In this project we have studied the culture of Luxembourg. We began with the geographic location, demography, linguistic affiliation of the country, and symbolism and gradually moved towards the culture. Elaborating the culture, we have entered into the history of Luxembourg and even discussed the major occasions which attract tourists from worldwide, as income from tourist contribute a large part towards its economic development. We then discussed the Greet Hofstede model and compared Luxembourg with India. Finally we got into the Luxembourg economy and highlighted its foreign trade and the major country with which it trades.


Luxembourg is one of the world's smallest sovereign states at 999 square miles (2,586 square kilometers). The triangle-shaped country borders Germany to the east, France to the south, and Belgium to the west. The most important influence on the nation's cultural traditions is its location between the French and Germanic culture realms. The southern two-thirds, known as "the Good Land" ( Bon Pays in French and Gutland in German), has rich sandy soil and one of Europe's major iron ore deposits, the basis of the country's wealth. The capital, Luxembourg City, where one-fifth of the people live, is in the Bon Pays . The northern third, called Eisléck ( Oesling in French and Osling in German), is hilly and heavily forested and contains only 15 percent of the population.

The population increased from 281,000 in 1947 to 420,000 in 1997, a growth rate of about 1 percent per year. Underlying that growth was a dramatic shift in the ethnic composition of the population. The number of native-born Luxembourgers increased modestly from 262,000 in 1947 to 280,000 in 1997, because Luxembourgers have one of the world's lowest fertility rates, but the number of immigrants increased from 29,000 to 140,000. The largest groups of immigrants came from Italy in the 1950s and 1960s and from Portugal beginning in the 1970s. In 1997, Portuguese accounted for 13 percent of the population, Italians 5 percent, French 4 percent, Belgians 3 percent, Germans 2 percent, citizens of other European Union countries 3 percent, and citizens of other countries 3 percent. The percentage of nativeborn residents declined from 93 percent in 1947 to 67 percent in 1997.


Language is the most important element of cultural identity for the native-born. Those residents speak, read, and write in French, German, and Luxembourgish (Lëtzebuergesch), switching between them effortlessly. The major newspaper publishes most international news in German, cultural features in French, and classified advertisements in Luxembourgish. The simultaneous use of three languages derives from a combination of historical tradition and economic necessity. Native residents speak Luxembourgish to each other, and that is the first language infants learn to speak at home. Classified as a Moselle-Franconian dialect of German, Luxembourgish was enriched during the Middle Ages with so many French words and phrases that it is no longer understood by Germans. Traditionally, Luxembourgish was rarely written, and no official rules of spelling and grammar existed until they were established by the government in 1984. Older Luxembourgers suddenly found themselves accused of making spelling and grammatical errors. As the major language most easily understood by native Luxembourgers, German is the principal language of instruction in elementary school, although children speak Luxembourgish in the playground. Beginning in the second grade, French is taught as a subject, although instruction is still principally in German. Over the years, French becomes more important and by high school replaces German as the language of instruction, with German limited to specialized courses in language and literature. French is the principal language for government legislation and speeches. Street names, shop signs, and menus are written in French, and it is preferred by the more educated, intellectual elite. French is also the lingua franca used to communicate with immigrants, most of whom already know another Romance language. Although their language is closer to German than to French, Luxembourgers are reluctant to speak German. Because French replaces German as the language of school instruction in higher grades, using German can be taken as a sign of limited education. Also, older Luxembourgers recall the German occupation during World War II, when they were forced to speak German, and have passed on their memories to later generations. However, in their homes, Luxembourgers are more likely to watch television programs in German than those in French.


The national motto, Mir wëlle bleiwe, war mir sin , means "We want to remain what we are." That accurately captures the two dominant goals of contemporary society: protection from linguistic or other imperialism on the part of its more powerful French and German neighbors and protection from economic and political instability that would threaten the country's prosperity and extremely high standard of living. The national anthem consists of the first and last verses of the song Ons Heemecht ("Our Fatherland"). Written in 1864, immediately before the nation gained full sovereignty, the anthem calls for peace. The flag has three horizontal stripes of red (on the top), white, and blue (on the bottom). It is virtually identical to the flag of the Netherlands except for a slightly different blue shading (sky blue instead of ultramarine). In the nineteenth century, Luxembourg and the Netherlands had the same monarch.


Name of the Culture : Luxembourger Identification : The name of the nation derives from Lucilinburhuc , which in the local Germanic dialect meant "Little Fortress," referring to a small Roman castle on a rocky promontory overlooking the Alzette River.

The culture of Luxembourg refers to the cultural life and traditions of the small European nation of Luxembourg. Most citizens are trilingual; speaking the Germanic national language of Luxembourgish, in addition to French and German. Like the culture of any other country, culture of Luxembourg too is unique in its own way. Though it is one of the smallest countries in Europe, cultural background of Luxembourg is as deep rooted and strong as any other country. An account of culture of Luxembourg is a direct reference to the cultural traditions of Luxembourg. Luxembourg culture brings to you the various influences that are instrumental in comprising it. The relentless effort of the citizens to enhance the promotion of art and culture of Luxembourg is truly commendable. Regular concerts, art exhibitions, renovation and coming up of new museums, all indicate the strong cultural background of Luxembourg. Some of the museums in Luxembourg that facilitate cultural heritage of the place are:
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The National Museum of History and Art History Museum in Luxembourg The Casino Luxembourg Since the beginning of 20th century, the fine arts have become an important part of culture of Luxembourg. Expressionist painter Joseph Kutter with his landscapes and portraits has made a lasting impression on the collective mind. With the influence of Paris School, Abstract art got its footing in the culture of Luxembourg. The other important artists are Jean-Marie Biwer, Robert Brandy, Patricia Lippert, Gast Michels, Marc Reckinger, Doris Sander, Moritz Ney and sculptors Jeannot Bewing, Marie-Josée Kerschen and Liliane Heidelberge. Music is an important part of culture of Luxembourg. The tradition of Symphony Orchestra is in vogue for past 15 years. The other important performing arts group, the Luxembourg Philharmonic Orchestra or OPL is strongly influenced by 20th century French Music. Literature too holds an important part in culture of Luxembourg. The well-composed patriotic songs by Michel Lentz show the well grown roots of culture of Luxembourg.


Classes and Castes
The most fundamental social division is between native Luxembourgers and foreign-born residents. Portuguese immigrants are likely to hold lower-status jobs such as street cleaning, bus driving, and restaurant waiting.

Symbols of Social Stratification
The major symbol of social class difference is the language spoken and understood at home. Native Luxembourgers address each other and their families in Luxembourgish but switch to French, German, or English to talk with foreigners.

Luxembourg is a representative democracy within a constitutional hereditary monarchy. The grand duke or duchess, the ceremonial head of state, appoints the prime minister, who is responsible to a sixty-member Chamber of Deputies that is popularly elected every five years.

Leadership and Political Officials
The three principal political parties are the right-leaning Christian Social Party (PCS), the left-leaning Socialist Workers' Party (POSL), and the centrist Democratic Party (PD). The government is nearly always a coalition of the conservative PCS and one of the two more progressive parties. The most influential informal decision-making bodies are three councils: le Conseil d'Etat (council of state), le Conseil économique et social (economic and social council), and les chambres professionnelles (confederation of employers and unions). Former ministers and business, labor, and other civic leaders are appointed to these councils, which are consulted before legislation is enacted affecting their areas of national life.

Social Problems and Control
The legal system is strongly influenced by French practice. The highest court is the Cour Superieure de Justice (Superior Court of Justice). Judges are appointed for life by the grand duke. The crime rate is extremely low, and civil disorders are unknown.


Military Activity
Luxembourg is an active member of the North Atlantic Treaty Organization (NATO). It spends 0.8 percent of the gross domestic (GDP) on defense and has a volunteer army of about eight hundred active soldiers.

About one-third of GDP is spent on social welfare programs; this is one of the world's most generous systems. About half that spending is on pensions, onefourth on health insurance, and one-fourth on disability payments. With only five thousand unemployed people, spending for unemployment compensation is low.

Division of Labor by Gender
In principle, women have full political and economic equality. The percentage of women active in the labor force has increased rapidly, but the country has a lower female labor force participation rate than do other developed countries: only 43 percent among citizens and 54 percent among foreigners. Few women are compelled by economic necessity to seek employment, and housework is counted as employment in determining social security and other benefits. Because of the very low birthrate, women citizens are torn between child rearing and working outside the home. The main impetus for the growth in female labor force participation is a desire for more independence and equality and less social isolation.

The Relative Status of Women and Men
Older women wield considerable informal authority, in part because they constitute a high percentage of the population: About 12 percent of native-born Luxembourgers are women over age 65. Older women have a large percentage of the national wealth and provide their middle-aged children with considerable financial support, such as assistance in buying a house. In the afternoon, the streets are filled with older women heading for the bakeries to consume coffee and pastry with friends.

Marriage rates have dropped sharply in recent years. One-third of couples who live together are unmarried, one-seventh of the children are born to unmarried mothers, and one-third of marriages end in divorce. All these practices were rare a generation ago.

Domestic Unit
Although the older generation controls much of the family wealth, threegeneration households have become much less common than they were in the past. Older women who cannot live independently are more likely to move into expensive, comfortable retirement homes than to move in with one of their children.

Inheritance laws do not induce early divesting of an estate to heirs, and so older people hold on to their wealth until they die. Because Luxembourg has had a very low birthrate for a long time, an inheritance is typically divided among a small number of children, but with high life expectancy, most middleaged and even retired people have living parents.

Infant Care
Among the native-born, the birth of a baby is a relatively rare event at about three thousand per year, several hundred less than the number of deaths. An extensive publicly supported network of day care centers is available for the 50 percent of mothers who work outside the home. Nearly half the babies are born to foreigners, and they are entitled to the same maternity and day care as the native-born population.

Child Rearing and Education
People are taught to be prudent, careful, responsible, and practical. Creativity and expressiveness are not emphasized. An infant is not a constant center of attention, and parents are not obsessed with twenty-four-hour catering to a child's whims. Regular mealtimes and other activities are not disrupted by the arrival of a child.


Higher Education
There is no university. Because French is the principal language of instruction in secondary school, Luxembourgers are more likely to attend a university in France or Belgium than in Germany.

Luxembourgers regard their cultural values as deriving primarily from their French rather than their German neighbors. However, they do not admire the spontaneity of Latin culture. Punctuality is expected at meetings, social activities, and cultural events.

Religious Beliefs
About 97 percent of the people are Roman Catholics. Native-born Luxembourgers are overwhelmingly Roman Catholic, as are most immigrants from Italy and Portugal.

Like other European countries, Luxembourg has a free and universal national health insurance system.


The public holidays are a mix of Christian and secular dates, such as Christmas, New Year's, and May Day. Luxembourg celebrates National Day on 23 June as the sovereign's official birthday. The night before (22 June) is festive, with torchlight parades, fireworks, music, and parties. National Day is more ceremonial, including military parades, cannonades, and a "Te Deum" sung in the national cathedral.

Support for the Arts
The major supporter of the arts is the Grand Ducal Institute, which promotes work in languages and folklore, arts and literature, history, natural science, medicine, and moral and political sciences.

Luxembourg lacks a distinctive literary tradition because of the absence of spelling and grammatical rules and the limited vocabulary and grammar constructions of Luxembourgish. Thus, writers are more likely to work in genres, such as poetry and plays, that are meant to be spoken rather than read silently. The major writers, including the essayist Marcel Noppeney (1877² 1966) and the poet Michel Rodange (1827²1876), have invariably used French or German. French books and publications are widely read, and Luxembourg's periodicals, literary reviews, and magazines aimed at intellectuals are almost always written in French. Luxembourgers writing in French are better able to compose essays and scientific tracts than to write novels. Because Luxembourgish is essentially a German dialect, writers in German are able to weave in local phrases and sentiments that are meaningful in Luxembourgish, although "pure" German would discourage such colloquialisms. However, the discomfort of Luxembourgers with the German language discourages its widespread use.


Graphic Arts
Luxembourg lacks internationally prominent graphic artists, and its principal museums³the National Museum of History and Art and the Museum of History of the City of Luxembourg³emphasize history and artifacts rather than graphic arts. Contemporary artists are represented at the Musée d'Art Moderne Grand-Duc Jean.

Performance Arts
Luxembourg has had a degree of influence in modern communications media. Radiotelevision Luxembourg (RTL), a privately owned company, transmits radio programs in five languages and television programs in French and German. RTL first developed a large audience in the 1960s, when it was the only major station in Europe that played pop music. RTL also supports the major orchestra, the Grand Orchestra of Radiotelevision Luxembourg.


" Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster." Prof. Geert Hofstede, Emeritus Professor, Maastricht University.

Power Distance Index (PDI) that is the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally. This represents inequality (more versus less), but defined from below, not from above. It suggests that a society's level of inequality is endorsed by the followers as much as by the leaders. Power and inequality, of course, are extremely fundamental facts of any society and anybody with some international experience will be aware that 'all societies are unequal, but some are more unequal than others'. Individualism (IDV) on the one side versus its opposite, collectivism, that is the degree to which individuals are integrated into groups. On the individualist side we find societies in which the ties between individuals are loose: everyone is expected to look after him/herself and his/her immediate family. On the collectivist side, we find societies in which people from birth onwards are integrated into strong, cohesive in-groups, often extended families (with uncles, aunts and grandparents) which continue protecting them in exchange for unquestioning loyalty. The word 'collectivism' in this sense has no political meaning: it refers to the group, not to the state. Again, the issue addressed by this dimension is an extremely fundamental one, regarding all societies in the world. Masculinity (MAS) versus its opposite, femininity, refers to the distribution of roles between the genders which is another fundamental issue for any society to which a range of solutions are found. The IBM studies revealed that (a) women's values differ less among societies than men's values; (b) men's values from one country to another contain a dimension from very assertive and competitive and maximally different from women's values on the one side, to modest and caring and similar to women's values on the other. The assertive pole has been called 'masculine' and the modest, caring pole 'feminine'. The women in feminine countries have the same modest, caring values as the men; in the masculine countries they are somewhat assertive and competitive, but not as much as the men, so that these countries show a gap between men's values and women's values.

Uncertainty Avoidance Index (UAI) deals with a society's tolerance for uncertainty and ambiguity; it ultimately refers to man's search for Truth. It indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations. Unstructured situations are novel, unknown, surprising, different from usual. Uncertainty avoiding cultures try to minimize the possibility of such situations by strict laws and rules, safety and security measures, and on the philosophical and religious level by a belief in absolute Truth; 'there can only be one Truth and we have it'. People in uncertainty avoiding countries are also more emotional, and motivated by inner nervous energy. The opposite type, uncertainty accepting cultures, are more tolerant of opinions different from what they are used to; they try to have as few rules as possible, and on the philosophical and religious level they are relativist and allow many currents to flow side by side. People within these cultures are more phlegmatic and contemplative, and not expected by their environment to express emotions. Long-Term Orientation (LTO) versus short-term orientation: this fifth dimension was found in a study among students in 23 countries around the world, using a questionnaire designed by Chinese scholars It can be said to deal with Virtue regardless of Truth. Values associated with Long Term Orientation are thrift and perseverance; values associated with Short Term Orientation are respect for tradition, fulfilling social obligations, and protecting one's 'face'. Both the positively and the negatively rated values of this dimension are found in the teachings of Confucius, the most influential Chinese philosopher who lived around 500 B.C.; however, the dimension also applies to countries without a Confucian heritage.

For those who work in international business, it is sometimes amazing how different people in other cultures behave. We tend to have a human instinct that 'deep inside' all people are the same - but they are not. Therefore, if we go into another country and make decisions based on how we operate in our own home country - the chances are we'll make some very bad decisions. Geert Hofstede's research gives us insights into other cultures so that we can be more effective when interacting with people in other countries. If understood and applied properly, this information should reduce your level of frustration, anxiety, and concern. But most important, Geert Hofstede will give you the 'edge of understanding' which translates to more successful results. We have compared our home country, i.e. India, with our host country, Luxembourg and we have got the large difference in all the five points. The diagram below represents the result derived from the formula powered software of Hofstede.


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From the diagram it is clear that only from the Masculinity point the difference or the gap is low, while for the rest four the gap is large. And for Long Term Orientation, Luxembourg has scored nothing, while India scores something just above 60.


History of Luxembourg is one of the major facilitator of tourism in Luxembourg. Dotted with a number of places that depict the historical background of Luxembourg, every year a record number of tourists flock to the country. The recorded history of Luxembourg starts with the acquisition of Luxembourg Castle, earlier known as Lucilinburhuc, in 963 AD. The year marks the beginning of the chronology of Luxembourg, the tale of rise and development of the country. In the year 963, Siegfried, Count of the Ardennes and founder of the dynasty of Luxembourg built a castle. It was around this castle that the capital city of Luxembourg later grew which was enlisted as World Heritage by UNESCO in 1994. The year 1437 is an important year in the Luxembourg history. It was in this year that the House of Luxembourg underwent a succession crisis as a result of which a part of the territory being sold to Philip the Good of Burgundy. In the coming centuries, history of Luxembourg was the narrative of the reigns of the Bourbons, Habsburgs and Hohenzollerns. With the defeat of Napoleon Bonaparte in 1815, Luxembourg became a disputed territory between Prussia and the Netherlands. In the Vienna Congress, the Grand Duchy was formed. Later, Luxembourg joined the German Confederation as well. The Belgian Revolution of 1830²1839 left a lasting impact on the history of Luxembourg. The territory was reduced by more than half and the western part of Luxembourg was transferred to Belgium. The First Treaty of London in 1839 and the Second Treaty of London in 1867 were instrumental in reaffirming the independence of Luxembourg. The history of Luxembourg experienced invasions when Germany invaded and occupied a part of the country during both the world wars. During World War II, Luxembourg abandoned its policy of neutrality and joined the Allies in fighting Germany. Luxembourg became the founding member of both United Nations and NATO in 1946 and 1949 respectively.


Spending Christmas in Luxembourg and watching the revelry on the streets is certainly a lifetime experience. The extraordinary, rather simply magical ambiance of Luxembourg Christmas makes it wonderland. Decked up in the best possible manner, the entire Luxembourg looks like a bride. Experiencing the festival at its best in Luxembourg, nothing can be more interesting and delighting than to spend Christmas in Luxembourg. The mood of festivity and revelry reigns in every corner during Christmas in Luxembourg. Experiencing the buildup of the festive ambiance is all the more fascinating. Right from the beginning of the month of December, streets and stores in Luxembourg brim with a large number of local and foreign shopaholics, buying gifts for their near and dear ones. Since most of the citizens of the country are Roman Catholic, arrangements for Christmas celebrations in Luxembourg are done on a large scale. Christmas in Luxembourg is one of the most popular festivals of the country. Majority of the Luxembourgian prefer spending the eve of festival with their friends and family. Pious people attend Midnight Mass, after which the family gathers for supper. The supper on the eve of Christmas is somewhat special as it consists of a typical winter menu of Luxembourg, black-pudding with mashed potatoes and apple sauce. Christmas Day in Luxembourg is an opportunity to enjoy the atmosphere of fun and frolic. Clubs and associations in Luxembourg also organize Christmas Eve and Christmas Day festivities. In some places, the Nativity plays, with children as actors offers a different kind of entertainment. An interesting fact about Christmas in Luxembourg is that one will find Santa Claus. However, celebrations of "St. Nicolas Day" take place on 6th December.


With a number of places exuding the old world charm and the true flavor of the city, holidays in Luxembourg would surely be a lifetime experience. As one walk along the streets and alleys of Luxembourg, travel back in time, experiencing the grandeur of the place. Dotted with a number cities and towns of historical importance, Luxembourg holidays are all about exploring its heritage. Filled with adventure and excitement, one will certainly enjoy holidays in Luxembourg to the lees. Vacation in Luxembourg is a dream come true to every tourist. The delightful experience of traveling this splendid country will linger in one·s mind long after one has left the place. There are a number of interesting places comprising the sightseeing venues in and around the cities of Luxembourg that will add to the charm of holidays in Luxembourg. Behold the mighty medieval edifices and discover the scenic regions while one undertake tours to Luxembourg. Luxembourg City is a fantastic place to begin holidays in Luxembourg. Overlooking the spectacular valleys of the Pétrusse and Alzette, the grand fortress forms the cornerstone of the city. The extensive defensive passageways of the fortress have earned it the epithet of 'Gibraltar of the North'. A stunning attraction meandering down from the Bock, Chemin de la Corniche is the pedestrian promenade. It is designated as 'Europe's most beautiful balcony'. Located at its southern base, the Citadelle du St Esprit offers amazing views of the valleys. If one wants to enjoy a thrilling and pulsating holidays in Luxembourg, explore the skiing and hiking terrains of the country. The slopes of the Hautes Fagnes Nature Reserve between Eupen and Malmedy are truly delighting. Hiking and Biking through the trails or the town are one of the best possible ways to enjoy Luxembourg holidays.


New Year in Luxembourg is one of the most fascinating events that take place in the country. The magical and out-of-the-world ambiance during the celebrations of New Year Eve in Luxembourg will simply enthrall the tourists. The charming ambiance of the surroundings during the New Year in Luxembourg brings forth the enthusiasm in the crowd. The festivals in Luxembourg draw a large number of tourists from all over the world. If one wants to spend his familiar festivals and events in a different way, an experience of New Year celebrations in Luxembourg is a must. The colorful and glamorous celebrations of Luxembourg New Year will give him a great chance to come close to the culture and heritage of the local folks. The mood of festivity and revelry reigns supreme over the country during New Year in Luxembourg. One will find people purchasing gift items for their near and dear ones. The well stocked and beautifully decorated shops in Luxembourg beckon the travelers as well. The local folks visit their relatives while the tourists enjoy themselves in the all pervading ambiance of carnival. The atmosphere of fun and frolic during New Year in Luxembourg makes the country one of the most favored tourist destination of the world.


The economy of Luxembourg is largely dependent on the banking, steel, and industrial sectors. Luxembourgers enjoy the second highest per capita gross domestic product in the world (CIA 2007 est.), behind Qatar. Luxembourg is seen as a diversified industrialized nation, contrasting the oil boom in Qatar, the majority monetary source of that nation.

Although Luxembourg in tourist literature is aptly called the "Green Heart of Europe", its pastoral land coexists with a highly industrialized and exportintensive economy. Luxembourg enjoys a degree of economic prosperity almost unique among industrialized democracies.

Banking is the largest sector in the Luxembourg economy. The country has specialized in the cross-border fund administration business. As Luxembourg's domestic market is relatively small, the country's financial centre is predominantly international. At the end of March 2009, there were 152 banks in Luxembourg, with over 27,000 employees. Political stability, good communications, easy access to other European centres, skilled multilingual staff, a tradition of banking secrecy and cross-border financial expertise have all contributed to the growth of the financial sector. Germany accounts for the largest-single grouping of banks, with Scandinavian, Japanese, and major U.S. banks also heavily represented. Total assets exceeded ½929 billion at the end of 2008. More than 9,000 holding companies are established in Luxembourg. The European Investment Bank³the financial institution of the European Union³ is also located there.

A key event in the economic history of Luxembourg was the 1876 introduction of English metallurgy. The refining process led to the development of the steel industry in Luxembourg and founding of the Arbed Company in 1911. The iron and steel industry, located along the French border, is an important sector of the economy. Steel accounts for 29% of all exports (excluding

services), 1.8% of GDP, 22% of industrial employment, and 3.9% of the work force. The restructuring of the industry and increasing government ownership in Arbed (31%) began as early as 1974. As a result of timely modernization of facilities, cutbacks in production and employment, government assumption of portions of Arbed's debt, and recent cyclical recovery of the international demand for steel, the company is again profitable. Its productivity is among the highest in the world. U.S. markets account for about 6% of Arbed's output. The company specializes in production of large architectural steel beams and specialized value-added products. There has been, however, a relative decline in the steel sector, offset by Luxembourg's emergence as a financial center. In 2001, through the merger with Aceralia and Usinor, Arbed became Arcelor. Arcelor was taken over in 2006 by Mittal Steel to form Arcelor-Mittal, the largest steel producer in the world.

Government policies promote the development of Luxembourg as an audiovisual and communications center. Radio-Television-Luxembourg is Europe's premier private radio and television broadcaster. The governmentbacked Luxembourg satellite company "Société européenne des satellites" (SES) was created in 1986 to install and operate a satellite telecommunications system for transmission of television programs throughout Europe. The first SES Astra satellite, the 16-channel RCA 4000 Astra 1A, was launched by Ariane Rocket in December 1988. SES presently constitutes the world largest satellite services company in terms of revenue.

Luxembourg's small but productive agricultural sector is highly subsidized, mainly by the EU and the government. It employs about 1%-3% of the work force. Most farmers are engaged in dairy and meat production. Vineyards in the Moselle Valley annually produce about 15 million litres of dry white wine, most of which is consumed within Luxembourg and also in Germany, France, and Belgium on a lesser scale.


Luxembourg offers a favourable climate to foreign investment. Successive governments have effectively attracted new investment in medium, light, and high-tech industry. Incentives cover taxes, construction, and plant equipment. U.S. firms are among the most prominent foreign investors, producing tires (Goodyear), chemicals (DuPont), glass (Guardian Industries), and a wide range of industrial equipment. The current value of U.S. direct investment is almost $1.5 billion, the highest level of U.S. direct investment on a per capita basis outside of North America. Luxembourg's trade account has run a persistent deficit over the last decade, but the country enjoys an overall balance-of-payment surplus, due to revenues from financial services. Government finances are strong, and budgets are normally in surplus. Foreign investments are being handled and promoted by the Board of Economic Development, the Government·s one stop shop for new investment projects.

Establishing accounts depends on the size of companies, and referring to three criteria : total of the balance sheet (total of assets without losses of the accounting year), the net amount of the turnover (net, such as it appears on the profit and loss account) and the average number of the workforce. The control of medium and big companies must be made by one or several independent auditors of companies, appointed by the general assembly among the members of the Institute of Independent Auditors of Companies. The control of small companies must be made by an accountant appointed by the general assembly for definite duration. The conclusion of the independent auditor·s report can be: - A certificate without reserve, that is to say an approval - A certificate with reserves, that is to say that there is approval with reserves because of discords or doubts. - A refusal to give a certificate. The accountants· associations have difficulties to get organized because of the importance of the State in the accounting system.

Labour relations have been peaceful since the 1930s. Most industrial workers are organized by unions linked to one of the major political parties. Representatives of business, unions, and government participate in the conduct of major labour negotiations. Foreign investors often cite Luxembourg's labour relations as a primary reason for locating in the Grand Duchy. Unemployment in 1999 averaged less than 2.8% of the work force, but reached 4.4% by 2007.

In 1978, Luxembourg tried to build a 1,200 MW nuclear reactor but dropped the plans after threats of major protests. Currently, Luxembourg uses imported oil and natural gas for the majority of its energy generation.

Luxembourg has efficient road, rail and air transport facilities and services. The road network has been significantly modernized in recent years with 147 km of motorways connecting the capital to adjacent countries. The advent of the high-speed TGV link to Paris has led to renovation of the city's railway station while a new passenger terminal at Luxembourg Airport has recently been opened. There are plans to introduce trams in the capital and light-rail lines in adjacent areas within the next few years.


Luxembourg remains dependent on foreign trade, even though domestic demand has become an increasingly important factor in fueling the economy. The nation's trade position has weakened with the decline of the steel industry: between 1974 and 1981, imports grew by 55% while exports rose only 7%, as the trade balance swung into deficit. Between 1985 and 1992, imports grew by 42% and exports rose only 24%. Trade with European nations accounted for 88.6% of imports and 88.7% of exports in 2000. With 23% of the total export volume in 2000, Germany was Luxembourg's biggest customer. Luxembourg imported more goods from Belgium (35%) than any other country. Principal trading partners in 2000 (in millions of US dollars) were as follows:

Germany France Belgium United Kingdom Italy Netherlands United States Spain Switzerland Austria

1,746 1,569 965 552 408 405 286 207 107 106

2,381 1,280 3,565 298 183 485 692 71 264 94

-635 289 -2,600 254 225 -80 -406 136 -157 12

While Luxembourg has had a trade deficit since the 1980s, the strength of the financial sector has meant that the Grand Duchy maintains a surplus in earnings. Although the nation had trade deficits of 84 billion francs in 1997, 81.4 billion francs in 1998, and 106 billion francs in 1999, it had account surpluses of 86 billion francs in 1997, 84 billion francs in 1998, and 59 billion francs in 1999. The overwhelming majority of the nation's trade has been with its EU partners. The 3 main trading partners are Germany, Belgium, and France. EU nations received 75 percent of Luxembourg's exports and provided 81 percent of its imports in 1999. In 1999, Germany received 25 percent of Luxembourg's exports, France 21 percent, Belgium 12 percent, the United

Kingdom 8 percent, Italy 6 percent, the Netherlands 5 percent, and 4 percent went to the United States. Meanwhile, 35 percent of Luxembourg's imports came from Belgium, 26 percent from Germany, 12 percent from France, 9 percent from the United States, and 4 percent from the Netherlands. In 2000 exports totaled US$7.6 billion while imports totaled US$10 billion. The country has traditionally imported most of its consumer goods and exported industrial products (steel). The Grand Duchy continues to import manufactured consumer products, but its exports have become more diversified. Besides steel, exports now include chemical and rubber products, and finished glass, but the most profitable export is financial services. The nation remains dependent on energy imports. While Luxembourg's economy is traditionally geared toward its immediate neighbors, the government is supportive of free trade. About 90 percent of the nation's GDP is related to foreign trade. To expand internationally, successive governments have supported regional economic integration and worldwide efforts to promote free trade. Beginning with currency integration with Belgium in 1921, Luxembourg has looked for participation in regional bodies. It was a founding member of the European Community (later the EU), and its EU membership has opened markets for itself in other member states. The population of the EU is currently 370 million, and Luxembourg hopes increasingly to market its financial services to EU citizens. The adoption of common trade rules and practices has eased the ability to conduct foreign trade. Within the EU, Luxembourg coordinates with Belgium and the Netherlands to promote their national interests and to bolster the Grand Duchy's standing within the EU. Luxembourg is also a member of the Schengen Group, which promotes the free movement of citizens within the EU. With greater freedom of movement, the government of Luxembourg hopes to continue encouraging the influx of workers necessary to maintain the economy. In 2005, Luxembourg·s Gross National Product per capita was $61,610 in international dollars. According to World Bank Development Indicators (2006), this measure makes Luxembourg the wealthiest nation on the planet. The Central Intelligence Agency·s World Factbook explains that Luxembourg benefits from its strategic location as a hub for the land transportation routes of European Union trade partners - particularly Belgium, France and Germany. Luxembourg is also blessed with a number of efficient airports that facilitate air express deliveries from around the world. Luxembourg is home to about a half million people. More than 60% of Luxembourgian workers are immigrant or cross-border workers. Luxembourg·s economy is led by its financial sector, notably foreign-owned banks.

Luxembourg exported US$16.6 billion worth of products in 2006. Exports included chemicals, glass, machinery and equipment, rubber goods and steel products. Major trade partners are Germany (19.3% of total exports), France (15.5%), Italy (9.5%), United Kingdom (9.5%), Belgium (8.8%), Spain (5.3%) and the Netherlands (4.5%). Luxembourg imported about $20.9 billion in commodities ranging from food and high-end consumer goods to metals and minerals. Leading suppliers of Luxembourgian imports included Belgium (26.3% of total imports), Germany (20.1%), China (16.7%), France (8.5%), United Kingdom (5.5%) and the Netherlands (4.2%). Luxembourg·s overall international trade deficit was $4.3 billion in 2006.

Luxembourg exported US$534.2 million worth of merchandise to the United States in 2006, up 37.4% from 2005 and up 78.1% in 4 years. Iron and steel products «US$92 million (17.2% of Luxembourg to U.S. exports, up 18.2% from 2005) 2. Semi-finished iron and steel mill products « $88.2 million (16.5%, up 45.8%) 3. Other precious metals « $78.5 million (17.5%, up from nil in 2005) 4. Finished textile industrial supplies « $37.8 million (7.1%, up 16%) 5. Finished metal shapes « $33.4 million (6.3%, up 85.4%) 6. Other industrial machinery « $27 million (5.1%, up 2.3%) 7. Woodwork, glass, plastic and rubber machinery « $23.4 million (4.4%, down 38.5%) 8. Measuring, testing and control instruments « $20.9 million (3.9%, up 64.7%) 9. Electric apparatus and parts « $18.1 million (3.4%, up 11.2%) 10. Abrasives, boxes, belting, glass « $16.7 million (3.1%, up 15.7%). 1.


Below are American imports from Luxembourg in 2006 with the highest percentage sales increases from 2005. 1. 2. 3. 4. 5. Other precious metals « $78.5 million (17.5%, up from nil in 2005) Other military equipment « $3.5 million (up 172,800%) Materials handling equipment « $4.4 million (up 530%) Automotive tires and tubes « $12.6 million (up 442%) Machine metal working, molding and rolling tools « $3.4 million (up 126%).

Luxembourgian imports from the U.S. fell 25.9% to $579.8 million in 2006, up 20.8% since 2002. Of American exports to Luxembourg in 2006, the following product categories had the highest values. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Computers « US$73.9 million (12.7% of Luxembourg from U.S. imports, down 2.1% from 2005) Other industrial supplies « $54.6 million (9.4%, up 18.6%) Civilian aircraft parts « $53.2 million (9.2%, up 5.7%) Civilian aircraft engines « $40.4 million (7%, down 3.9%) Electric apparatus « $36.1 million (6.2%, up 27.9%) Medicinal equipment « $28.5 million (4.9%, up 1485%) Computer accessories « $22.1 million (3.8%, up 6.8%) Nuts « $20.4 million (3.5%, down 11.9%) Manmade cloth « $19.2 million (3.3%, up 44.3%) Complete civilian aircraft « $16.7 million (2.9%, down 5.6%).


Below are American exports to Luxembourg in 2006 with the highest percentage sales increases from 2005. 1. Trucks, buses and special purpose vehicles « US$1.1 million (up 2,615% from 2005) 2. Medicinal equipment « $28.5 million (up 1,484%) 3. Laboratory testing instruments « $1.6 million (up 762%) 4. Inorganic chemicals « $1.5 million (up 512%) 5. Industrial rubber products « $8 million (up 307%). In terms of the merchandise flow between the two countries, Luxembourg·s trade deficit with America was $45.6 million in 2006 ² almost 4 times less than $180 million deficit in 2002. The Luxembourgian trade deficit with the U.S decreased by a remarkable 862% in 2006 from the 2005 deficit of $393.6 million.


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