Economy of Liechtenstein

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Despite its small size and limited natural resources, Liechtenstein has developed into a prosperous, highly industrialized, free-enterprise economy with a vital financial service sector and living standards on a par with the urban areas of its large European neighbors.

Low business taxes - the maximum tax rate is 18% - and easy incorporation rules have induced about 73,700 holding or so-called letter box companies to establish nominal offices in Liechtenstein, providing 30% of state revenues. The country participates in a customs union with Switzerland and uses the Swiss franc as its national currency. It imports more than 90% of its energy requirements. Liechtenstein has been a member of the European Economic Area (an organization serving as a bridge between European Free Trade Association (EFTA) and EU) since May 1995. The government is working to harmonize its economic policies with those of an integrated Europe.

Contents

History

Since the signing of the Customs Treaty in 1916, Liechtenstein and Switzerland have represented one mutual economic area. Therefore, the borders between those states are open. The country also uses the Swiss franc as its national currency, and Swiss customs officers secure its border with Austria.

Liechtenstein is a member of EFTA, and joined the European Economic Area (EEA) in 1995 in order to benefit from the EU internal market. The liberal economy and tax system make Liechtenstein a safe, trustworthy, and success-oriented place for private and business purposes, especially with its highly modern, internationally laid-out infrastructure and nearby connections to the whole world.

The Principality of Liechtenstein has gone through economic and cultural development in the last 40 years like no other Western country. In this short period, Liechtenstein developed from a mainly agricultural state to one of the most highly industrialized countries in the world.

Foreign Trade

Besides its efficient industry, there also is a strong services sector. Four out of 10 employees work in the services sector, a relatively high proportion of whom are foreigners, including those who commute across the border from the neighboring states of Switzerland and Austria. Industrial exports doubled in 10 years from $1.4 billion (SFr. 2.2 billion) in 1990 to $2.9 billion (SFr. 4.6 billion) in 2000. Some 12.7% of Liechtenstein goods are exported to Switzerland, 42.1% to the EU, and 45.2% to the rest of the world. Liechtenstein imports more than 90% of its energy requirements.

For the last 2 years, the United States has been the most important export market for Liechtenstein, totaling $561 million (SFr. 876 million); Germany is second, with $479 million (SFr. 748 million) worth of imports, and Switzerland third, with $375 million (SFr. 587 million). France and Italy were able to maintain their positions, while Austria and the United Kingdom have been overtaken by Taiwan and Japan.

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