Belgian economic miracle

The Belgian economic miracle (French: Le miracle belge, Dutch: Het belgische wonder) was a period of rapid economic growth in Belgium after World War II, principally between 1945 and 1948. It was characterised by parallel trends of rising employment and real wages and low inflation, leading to improvements in living standards.^[1] It was an roughly contemporary with the Wirtschaftswunder in West Germany and part of the period of worldwide postwar economic expansion.

Economic miracle

Modern-day view of a former coal mine at Frameries. Coal mining was one of the industries which drove Belgium's economic miracle

During World War II, Belgium had been occupied by Nazi Germany had seen a deterioration in its gross domestic product through war damage and the economic policies pursued by the occupiers, despite the efforts of figures like Alexandre Galopin. From 1945, however, demand for Belgium's traditional industries (steel and coal, textiles, and railway machinary in particular) grew across Europe, boosting the recovery of the Belgian economy.^[2] In comparison with neighbouring countries, whose industries had been heavily damaged by fighting, the comparatively intact Belgian industrial base was able to restore its capacity to respond to the rise in demand.^[3] In 1946, the government announced its intention to increase production in Belgium's important coal mining industries by inaugurating a "Battle for Coal" (Bataille du charbon). At the end of 1947, Belgium became the first former belligerent in Europe to reach its pre-war level of industrial output.^[4]

The economic miracle was also greatly facilitated by the monetary policy of Camille Gutt whose "Plan Gutt", begun in October 1944, reduced the money supply which had grown hugely during the occupation. The effect of the policy, which reduced the amount of circulating currency by two-thirds, was to limit inflation sharply and facilitate a general rise in living standards.^[4]

Living conditions for Belgian workers improved rapidly. In 1944, shortly after the liberation, the Belgian government had introduced a series of new social security measures which began the rise in living standards. By 1947, wages of coal miners in the Borinage were 40 percent higher than they had been in 1938.^[5] Birthrates rose. The desire for increased production created greater demand for labour, raising wages levels. The need for workers, particularly in the Battle for Coal, led to the creation of a guest worker programme with Italy in 1946.^[5]

Criticism

Some historians have criticised the use of the term "economic miracle" to describe the period. According to historian Martin Conway, the term is "singularly inappropriate" to describe Belgian economic recovery during the period because "growth rates, salaries, and levels of investment lagged substantially behind, and production costs significantly above, those of Belgium's competitor economies".^[6] Government policy focused on monetary stability rather than on encouraging investment.^[7] Taken by surprise by the speed of the country's economic recovery, the Belgian government claimed little of the Marshall Aid that was being used by its competitors to develop new industries.^[8] The result was that Belgian heavy industry faced a "acute structural crisis" in the 1950s which led to the start of the deindustrialisation of Wallonia and the start of regional economic divergence.^[6]

The study of the period was important in the formation of the economic thought of the economist Alexandre Lamfalussy who wrote on the subject in the early 1960s.^[9]

References

1. Van der Wee & Verbreyt 2009, p. 459.
2. Maes 2009, pp. 5-6.
3. Van den Wijngaert & Dujardin 2005, p. 149.
4. Van den Wijngaert & Dujardin 2005, p. 150.
5. Milward 2000, p. 51.
6. Conway 2012, p. 375.
7. Maes 2009, p. 6.
8. Van den Wijngaert & Dujardin 2005, p. 156.
9. Maes 2009, pp. 1-5.

Bibliography

• Conway, Martin (2012). The Sorrows of Belgium: Liberation and Political Reconstruction, 1944-1947. Oxford: Oxford University Press. ISBN 978-0-19-969434-1.
• Maes, Ivo (April 2009). "The young Lamfalussy : an empirical and policy-oriented growth theorist" (PDF). National Bank of Belgium Working Paper (163).
• Milward, Alan S. (2000). The European rescue of the nation-state (2nd ed.). London: Routledge. ISBN 0-415-21628-1.
• Van der Wee, Herman; Verbreyt, Monique (2009). A Small Nation in the Turmoil of the Second World War: Money, Finance and Occupation. (Belgium, its enemies, its friends, 1939-1945) (Rev. ed.). Leuven: Leuven University Press. ISBN 978-90-5867-759-4.
• Van den Wijngaert, Mark; Dujardin, Vincent (2005). "La Belgique sans Roi (1940-1950)". Nouvelle Histoire de Belgique. II: 1905-1950. Brussels: Éd. Complexe. ISBN 2-8048-0078-4.