Luxembourg is a state of Western Europe that is traditionally called the Grand Duchy. It is very small and has no access to the sea. In the north it has a border with Belgium, in the south and west - with France, in the east - with Germany. The area of this state is 2586.4 km 2 . The population in 2018 was 602,005 people. The population density is 233 people / km 2 . The economy of Luxembourg is focused on services, financial activities, industry, agriculture and tourism.
General features of the country
Luxembourg is part of the European Union, a member of the UN, NATO, OECD. Belongs to the Benelux zone. The country officially recognized 3 languages: French, German and Luxembourgish. The generally accepted currency here is the euro. The capital is the city of Luxembourg. He is also the largest settlement of this state.
Luxembourg is true to its historical traditions. There is still a constitutional monarchy. Time zone - UTC + 1. Luxembourg has its own Internet domain - .lu.
Luxembourg Economy: A Brief Summary
The economic activity of Luxembourg has a number of specific features. The country has few valuable resources, no access to the seas, the territory is very small. However, the development of specific areas has made Luxembourg one of the most prosperous countries in the world. It is considered one of the richest countries in Europe and the world. The standard of living of the population is very high.
The main characteristic feature of this country is the placement on its territory of a large number of banks, representative offices, offshore companies - a total of about 1000 investment funds and over 200 banks. No other city in the world can boast of such indicators.
A highly developed service sector lies at the heart of the state economy. The first position in economic activity is banking. The most attractive banking laws among EU countries apply here. They guarantee the confidentiality of deposits. Massive development of the financial sector began in the 60s of the 20th century. Then foreign banks began to open their institutions in this country. However, a real boom in the financial sector of Luxembourg began in the 80s, when it was flooded with German investors seeking to avoid high national taxes. Investment funds began to spread actively.
Thus, the structure of the economy of Luxembourg is quite specific, but at the same time quite viable. Thanks to her, the state manages to get ahead of many EU countries, practically without having its own resources and access to the seas.
Economic indicators
Luxembourg's economy is considered highly developed. There is stable economic growth, low inflation and unemployment. GDP per capita is $ 150,554, and the country's total GDP in 2013 amounted to $ 78.3 billion. Unemployment was 4.1%. Inflation is only 1.6% per year. Such indicators can be considered very good.
The largest contribution to the economy and GDP is made by the services sector - 69%. It employs 90% of the country's population. Industry accounts for 30%, while agriculture accounts for only 1%. The share of employees in the industrial sector is 8%, and in agriculture - 2%. Specifically, the financial sector contributes about 10% to GDP.
The standard of living of the population consists of high incomes and low taxes. It is difficult (or impossible) to find a person with incomes below the subsistence level in the country. Maximum taxes tended to decrease. Nevertheless, they cannot be called very low.
Of the greatest importance for Luxembourg are 3 large international companies, whose management is located in Luxembourg. This is the steel concern Arbed, the telecommunications company SES-Astra and the television company RTL.
Resources and economy
The main resource of the country is iron ore. Thanks to her, the production of iron and cast iron has been established. These industries account for about 10% of Luxembourg's GDP. Since the mid 90s of the 20th century, the role of metallurgy in the economy has sharply decreased. The extraction of raw materials ceased altogether. This was largely due to the low quality of local iron ores, making their extraction unprofitable. The available resources of building materials and waste from metallurgy are used for the production of cement. In addition to them, brick, concrete, slate, gypsum are produced.
Agriculture is well developed due to favorable climatic and transport conditions. Here meat and dairy farming, viticulture, and gardening are being developed. First-class vineyards grow in the valley of the river. Moselle. They are used for the preparation of elite wines: rivaner, moselle, riesling. From fruits, apple trees, pears, plums, cherries are grown. Flower growing has been developed, although this industry is gradually declining.
Currently, crop production is gradually losing its former importance. The number of people employed in it is decreasing. Luxembourg agriculture is characterized by a high level of mechanization of labor, the active use of fertilizers. These areas of agricultural activity are more pronounced here than in other countries.
High-tech industries are based on the creation of telecommunication networks, the production of video and audio equipment. Also, plastics, glass, fabric, porcelain are produced here, and the production of chemicals and machines is in progress. In the construction of enterprises involved firms from the United States. The high knowledge of different languages among the local population makes Luxembourg an attractive country for foreign companies.
Cons Economy of Luxembourg
Most of the country's GDP is revenue from providing services to international partners. Therefore Luxembourg is highly dependent on other countries. This dependence led to the fact that the crisis of 2008-2011 was experienced by this state very hard. Another disadvantage is the need to import all types of energy resources: oil, gas, coal.
Transport sphere
Through the country laid international transport routes going to Germany, France, Belgium. The total length of these highways is 5166 km, and railways - only 274 km (electrified 242 km). Merchant ships are sailing along the Moselle River. Tourism is also of great importance (6% of the contribution to GDP). The total length of the footpaths is 5000 km. The main sightseeing sites are medieval castles and vineyards.
Foreign economic activity
Luxembourg's economy is primarily focused on trade with other countries and the provision of services. Mostly trade is conducted with the EU, the USA, and the EU’s share is many times larger and amounts to 80-90 percent of the foreign trade balance. Chemistry, steel products, equipment, rubber products are exported. The country buys various goods, including food, as well as equipment and petroleum products.
Conclusion
The economic development of Luxembourg is a steady progressive process leading to an increase in the well-being of the population. Moreover, the country is heavily dependent on other states, especially EU member states. Due to the lack of its own resources, Luxembourg is forced to import them from abroad. In addition to industry and the financial sector, agriculture and tourism are developed here. The service sector is the main engine of the economy. And global financial and economic crises are hitting the country's economic life. The level of Luxembourg's economy is one of the highest in the world and in the European Union. Foreign guests are attracted by relatively low taxes and favorable conditions for holding deposits.