This Working Paper assesses the impact of public support for R&D activities on the educational mix of R&D employees in private companies in Belgium. Estimations show that some tax incentives significantly raise the share of researchers holding a PhD. There are indications that holders of PhDs substitute for R&D employees with a lower education degree. It is also shown that controlling for changes in the educational mix of R&D personnel lowers estimates of the impact of public support on the average wages of researchers.

By the end of 2009, all Member States of the EU must have transposed the Services directive into national law. This will constitute a major step forward in the completion of the legal framework for the internal market, but its economic impact is expected to be relatively small. It may lead to double-digit export growth for certain services branches. The small scale of these exports, however, gives rise to a weak impact on turnover, value added and employment.

This paper investigates the relationship between the relative positions, in terms of value added and relative prices, of Belgian manufacturing and market services in the European Union over 1970-2005. Relative prices are then broken down into relative unit costs of production factors. The analysis goes further by decomposing relative unit labour cost into relative hourly wages and relative productivity. Finally, relative productivity is broken down into relative capital deepening, relative labour
composition effect and relative total factor productivity.

This Working Paper evaluates the performance of the system of innovation in Wallonia for the most recent available period. Like the previous paper, this paper is based on the analysis of indicators reflecting the six main components of a system of innovation: knowledge development, human resources, valorisation of R&D, absorption capacity of innovation, entrepreneurship and innovation financing. A country's performance depends not only on the relative strength of each individual element but also on how effectively the components interact. These six components are evaluated from a European perspective: Wallonia is compared with European countries and European regions with similar socio-economic characteristics.

Worries about massive job losses have prompted a fast-growing literature on offshoring and its impact on employment in advanced economies. This paper examines the situation for Belgium. The offshoring intensity is computed as the share of imported intermediate inputs in output, based on a series of constant price supply- and-use tables for 1995-2003. Estimations of static and dynamic industry-level labour demand equations augmented by offshoring intensities, do not reveal a significant impact of either materials or business services offshoring on total employment for Belgium between 1995 and 2003, but this does not preclude a differential impact by skill-level.

To improve our understanding of the divergent evolutions that recently emerged between European countries in terms of labour productivity, this working paper compares the labour productivity growth of three small open European countries: Austria, Belgium and the Netherlands. The analysis focuses on market services as they are the most important single factor that is responsible for the divergences.