Luxembourg
Official Dénomination : Grand
Duchy of Luxembourg.
Government : Constitutional
Monarchy with parliament democracy government
Head of State: S.A.R. The
Grand-Duc Henri.
Head of Government : Jean-Claude
Juncker, Prime Minister.
National Langage : Luxembourgish.
Administratives Langages :
French, German and Luxembourgish
Money : EURO
Capital : Luxembourg.
Administratives Subdivisions: 3
districts (Luxembourg, Diekirch, Grevenmacher),
12 cantons, 118 communes
Key figures of économie:(1)
Year
|
2002
|
2003
|
2004
|
2005(f)
|
2006(f)
|
Growth
GDP (%)
|
2,5
|
2,9
|
4,5
|
3,1
|
3,8
|
Growth
Employment (%)
|
3,0
|
1,8
|
2,6
|
2,2
|
2,7
|
Unemployment
(%)
|
3,0
|
3,8
|
4,2
|
4,4
|
4,6
|
Inflation
%
|
2,1
|
2,0
|
2,2
|
2,1
|
2,0
|
(f): forecast
Luxembourg is a free economy. It
is therefore wide open to trade and international
competition.
This high degree of openness is
also to be found in the Luxembourg employment
market as 3/5ths of the workforce are
not from Luxembourg and 2/5ths commute
from France, Belgium and Germany. The buoyancy of
the Luxembourg economy between 1985 and 2000 kept
unemployment rates amongst the lowest in the
whole of Europe at between 3-4 %.
The openness of the economy and
foreign investment were also amongst the key
factors that made Luxembourg companies dynamic
and competitive, which contributed to exceptional
average growth of 6% per annum between 1985 and
2000.
Despite the strong growth, prices
remained relatively stable during the same period.
Luxembourg inflation was therefore in line with
that of its main commercial partners. Due to
productivity growth, the economy was able to
retain a high level of competitiveness.
The developments of these
parameters over the past 15 years means that
generally Luxembourg performs well in the
multilateral supervision exercises carried out by
the OECD, the IMF, the European Commission, or standardisation exercises
conducted by private bodies (IMD).
The table below shows the
development of the Luxembourg economy over recent
years and the predictions for the coming years
using some key figures. Further information is to
be found on the Service central de la statistique
et des études économiques (STATEC,
Luxembourg Statistical Institute) website and the
Economic and social portrait of
Luxembourg website.
Per capita wealth:
The absolute level of the GDP and
the per capita GDP are often considered to
indicate the wealth of the country and its
inhabitants. In order to make a proper comparison
obviously it is necessary to take account of the
differences in price levels and consumption
habits from country to country by adjusting them
to reflect purchasing power parities. The per
capita GDP is therefore expressed as the
“purchasing power standard” (PPS**). In
Luxembourg we need to add the cross-border, non-resident
workforce, which accounts for over one-third of
the jobs in the Luxembourg economy, contributes
to forming value-added and is in receipt of wages
but is not taken into account in the per capita
GDP ratio denominator. So it is better to base
comparisons on the "Gross National Revenue"
(GNR), which includes the flows of factors
between Luxembourg and other countries (particularly
the “exported” earnings of cross-border
commuters).
Since 1960 Luxembourg has had one
of the best performances in terms of GNR per
inhabitant (expressed as PPS**). With a PPS** of
1,329, the Grand Duchy is only surpassed by the
United States with a PPS of 1,509 and Switzerland
with 1,579. Nevertheless, it was not until the
beginning of the 1980s that Luxembourg broke away
from other industrial countries and the gap
widened. In 2001 the Luxembourg per capita GNR
was around 34,000 PPS compared with 29,000 PPS
for the United States that was in second place on
this scale.
Nevertheless, neither the
“per capita gross domestic product" nor
the “per capita gross national revenue”
reflect the structure of the GDP which may be
characterised by divergent influences from
country to country, the proportions of gross
fixed capital formation, Government consumption
expenditure and household consumption expenditure.
A comparison of household consumption expenditure
levels or actual individual consumption (in PPS)
per country, which is relatively low in
Luxembourg compared with other European countries
(expressed as a percentage of the GDP), can give
a more realistic view of the inhabitants'
standard of living. This indicator is used to
compare differences in wealth in terms of the
purchasing power of the residents of different
countries but does not take account of the
reinvested revenues that contribute to future
wealth. By using this method - level of
consumption per inhabitant - we arrive at the
conclusion that although the purchasing power of
Luxembourg residents exceeds the average
purchasing power of the European Union by over 42
percent in 2001, the gap compared with countries
such as Austria, the UK, Norway, Switzerland,
Denmark and Germany is much lower than would have
been expected from just looking at the per capita
GDP or per capita GNR.
In addition the wealth production
of the country can also be assessed by looking at
the GDP per job or GDP per hour worked ratios,
which are in fact summary measurements of the
productivity of an economy. In 1999 the GDP per
hour worked in Luxembourg amounted to 142.1 on
the basis of an index of 100 for the whole of the
European Union. The same index was 124.4 in
Denmark and 117.4 in Belgium.
The measurement of a country's
wealth therefore depends largely on the
measurement methods applied. Also in Luxembourg,
which is the size of a region in big countries,
the “regional centre” aspect also plays
a role. Therefore a comparison with other regions
can also provide additional useful lessons. In
the graph of the GDP by region we see the
wealthiest regions, the poorest regions of the EU
as well as the neighbouring regions of Luxembourg.
GDP
and consumption per capita in 2001 (index
100 for the European Union)
|
|
GDP
|
Effective
individual Consumption *
|
Index of
price level
|
| |
| |
in current
euros
|
standard of
purchasing power
(SPP)
|
in current
euros
|
standard of
purchasing power
(SPP)
|
GDP
|
Individual
Consimption
|
Belgium
|
106
|
108
|
103
|
103
|
98
|
99
|
Danemark
|
144
|
116
|
132
|
105
|
124
|
126
|
Germany
|
108
|
103
|
108
|
105
|
105
|
103
|
Greece
|
51
|
64
|
54
|
69
|
80
|
78
|
Spain
|
70
|
84
|
67
|
83
|
83
|
81
|
France
|
104
|
103
|
101
|
102
|
101
|
99
|
Irland
|
127
|
117
|
100
|
91
|
109
|
110
|
Italy
|
90
|
102
|
91
|
100
|
88
|
91
|
Luxembourg
|
206
|
188
|
154
|
142
|
110
|
108
|
Netherlands
|
115
|
115
|
100
|
104
|
100
|
96
|
Austria
|
112
|
111
|
109
|
109
|
101
|
100
|
Portugal
|
53
|
71
|
54
|
72
|
74
|
75
|
Finland
|
113
|
104
|
101
|
88
|
108
|
115
|
Sweden
|
118
|
102
|
112
|
93
|
116
|
120
|
United
Kindom
|
116
|
103
|
128
|
112
|
113
|
114
|
Total
|
100
|
100
|
100
|
100
|
100
|
100
|
Norway
|
179
|
143
|
145
|
108
|
125
|
134
|
Switherland
|
163
|
117
|
157
|
108
|
139
|
145
|
Source: EUROSTAT
N.B.: résultats provisoires pour 2001.
* Effective individual consumption =
final Consumer expenditure of the
households and the non-profit-making
institutions to the service of households
(ISBLSM) + goods and services for
individual consumption provided by the
government on a purely free basis and at
cut prices, such as teaching and health.
|
Although Luxembourg ranks amongst
the regions with the highest per capita GDP, it
does, however, lose the top position it occupied
in comparison with other countries to the Inner
London and Brussels regions and barely exceeds
the Hamburg region. In this context it should
also noted that the per capita GDP in the regions
that neighbour Luxembourg (Lorraine, Belgian
province of Luxembourg, Trèves, Sarre) are, to
varying degrees, below the average per capita GDP
in the European Union and that the gap compared
with Luxembourg is sizeable. Luxembourg as a part
of a larger geographical area is a dynamic entity
comparable to other regional centres or
conurbations in Europe with the obvious
particularity that it is a sovereign country that
conducts its own economic, financial and social
policy.
In reality the GDP per inhabitant
only provides an accounting and partial viewpoint
of the well-being of the inhabitants of a country
or region. International and scientific
organisations have therefore tried to introduce
development indicators to reflect the social,
health, educational and environmental aspects.
The most well-known of these indicators is called
the human development index (HDI), which the
United Nations Development Programme (UNDP) has
published each year since 1990. This is a summary
indicator established on the basis of partial
indicators on health (indicator: life expectancy
at birth), education (indicator: school enrolment
rate, literacy rate) and economic performance (per
capita GDP). In the HDI rankings for 2002,
Luxembourg only comes in sixth place. This can be
explained firstly by the life expectancy at birth
rate - taken as an indicator of public health -
which is 77.4 years in Luxembourg compared with
81 in Japan, 79.7 in Sweden and 78.5 in Norway
for example. Secondly, the result reflects a
methodological issue regarding the school
enrolment rate, which in Luxembourg does not
include students of Luxembourg nationality who
attend foreign universities in the absence of a
full university course in Luxembourg. The HDI can
therefore be criticised from the methodological
point of view, particularly as regards the
weighting of indicators and the choice of
variables but has the merit of expanding the
perspective on well-being beyond economic
performance in terms of per capita GDP.
(1)Source
of the Ministry for the Economy and the foreign
Trade- Copyright © Ministère de l'Économie et
du Commerce extérieur
**
Standard of purchasing power
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