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Economy and Finance


Luxembourg owes its wealth to the discovery of iron ore in the south of the country in the 19th century, around which a powerful steel industry gradually developed, which became the dominant sector in Luxembourg.

During the 1960s, the government implemented an active economic development and diversification policy. The traditional heavy industry was joined by modern industries producing mainly chemicals, rubber, plastics and glass using advanced technologies. As of the 21st century, telecommunications , satellite technologies , life sciences and green technologies are other thriving new industries.

The small size of Luxembourg's market explains why foreign trade constitutes an essential element of the country’s economic life. Industry exports more than 80% of its production, with 86,4% of these exports being distributed to countries within the EU (July 2011).

As a result of its geographical location in the centre of Western Europe, its skilled, multilingual and conscientious workforce as well as its openness to foreign investment and capital, Luxembourg is an attractive business location of international firms.

Luxembourg is furthermore characterised by a stable political and social climate , favourable to economic development. The country is proud of its high level of social peace reached through the 'Luxembourg model' of social dialogue. In tripartite meetings, equal numbers of employer, employee and government representatives try to resolve socio-economic problems and conflicts in a spirit of consensus based on the principles of responsibility and solidarity.



Luxembourg's financial centre is characterised by a strong culture of investor protection and rigorous anti money-laundering policies. Its specialist teams are multilingual and multicultural, with a long tradition of financial expertise and extensive knowledge of the needs of an international clientele.

Luxembourg is the second largest investment fund centre in the world after the United States, the premier captive reinsurance market in the European Union and the premier private banking centre in the Eurozone.

From its origins as a European centre, the city subsequently developed as a private banking centre and then, since the 1980s, as a leading domicile for investment funds. The success of the financial centre is founded on the social and political stability of the Grand Duchy as well as on a modern legal and regulatory framework that is continuously updated, inspired by regular consultation between the government, the legislator and the private sector. Thus, over the years, specific regulatory frameworks have been created for alternative investment funds, venture capital investment funds, international pension funds, specialised investment funds, captive reinsurance companies, covered bond issuing banks, securitization vehicles and family wealth management companies.

This legal framework, combined with Luxembourg’s openness to the world, has attracted banks, insurance companies, investment fund promoters and specialist service providers from all over the world.