom in entrepreneurship, in all types of sectors. I’m talking about the services sectors where many of these sectors are excluded from the market, where the government is still very much involved and dictating all kinds of conditions, regulations that are applied to these sectors. And I think that it would be much better that we open up these sectors for more competition for more entrepreneurship, and that we also see that in sectors that have been very much protected, such as trading sectors but also in public transport, energy and the like, we would see a lot more activity develop is there were more freedom and flexibility.
 






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