Principality of Liechtenstein: Selected Issues

Principality of Liechtenstein: Selected Issues
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Volume/Issue: Volume 2025 Issue 077
Publication date: March 2025
ISBN: 9798229005791
$20.00
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Topics covered in this book

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Labor , Economics- Macroeconomics , Public Finance , Taxation - General , property income , Liechtenstein authorities , budget rule principle , High-Frequency Indicator of Economic Growth , gender wage gap , labor market characteristic , Income , Pensions , Pension spending , Labor markets , Value-added tax , Global , Europe

Summary

This Selected Issues paper focuses on cross-border income flows in Liechtenstein. In Liechtenstein, the gap between Gross Domestic Product (GDP) and Gross National Income (GNI) is significant due to the country’s economic structure as a financial center with a high percentage of cross-border commuters and globally competitive manufacturers contributing to high GDP per capita. Using currently available data, this paper examines the drivers of the GDP-GNI gap in Liechtenstein to provide a broader context of its high per capita income. The paper illustrates the importance of analyzing Liechtenstein’s economic developments through an alternate lens, given its unique structure, namely the significant presence of commuters as well as foreign investments by Liechtenstein residents. The GDP–GNI gap is among the largest among major economies and comparable in magnitude to Ireland and Luxembourg—but is more volatile. Liechtenstein’s gap is largely due to net outflows to foreign workers, and not because MNCs are domiciling operations in the country for financial reasons.