Multinational companies account for over 40% of Belgian GDP
Belgian companies belonging to a multinational group (whether Belgian or foreign) account for more than 40% of Belgium's gross domestic product (GDP). They’re also responsible for a quarter of the country’s employment and three quarters of its exports, according to a study by the Federal Planning Bureau (FPB).
The study identified 5,500 business groups active in Belgium, of which 2,100 are domestic groups, 1,800 are Belgian multinational groups and 1,600 are foreign multinational groups.
Belgian multinational groups control almost 7,500 subsidiaries abroad, especially in neighbouring countries like France, the Netherlands, Luxembourg and Germany. These countries account for 42% of the total when it comes to subsidiaries, and half when it comes to parent companies. Another 16% of parent companies are located in the United States.
“Multinational groups play an important role in the Belgian economy, due to its long tradition of openness to foreign investment,” the FPB said in its findings, noting that these Belgian and foreign multinational groups have almost 10,000 subsidiaries in Belgium.
“This figure is admittedly small compared to the hundreds of thousands of companies active in Belgium, but Belgian companies that are members of a multinational group are relatively larger and represent a substantial part of the country's economic activity.”
Belgian subsidiaries of foreign groups account for almost 30% of GDP and 15% of employment, and companies that are part of a Belgian multinational group account for 15% of GDP and 10% of employment.
“These firms are therefore characterised by higher labour productivity than domestic firms,” the FPB noted.
More multinationals in manufacturing than services
Their analysis found that the weight of multinational groups is greater in manufacturing than in services, with multinational groups having a higher share in technology and knowledge intensive activities. Foreign multinationals tend to dominate branches such as banking, steel or soft drinks production, while Belgian multinationals have a greater presence in the chemical industry.
“Foreign multinational groups play an important role in Belgium's integration into the world economy: their subsidiaries export 45% of their production and represent 55% of the country's exports,” the report explained.
“Moreover, these Belgian subsidiaries of foreign multinationals use foreign suppliers for more than half of their supplies. Their local anchoring in the value chains in Belgium is therefore less than for other Belgian companies. However, the study also shows that their local purchases of goods and services allow other Belgian companies to participate indirectly in global value chains and to create jobs in Belgium.”
Bernhard Michel, an economist at the Federal Planning Bureau, said the study intends to paint “a clearer picture of the potential spillover effects of multinationals' activity in Belgium and to inform economic policy choices.”
The report was welcomed by Belgium’s American Chamber of Commerce (AmCham), which works to improve business and investment opportunities for the US-Belgian business community.
“The Federal Planning Bureau’s report confirms the outsize importance of US and other international companies for the Belgian economy. We must not only recognise the contribution of existing foreign investors in terms of employment, production and trade, but with this knowledge, work together with policymakers to attract and retain even more foreign investment in Belgium,” said AmCham chief executive Stéphanie Rutten.
Photo: AmCham Belgium