ABSTRACT
Belgian industrial policy in the 1960s was directed at regional development and the improvement of the skills of its work force via investment grants, low interest loans, and tax breaks too many foreign firms in order to induce their establishment of subsidiaries in Belgium. The situation was complicated by the passage of the Devolution Act of 1980 which formalized what had long been suspected; namely, that Belgium was actually three countries: Dutch speaking Flanders, French speaking Wallonia, and Brussels. Flanders essentially lacks a military industry which historically has been centered in Wallonia. Flanders seeks militay contracts as leverage for future technological development while Wallonia uses Research and Development subsidies for civil programs to fill the gap in lost military production. The Walloon companies operating in the military field are highly specialized in the production of military goods. The major Belgian aerospace firm SABCA is heavily dependent on military sales.
