As a small pocket country surrounded by powerful countries, Luxembourg from the independence of the alliance with neighboring countries in order to obtain the protection of powerful countries as an important strategy to maintain its survival and development. Luxembourg signed the Treaty of the German Customs Union with Germany in 1842, linking the Luxembourg economy to the German economy. In 1918, the Luxembourg government announced that it would abrogate the 1842 customs treaty with Germany, and in 1921 it established an economic and customs union with Belgium. During the Second World War Luxembourg was again invaded by Germany, which severely damaged its economic development. The war destroyed 45% of Luxembourg's arable land and damaged 1/3 of the country's housing stock to varying degrees. After the Second World War, Luxembourg became more active in regional and global economic cooperation organizations, strengthening its economic ties with other countries in order to make up for the country's lack of resources and small market. For example, in 1944, before the end of the Second World War, Luxembourg formed the Benelux Customs Union with the Netherlands and Belgium, and in 1958 it further formed the Benelux Economic Union. In addition, Luxembourg has participated in the Benelux Multilateral Reimbursement Agreement, the European Payment Union, the European Coal and Steel Pool, the European Economic Community, the Organization for Economic Cooperation in Europe and the Organization for Economic Cooperation and Development. The expansion of international cooperation and exchanges has given Luxembourg a politically stable external environment and economically integrated it with the whole of Europe, thus contributing significantly to the country's economic development.
Luxembourg's iron and steel industry has always been the country's main pillar industry. Therefore, it has been said that Luxembourg's economic survival can be attributed to the development of barren limonite ore in the south of the country. the discovery and development of iron ore in the south of Luxembourg in the middle of the 19th century not only played an important role in the balance of trade between Belgian imports and exports, but also greatly contributed to the development of Luxembourg's iron and steel industry. 1870s, Luxembourg relied on the country's own iron ore and coal from the Ruhr region, the introduction of the Gilchrist iron and steel industry in the country. In the 1870s, Luxembourg relied on its own iron ore and coal from the Ruhr area, and introduced the alkaline bottom-blowing converter steelmaking method invented by Gilchrist and Thomas, i.e. the Thomas steelmaking method, which led to the rapid development of the iron and steel industry. Luxembourg's pig iron production was 60 tons in 1855 and 250,000 tons in 1873, half of which was made into steel. By 1927, Luxembourg's steel production reached 2.7 million tons, becoming one of the world's important steel-producing countries. As is often said, Belgium industrialized in the coalfields; Luxembourg industrialized in the iron ore fields.
Since the 1970s, Luxembourg's iron and steel industry has been in a state of stagnation, facing a serious under-opening. 1974 Luxembourg's raw steel and pig iron production reached a record-breaking 6,448,000 tons and 5,648,000 tons. 1975 to 1980, Luxembourg's crude iron and steel production were not more than 5.6 million tons in 1983, only 3.288 million tons. Luxembourg's economy, which is overly dependent on the iron and steel industry, has been plagued by a structural crisis in this industrial sector, and the national economy as a whole has shown a trend of contraction. industrial production in 1983 was 20.7% lower than that of 1994, with an average annual decline of 2.54%, which is unique among the countries of the Eu***omic world.
Luxembourg realized the disadvantages of a unitary economy as early as the 1960s and set about vigorously promoting diversification of the national economy. From 1970 to 1981, more than a decade, Luxembourg's manufacturing industry in the metallurgical industry share from 66.1% down to 46.5%, while the rubber and plastics industry, electrical products, transportation equipment, machinery manufacturing, food and beverage industry have a greater development. The policy of economic diversification has attracted a large number of famous foreign companies such as the American Goodyear Tire and Rubber Company to Luxembourg to invest in factories, and the arrival of a large number of foreign investors in turn promoted the diversification of Luxembourg's economy.
While Luxembourg's steel industry was shrinking, the financial sector was growing rapidly. Luxembourg's economic, social, political and environmental are very stable, from the 60's the government has taken a series of policies to promote the development of the financial industry, such as the development of a strict system of bank secrecy, the holding company of the implementation of a very favorable tax system, foreign exchange and capital flows completely free and so on. These stable conditions and favorable policies not only promoted the development of the domestic financial sector, but also, and more importantly, attracted a large number of foreign financial firms to Luxembourg to set up their business. By the end of 1981, there were 115 banks in Luxembourg, most of which were foreign banks, and the European Investment Bank and the European Monetary Cooperation Fund, both of which are members of the European Economic Area, had set up offices in Luxembourg. Luxembourg became an important international financial center. The financial sector's share of GDP rose from 1.5% in 1960 to 13% in 1982, making it the second largest pillar industry of the national economy after the iron and steel industry. After the 1980s, the economies of the Western countries were in a state of recession and the debt crisis of the developing countries hit the international financial sector hard. This international climate also affected Luxembourg and individual foreign banks withdrew from the country. In response, the Luxembourg government adopted a series of measures to reduce tax rates and maintain Luxembourg's international position as a major financial center. 11.9% of GDP in 1990 came from the financial services sector, and by the end of 1993 there were 221 banks in Luxembourg***. 17,700 people were employed in the banking and insurance sector in 1992.
Economic development
Economic structure
Since the end of World War II, Luxembourg's economy has grown enormously and its economic structure has undergone profound changes. The share of the primary and secondary sectors in GDP has fallen considerably, while the tertiary sector has risen rapidly.
Agriculture has always played a minor role in Luxembourg's economy, and its share of GDP has been on a downward trend in the 50 years since the end of the Second World War: 12 per cent in 1950, 5.2 per cent in 1970, 2 per cent in 1980, 2.3 per cent in 1990, and 1.4 per cent in 1992. At the same time, the share of agricultural cardamom in the total employed population also showed a downward trend. in 1990 there were 3803 agricultural households in the country***, equivalent to only 32.85 in 1958. the agricultural population in 1990 was 14,593, a decrease of 43.7% compared to 1970, and accounted for 3.9% of the total population.
Luxembourg's agriculture is dominated by pastoralism, with the value of livestock production accounting for 83.7% of the total value of agricultural output, followed by planting. Luxembourg's planting industry in the cereal planting area has been declining, in 1990 a variety of crops planted area *** total 55891 hectares, of which 32980 hectares of cereal planting area, than in 1958, a reduction of 36.9%. 1990 Luxembourg's total output of 38.9 million kilograms of mundane goods, is simply not enough to meet the needs of the country. In contrast to the decline in total cereal acreage and production, there has been an increase in the acreage and production of beverages such as barley, oats and maize. maize production increased by 71.6% in the decade 1980-1990. Luxembourg's cash crops are dominated by grapes. Grapes are grown mainly in the Moselle valley and are used for winemaking; in 1990 Luxembourg's wine production amounted to 151,000 kilograms. In addition, Luxembourg also produces vegetables and flowers.
Luxembourg's industry used to play an important role in the national economy, but since the 1960s, its share of GDP and total labor force employment has been on the decline. Nevertheless, industry is still April in Diderange site of the first steelmaking furnace counting up to now has been more than 100 years of history. 1974 Luxembourg raw steel and pig iron production respectively created a record high after the world's scientific and technological development, the rise of high-tech sectors, so that the industrial structure of each country have undergone a great change in the consumption and demand for steel fell, thus leading to the world amaranth iron industry Slump. Luxembourg iron and steel industry is also trapped in the dilemma of under-opening, crude steel production has been hovering around 3 million tons. Luxembourg is a resource-poor country, and the mining industry, especially the iron ore mines, which used to play an important role in promoting the development of Luxembourg's iron and steel industry, has been in the doldrums due to the depletion of its resources. 1981 saw the closure of almost all the iron ore mines in the territory of Luxembourg. Now Luxembourg's steel industry needs iron ore mainly from France's Lorsen and Switzerland, Brazil and other countries, coke mainly from Germany. Albert Group is the largest steel company in Luxembourg, and one of the largest steel companies in Europe, ranking 221st among the world's 500 largest companies in 1990, with assets amounting to 83.7 billion US dollars. Luxembourg's crude steel production in 1990 was 3.56 million tons, the country's people spared 9.4 tons, this ratio in the world in the first place. In that year, 1/3 of the country's manufacturing output from the steel industry.
Luxembourg in addition to the developed iron and steel industry, chemical industry, machine manufacturing, paper, printing and food industry is also very important industrial sectors. 1992 national industrial output accounted for the gross domestic product (GDP) of 33.7%, of which the manufacturing output accounted for 25.9% of the entire GDP. 1992 industrial employment accounted for the total labor force of 29.1%, the manufacturing sector alone accounted for 25.9%. In 1992, industrial employment accounted for 29.1 percent of the total labor force, with manufacturing alone accounting for 17.7 percent.
Luxembourg's chemical industry is an emerging sector, with rubber, plastics, synthetic fibers, pharmaceuticals, fertilizers and so on.
Luxembourg's fuel and power industry is also an important sector of the Luxembourg economy; in 1990, the country's electricity generation amounted to 1.378 billion kWh, of which 820 million kWh were generated by hydroelectric power, accounting for 59.9% of the total. In addition, Luxembourg generates electricity from the waste heat of steelmaking, and in 1989 Luxembourg's per capita consumption was 13,976 kWh per capita, the second highest in Europe. Currently Luxembourg relies on imports for most of its energy, and in 1991 petroleum products accounted for 4% of total imports that year.
Luxembourg due to its lack of natural resources and small domestic market, so the dependence on foreign trade is very strong. 1992 the country's main exports of crude steel and its products (67,762 million Luxembourg francs), plastics, rubber products (27,581 million Luxembourg francs), machinery and equipment (30,887 million Luxembourg francs), the total amount of exports amounted to 20,858,587 million Luxembourg francs. The main imports were mineral raw materials (including fuels), crude metals and their products, machinery and equipment, chemical products and transportation equipment. Total imports amounted to 265.903 billion Luxembourg francs.
Political and social stability
Luxembourg is one of the most stable countries in Europe. After the end of the Second World War, the Christian Socialist Party, the Socialist Workers' Party and the Democratic Party formed coalition governments alternately. Although Luxembourg has a responsible cabinet, which can be resigned by a vote of no-confidence in parliament or by an early change of parliament initiated by the prime minister, in practice every government serves until the end of its term. Federation, National Federation of Railway and Transport Workers, etc.
Business administration
Luxembourg's economic and political stability makes it an ideal place for foreign investment. Luxembourg has no special restrictions on foreigners investing in Luxembourg and all foreign companies engaged in business activities in Luxembourg must comply with the relevant legal provisions in the same way as Luxembourg companies.
Conditions for the opening of a business
There are three main types of companies in Luxembourg: a Société Anonyme (SA), a Société Anonyme (Sarl) and a Société d'Investissement Contr?le (SIC). A holding company may also take the form of a limited company, but this is less common. Luxembourg has different legal provisions on the conditions to be fulfilled for the establishment of these three types of companies.