The benefits of being a multi-capital: The economic impact of the international and European institutions and interest groups

Abstract

Brussels is known worldwide for hosting (most of) the European institutions as well as several other international organisations like North Atlantic Treaty Organization (NATO). Besides the symbolic political value, their presence has an economic impact because of their administrative activities and staff remunerations. Estimating the economic impact poses two main challenges. First, the supranational nature of these organisations makes it challenging to quantify the size of these institutions and related bodies because country-based statistical systems hardly account for transnational organisations. Second, as these institutions and organisations mainly rely on taxpayers’ funding, policymakers need transparent estimates to assess the implications of their decisions as well as for a matter of accountability. For these purposes, a meticulous data collection is carried out, and transparent assumptions are used to estimate the local economic multiplier effect of these activities accounting for operational expenditures, employees’ consumption as well as (Belgian) taxes and saving. The results show that the economic impact for the Brussels-Capital Region lies between 23% and 26% of regional turnover and 19% and 20% of employment, while interregional spillovers are estimated being around 1.5% to 1.7% of regional turnover and 0.6% to 0.7% of employment for both Flemish and Walloon regions.