Liechtenstein

I

Introduction

Liechtenstein, independent principality, bordered on the north by Switzerland and Austria, and on the south and west by Switzerland. One of the smallest independent states in the world, it has a total area of 160 sq km (62 sq mi). The capital is Vaduz.

II

Land and Resources

The western third of Liechtenstein lies in the flood plain of the upper Rhine. The rest of the country consists of foothills of the Rhätikon Massif, part of the central Alps, which rise in the south to peaks of more than 2,438 m (8,000 ft) above sea level. The Rhine, which forms the western border, and its local tributaries drain the greater part of the country. The Samina River drains the mountain valleys of eastern Liechtenstein. The climate is Alpine with mild winters; average temperatures range from -1.1° C (30° F) in January to 21.1° C (70° F) in July. The average annual rainfall is about 1,016 mm (40 in). Liechtenstein has a varied flora and fauna. One third of the land is forested; deciduous trees predominate on the lowlands, evergreens on the mountain slopes. Wildlife includes deer, chamois, fox, marten, and badger. Liechtenstein has few natural resources of economic significance. Almost all raw materials, food, and 94 per cent of energy has to be imported. Having a small population and no heavy industry, Liechtenstein generates only a few environmental problems. Although acid rain that originates elsewhere affects the country’s forests, this problem should decline as a United Nations (UN) air pollution protocol comes into force.

III

Population

Liechtenstein has a population of 34,498 (2008 estimate), of whom about one third are resident aliens (1995; 12,083 resident aliens), with an overall density of about 216 people per sq km (558 per sq mi). The capital and principal urban centre is Vaduz, with a population of 5,050 (2006 estimate). Life expectancy is about 76 years for men, 84 years for women. Native-born Liechtensteiners are descended from the Germanic Alamanni people, who settled the region after ad 500. Standard German is the official language but the majority speak Alemannisch (called “Alsatian” in France) as a first language and are bilingual in German. Walser, a Germanic language from Switzerland, is the mother tongue for a small community in Liechtenstein. Approximately 87 per cent of the population is Roman Catholic. In 1995-1996, 1,998 pupils were enrolled in primary schools, and about 1,508 attended secondary schools. University-level education is provided by the University of Applied Sciences Liechtenstein (1961) in Vaduz.

IV

Economy

Liechtenstein is rare among small states in having a well-diversified economy, with strong manufacturing, financial, and tourism sectors. Agriculture, the mainstay of the economy before World War II, now employs less than 2 per cent of the labour force. The expansion of economic activity since 1945 has helped to make Liechtenstein one of the world’s richest countries; average gross national product (GNP) per head (World Bank figure; 1992-1994 prices) is more than US$37,180, comparable with that of Switzerland. Growth has been fostered by favourable tax regimes and banking secrecy laws that have encouraged foreign investment in industry as well as the principality’s emergence as an important offshore financial centre; an estimated 100,000 foreign companies have their registered headquarters in Liechtenstein. In early 2002 the Organization for Economic Co-operation and Development (OECD) failed to convince Liechtenstein to sign up to its international agreement on tax evasion. The country’s close ties with Switzerland are also important; the Swiss franc is the official currency of Liechtenstein (Swiss Fr 1.13 equalled US$1; early 2008) and the two states have operated a customs union since 1924. Liechtenstein’s tiny domestic market means that the majority of manufactured goods are exported; the metals, machinery, precision instrument, pharmaceuticals, food-processing, and manufacturing industries are the most important. The sale of postage stamps, mainly to the almost 60,000 annual tourist visitors, is also significant, accounting for about 4 per cent of national income each year.