Why The Luxembourgish Economy Is Too Dependent On The Financial Services Industry

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Only a few OECD countries, if any, are as dependent to such an extent on one single branch of activities as Luxembourg is on its financial services industry. Since years it has been the principal growth engine of the economy. It is not only fuelling employment, but also activities linked to corporate services. In the last decade, the dynamism of fiscal revenues coming from the sector contributed to financing the expansion of the public sector and a solid short term budget situation has been realised (OECD, 2008, p.52). This Thesis will examine the question whether the Luxembourgish economy is too dependent on the financial services industry. Furthermore, it is going to measure the contribution coming from the sector to the national economy. The objective is to find out to what extend the economy depends on the financial sector. To reach this, this Thesis will first give an overview of the Luxembourgish economy and analyse its international competitiveness. Then, it is going to explain how the country evolved to becoming a financial centre and it is describing the financial centre we can see today. After being well informed about the economy and the financial services industry, the research is going to measure the direct impact on the economy coming from the industry, in terms of contribution to GDP, to national employment, to fiscal revenues, to national production and to the trade balance. Finally, the conclusions based on the results obtained will give an answer to the

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