Liechtenstein

IN 1719 THE PRINCIPALITY of Liechtenstein was founded as part of the Holy Roman Empire. The name of the country is derived from the Liechtenstein dynasty. The principality joined the German Confederation in 1815, but opted for independence in 1866. Two years later, Liechtenstein abolished its army, thereafter maintaining a position of neutrality in international affairs. Nevertheless, close ties with Austria led to economic devastation for Liechtenstein during World War I. After the war, Liechtenstein established an ongoing customs and monetary relationship with Switzerland. The principality was able to remain neutral during World War II.

Much of Liechtenstein's current prosperity is due to its low taxes. There is a 20 percent maximum tax on businesses. Almost one-third of Liechtenstein's revenues are derived from high-profile businesses that have taken advantage of the low tax base to establish nominal offices in the principality. In the midst of strong economic growth, Liechtenstein was faced with an international scandal when concerns surfaced concerning the likelihood that its financial institutions were engaged in [Page 640]money laundering. As a result, the country was internationally blacklisted. Subsequent reforms led to Liechtenstein and the United States signing a Mutual Legal Assistance Treaty.

Liechtenstein's monarch, Prince Hans-Adam II, is considered to have more real power than any other European ruler. The prince uses his personal fortune to support himself, even paying for some state functions out of his own pocket. His family worth is estimated at several billion dollars. Under Liechtenstein's constitution, the monarch has broad emergency powers and exercises a veto right over all legislation. In 1990, Liechtenstein joined the United Nations and quickly articulated an agenda directed toward expanding the rights of women and children around the world.

Almost half of Liechtenstein's labor force is made up of foreigners, including some 13,000 workers who commute from Austria, Switzerland, and Germany on a daily basis. Current unemployment is 1.3 percent. Liechtenstein's only resources are a potential for developing hydroelectricity and the arable land. Currently the country imports over 90 percent of all energy requirements. Liechtenstein has been a member of the European Free Trade Association since 1995.

Liechtenstein's highly industrialized and diversified market economy has produced a per capita income of $25,000. Consequently the standard of living is comfortable for most residents, and housing loans are interest-free. The Liechtenstein government has developed a comprehensive network of social programs that include social security and financial assistance for those who are in need. Data on major social indicators for Liechtenstein are unavailable, and this makes it difficult to accurately analyze poverty.

Life expectancy in Liechtenstein is high at 79.55 years. With a projected life span of 83.16 years, females generally outlive men by approximately seven years. Among the population of 33,717, the median age is 39.22 years. Over 17 percent of the population is under the age of 14, and 12 percent have seen a 65th birthday.

Infant mortality occurs at a rate of 10 deaths per 1,000 live births. Male infants (6.34 deaths per 1,000 live births) are more than twice as likely to die as female infants (3.05 deaths per 1,000). Among children under the age of five, the mortality rate is 11 deaths per 1,000. All children over the age of 10 in Liechtenstein can read and write. The low fertility rate, which was estimated at 1.51 children per woman in 2005, helps to raise the quality of life for the children of Liechtenstein.

...