Belgium moved up two spots in the World Economic Forum’s (WEF) recently released 2016-2017 Global Competitiveness Report, claiming 17th position out of 138 countries.
Labor market efficiency is undeniably the category that recorded the most progress. Recent government reforms, including policies aimed at lowering social security contributions, helped the country improve its competitiveness and jump from 54th to 45th position. The ‘pay and productivity’ criterion is perhaps the boldest example, where Belgium moved up 23 spots, indicating that the gap between wages and productivity has decreased. Moreover, the quality of education, where Belgium remains fifth, promises a bright future for the quality of the workforce. There is still significant room for improvement, however, on the ‘effect of taxation on incentives to work’ (132), ‘flexibility of wage determination’ (125) and ‘hiring and firing practices’ (114).
— AmCham Belgium (@AmChamBE) September 28, 2016
While Belgium may still be considered a poor pupil on taxation, it considerably improved its ranking on the effect of taxation on incentives to invest, where it moved from 118th to 97th. However, the WEF points out that tax rates and tax regulations remain “the most problematic factors for doing business.” To remedy this issue, AmCham Belgium recommends lowering the corporate tax rate to 20%, maintaining the notional interest deduction (NID) and simplifying administrative procedures.
Inefficient country governance is the other usual suspect hindering Belgium’s competitiveness. Belgium has made significant efforts to reduce the burden of government regulation, where the country climbed from 119th to 89th position in a year. The government also expressed more support for advanced technology products. Transportation infrastructure is a mixed bag, with the quality of ports and railroads holding steady, while the quality of roads has deteriorated. This highlights the absence of a long-term vision for mobility.
Belgium maintains a favorable position in the digital and tech realm. Foreign investors are importing more new technologies to Belgium, and the country offers a greater number of available scientists and engineers – here Belgium now ranks 22nd instead of 31st. The country has also secured its third place in health and primary education. However, Belgium dropped three spots in R&D company investments and business cluster development, a reminder not to neglect Belgium’s strengths.
Climbing the ranks does not happen by accident. It is the result of targeted policies and efforts. Belgium made good progress and saw only limited backsliding, and this is reflected in its overall score. By investing in the digital agenda, infrastructure and R&D, as well as endorsing business-friendly legislation and simplifying administrative procedures, Belgium can continue to climb the WEF rankings.
Photo credit: flickr/ Eric Gonzalez