Executive Summary
Luxembourg, the only Grand Duchy in the world, is a landlocked country in northwestern Europe bordered by Belgium, France, and Germany. Despite its small landmass and small population (560,000), Luxembourg is the second-wealthiest country in the world when measured on a Gross Domestic Product (GDP) per capita basis. Since 2002, the Luxembourg government has proactively implemented policies and programs to support economic diversification and to attract foreign direct investment (FDI). The government focused on key innovative industries that showed promise for supporting economic growth: logistics, information and communications technology (ICT), health technologies including biotechnology and biomedical research; clean energy technologies, and most recently, space technology and financial services technologies. The economy has evolved and flourished, posting again a strong GDP growth rate – projected at 4.5 percent in 2017-2018, far outpacing the European average of 1.8 percent. Luxembourg offers a diverse and stable platform and outsized growth potential for a wide variety of U.S. investments and trade within the EU and beyond.
Luxembourg remains a financial powerhouse thanks to the exponential growth of the investment fund sector through the launch and development of cross-border funds (UCITS) in the 1990s. Luxembourg is the world’s second-largest investment fund asset domicile, after the United States, with $4 trillion of assets in custody in financial institutions.
Luxembourg is consistently ranked as one of the world’s most open and transparent economies and has no restrictions on foreign-ownership. It is also consistently ranked as one of the world’s most competitive and least-corrupt economies. The country has also successfully combatted money-laundering, terrorist-financing, and tax evasion through major fiscal reforms over the past decade. These reforms have countered Luxembourg’s historic “tax haven” image.
The Government of Luxembourg is actively seeking logistics companies to expand the new logistics hub at Findel Airport. Luxembourg is home to Europe’s leading all-cargo airline, Cargolux, and is currently expanding its air passenger terminal to accommodate more flights and the accompanying increase in usage. Luxembourg is also seeking ICT companies to use the country’s existing high-security, state-of-the-art datacenters, affording high-speed internet connectivity to major international data hubs.
Luxembourg has positioned itself as “the gateway to Europe” to establish European company headquarter operations by virtue of its central European location and advanced road, railway, and air connectivity.
The government continues to look to the future, including working to attract and support innovation and entrepreneurs, and actively investing in space technologies including asteroid mining. In November 2016, Luxembourg released its “Third Industrial Revolution Strategy,” a vision to “transform the country into the first nation-state of the smart green Third Industrial Revolution era.” The strategy seeks to position Luxembourg to take advantage of upcoming trends including digitalization, automation, de-carbonization, and resource efficiency, as well as new economic models including the sharing and circular economies. For more information on this initiative see www.tirlux.lu.
Table 1
Measure | Year | Index/Rank | Website Address |
TI Corruption Perceptions Index | 2016 | 10 of 175 | http://www.transparency.org/ research/cpi/overview |
World Bank’s Doing Business Report “Ease of Doing Business” | 2016 | 59 of 190 | doingbusiness.org/rankings |
Global Innovation Index | 2016 | 12 of 128 | https://www.globalinnovationindex.org/ analysis-indicator |
U.S. FDI in partner country ($M USD, stock positions) | 2015 | USD 503 billion | http://www.bea.gov/ international/factsheet/ |
World Bank GNI per capita | 2015 | USD 77,000.00 | http://data.worldbank.org/ indicator/NY.GNP.PCAP.CD |