The Leading Edge - Summer 2009 - 13

influx of foreign capital. The diversification of Luxembourg’s economy is illustrated by the presence of a wide range of business sectors, particularly in the areas of chemical, plastic and synthetic materials, mechanical construction and industrial machinery, the processing of ferrous and non-ferrous metals, the car industry, precision instruments, electronic supplies, the glass industry and wood processing. luxembourg is no place to live. The Grand-Duchy of Luxembourg enjoys one of the highest standards of living, not only in Europe but among all developed countries. According to a recent study conducted by The Economist magazine, Luxembourg City has the fourth highest quality of life in the world. With a GDP per inhabitant of EUR 48,700 (approximately $69,000), Luxembourg ranks among the countries at the top of the list. Luxembourg has a strong social, education and health care system and the crime rate in Luxembourg is low. Luxembourg City with its 90,000 residents, is characterized by a surprising contrast between the old city, with its 1,000-year-old fortifications, winding alleyways and picturesque homes, and the upper city, a true cosmopolitan center perched on a rocky plateau. The old city and its fortifications were listed as a UNESCO World Heritage Site in 1994. The rest of the country is characterized by picturesque little villages in a wide variety of charming landscapes with a large offering of ‘local’ attractions. Because of the capital’s role in the European Union, the cuisine served by Luxembourg’s restaurants shows influences from throughout Europe. luxembourg is too small to play a role in the international arena. Doing business in Luxembourg means working with efficient and innovative companies and taking advantage of the adaptive and proactive structures of a small country. The country’s main advantages are its strategic location in Europe, the quality of its transport, logistics and telecommunications infrastructure, the availability of a qualified multilingual workforce, political and social stability, an attractive legal and tax framework, a multicultural environment, close links to the authorities and the government, an openminded and international outlook and an ThE LEadIng EdgE 7 excellent quality of life. On a political level, Luxembourg kept tight links with its neighboring countries and was a driving force in the setup of the European Union. Luxembourg’s politicians are playing a major role in European politics, meaning that the country is well represented in Europe compared to its size or population. Hence, although Luxembourg is a tiny country situated in between the biggest countries in Europe, Luxembourg has maintained its prominent position on the world’s stage. luxembourg is an isolated country. The multi-cultured nature of Luxembourg is perfectly illustrated by its place in Europe. Luxembourg has long been an active player in European development. It was one of the founding members of the European Coal and Steel Community in 1951 and the European Economic Community in 1957 and is now home to many institutions of the European Union. The creation of the Common Market was highly beneficial for the development of Luxembourg’s foreign trade. Luxembourg’s economy is externally focused, and more than 85 percent of its production is exported. The country strongly supported the introduction of the Euro and the enlargement of the European Union. Luxembourg is now acknowledged to be a reliable economic and political partner at the European and international level. It forms an integral part of one of the largest economic and monetary areas in the world. In addition, Luxembourg plays a driving role in the development of the “Grande Région” cross-border area formed by Luxembourg and neighboring regions in Germany, France and Belgium. 9 8 10 luxembourg’s financial sector is in a downturn. Luxembourg is now home to one of the 10 leading financial sectors in the world, with approximately 150 banking institutions as well as a number of other professional companies in the financial sector, which are working under the supervision of the regulator of the financial sector. Luxembourg is the second-largest investment fund center in the world behind the United States, the premier captive reinsurance market in the European Union and the premier private banking center in the Eurozone. The financial sector is the largest contributor to the Luxembourg economy, representing about 45 percent of the GDP. From its origins as a Eurobond domicile in the 1960s, the financial center subsequently developed as a private banking center and then, from the 1980s, as a center for investment funds. The success of the financial center is grounded in the social and political stability of the Grand-Duchy and on a modern legal and regulatory framework that is continuously updated, inspired by regular consultation between the government, the legislator and the private sector. This legal framework, combined with Luxembourg’s long-standing economic openness to the outside world, has attracted banks, insurance companies, investment fund promoters and specialist service providers from the four corners of the world. Supervised by a competent and proactive regulatory authority, the Luxembourg financial center is characterized by a strong culture of investor protection and rigorous anti-moneylaundering policies. The workforce is multilingual and multicultural, with a long tradition of financial expertise and extensive experience of the needs of an international clientele. Luxembourg’s economic policy has favored the development of new business activities by means of a liberal, modern, flexible, favorable and innovative legal environment. Luxembourg’s aim of further diversifying market services has led to the creation and development of businesses in the fields of insurance and reinsurance, transport, commerce, tourism, telecommunications, e-commerce, audiovisual and company services. These key sectors have grown dynamically in Luxembourg and have also contributed to expanding international trading relations. Numerous multinational companies have chosen to set up business in Luxembourg and have installed large production and research and development facilities. More recently, major international groups specializing in e-commerce and information technologies have established their European worldwide headquarters in Luxembourg. e If you would like to discuss any of the above in detail or if you would like further advice about setting up business in Luxembourg, please contact Laurent Muller of Paddock Group, a member of the Leading Edge Alliance, at +352 49 59 24 or laurent.muller@paddock.eu. 13

The Leading Edge - Summer 2009

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