Background on the economics and politics of Luxembourg

Luxembourg has shown an outstanding performance in terms of growth and virtually all other macroeconomic indicators in the last decade. It is the smallest, but by far the richest country in Europe.

Unemployment is virtually non-existent at less than 2% and its government, alone in the EC, does not need to borrow to cover expenditures. In the last decade Luxembourg's economic growth factors which generated the constant improvement in the standard of living over a century and a half are quite specific. The origin of the incipient industrial development lies in a single sector, the steel industry. However, the c

Economic integration has always been the driving force behind the movement towards European unity. The European Coal and Steel Community is responsible for the regulation of these two key sectors of the Member States economies. This involves guaranteeing market supplies of coal and steel, regulating prices, improving workers living and working conditions, promoting trade and investment and helping the industries to make vital structural adjustments to meet changing world economic conditions.

For monetary union to be credible and strong, it must encompass only countries which are well managed economically. To this end, the Member States have undertaken to improve the performances of their economies to match those with the best track record. This is the concept of convergence.

Luxembourg continues to build on a remarkable economic performance, maintaining high growth rates and low unemployment. Luxembourg was severely affected by the sustained decline in the steel industry that began in the 1970s. However, in contrast to its neighbours, Luxembourg was able to switch rapidly to high value added services, notably financial services. An important factor that enabled Luxembourg to diversify in this way was its regulatory, taxation and other advantages which its neighbours do not share. As these industries expanded, growth was reinforced by the external benefits of clustering. This transformation of the Luxembourg economy underlies the extraordinarily high economic growth (5.5% per year) and low unemployment recorded since the mid-1980s.

ountry outpaced all other EC countries with a growth rate of 4.1%.

The restructuring of the steel industry started in the second half of the 1970s, continued in the 1980s, particularly through direct financial aid from the government. At the beginning of the 1990s, after having made major investments increasing labour productivity still further, ARBED concluded synergy agreements with French and Belgium partners, which enabled the Luxembourg steel-makers to take advantage of substantial economies of scale on the national site.

Some common words found in the essay are:
European Union, Finally Luxembourg, Europe Unemployment, Conclusion Luxembourg, French Belgium, Germany Belgium, Steel Community, European Community, Luxembourg Introduction, Chambers Deputies, single currency, steel industry, monetary sovereignty, economic growth, single market, joint monetary, joint monetary sovereignty, monetary union, join single currency, single currency means, currency means, restructuring steel, enabled luxembourg, idea luxembourg join, luxembourg join single,
Approximate Word count = 2016
Approximate Pages = 8 (250 words per page double spaced)