The average person in Luxembourg has nearly twice as much money as the average American. Why is this?
1) “Luxembourg’s stable, high-income economy features moderate growth, low inflation, and low unemployment. The industrial sector, which was dominated until the 1960s by steel, has diversified to include chemicals, rubber, and other products. During the past decades, growth in the financial sector has more than compensated for the decline in steel. Services, especially banking and other financial exports, account for the majority of economic output. Agriculture is based on small, family-owned farms. Luxembourg has especially close trade and financial ties to Belgium and the Netherlands (see Benelux), and as a member of the EU it enjoys the advantages of the open European market. Luxembourg possesses the highest GDP per capita in the world (US$87,995 as of 2006), the eighteenth highest Human Development Index, and the fourth highest rated in the quality of life index. As of March 2006, unemployment is 4.8% of the labour force. For the fiscal year of 2005 and 2006, Luxembourg has run a b
Luxembourg is a fairly rich country. However, average per capita income, the figure you are referring to and which tells you how much money an average person living in Luxembourg earns , is somewhat distorted. The reason is this: Luxembourg is a very small country and three much bigger countries, France, Belgium and Germany are less than an hour’s drive away. Quite a few people from these countries come to Luxembourg to work during the day, and then drive back home in the evening. What they produce is counted as part of Luxembourg’s GNP (Gross National Product) since it is produced there, but they themselves are not counted as part of Luxembourg’s population, since they don’t live there. The result is a distorted figure, since the product of more people than actually live in Luxembourg is divided by just the number of people living in Luxembourg. This causes Luxembourg per capita income to appear inflated. It’s as if all the product of every banker working, say, in the City in London,
