The International Monetary Fund has a new ‘star’ signing. One of the smallest and richest countries in the world has joined the IMF to become the 191st member of the international organization. This country, although insignificant on a global and even regional level, has several characteristics that make it unique. After Monaco, this is the richest country in all of Europe, with a per capita income that multiplies almost six times that of Spain. This economic ‘treasure’ is well protected between mountains and far from the seas (it is the only country in the world along with Uzbekistan that requires crossing two borders to access a coastline). Although the mountains act as a natural (metaphorical) protection for this treasure, they have not prevented this nation from being absolutely connected to the world. This economy is one of the most integrated in the entire globe and, furthermore, stands out for having more workers than population, something really unique, but that has a simple explanation.
Liechtenstein had applied for membership in May 2023, and the process included a visit by the IMF team to Vaduz between November 27 and December 8, 2023. The decision was ultimately ratified by a majority in a national referendum held on September 22, 2024. The tiny principality (160 square kilometers, comparable to the city of Washington) has received an initial installment in the IMF of 100 million special drawing rights (equivalent to about 134.7 million US dollars) and It is already a full member of the IMF. This country is none other than Liechtenstein, the richest landlocked nation in the entire world.
The small alpine nationwith 300 years of history behind it and known for its high development, it is distinguished by having the second highest per capita income in Europe, only surpassed by Monaco. With a per capita income of $197,000 in 2021Liechtenstein considerably surpasses most small European states and countries (Spain’s per capita income is about $34,000). This high level of income and development is largely due to its heavy investment in research and development, which represents 6.2% of its GDP, and supports a highly competitive and export-oriented manufacturing sector.
Global integration and financial economy
From the International Monetary Fund itself they explain in a note published to ‘celebrate’ without inclusion that Industries such as machinery and tool engineering, plant construction and the manufacture of precision and dental instruments are key to the country’s economy, whose Industrial contribution represents 42% of gross value added, well above the EU average, which is around 15%. The financial sector, mainly focused on private banking, wealth management, insurance and trust services, also plays an important role, contributing around 20% to Liechtenstein’s GDP.
Despite its small size, Liechtenstein is deeply integrated into the global economy. The United States, Germany and Switzerland are among its main export destinations. As a member of the European Economic Area (EEA), Liechtenstein enjoys full access to the European Union’s single market, including opportunities in financial markets, thanks to the rules on the free movement of services and capital.
Leveraging their access to the EU financial market and supervision by the European Banking Authority, Liechtenstein financial institutions have extended their private wealth management networks beyond Europe, spanning Asia and the Middle East. In addition, strong economic relations with Switzerland, including the use of the Swiss franc as a currency, have fostered trade and labor integration.
More workers than population
A distinctive feature of Liechtenstein’s economy is the large number of workers who commute abroad from Austria, Germany and Switzerland. Compared to a population of about 40,000 people, the workforce was 42,500 in 2022. About half of the workforce commutes daily from Switzerland (59% of workers) or Austria (37%). Participation in the labor force is high (76.1%, compared to 74.9% in the EU) and the unemployment rate is below 2%, according to the IMF note.
During the accession ceremony, IMF Managing Director Kristalina Georgieva expressed her satisfaction with Liechtenstein’s incorporation, highlighting that this step reflects the country’s commitment to the highest standards of economic policy and international cooperation. Georgieva stressed that Liechtenstein’s accession comes at a time of growing global uncertainty and challenges, and that the IMF will work closely with the country’s authorities to support its sustainable growth and integration into the global economy.
For its part, Prime Minister Risch stated that joining the IMF is an important step for Liechtenstein, highlighting that, as a small country with limited administrative resourcesthey make decisions very carefully before joining international organizations. He added that his country is committed to being an active and dedicated member of the Fund, contributing to strengthening international economic stability and resilience.
At the political level, the 1921 Constitution combines monarchical and democratic principles and defines the principality as “a constitutional, hereditary monarchy, with a democratic and parliamentary basis.” The government is made up of a five-member cabinet nominated by Parliament and appointed by the prince for a four-year term. Liechtenstein has 1,500 civil servants, less than 4% of the population, significantly lower than the EU average of around 17%. 25 members of Parliament serve a four-year term. Although Liechtenstein’s capital, Vaduz, is the principality’s best-known city, it is not the largest; neighboring Schaan has a larger population.
LinkedinBeloud
#IMFs #latest #signing #tiny #rich #European #country #hidden #mountains #workers #population
