As demonstrated through the steel and broadcast industries, Luxembourg has been very successful with growing particular industries over time and weathering the economic upturns and downturns which strike every industry.  Their efforts to diversify the country's economic base have been key to the country's current successful economic position.  

14.1    Competitive Position

            Strengths
 

• telecommunications infrastructure which is among the most sophisticated in Western Europe
• ease and relatively low cost of internet connections
• technically savvy workforce
• high technology adoption rates among the population
• available resources of the country and individuals
• government's policy of open trade
• central European location
• high literacy rate and multiple language fluencies of the population
• effective legal framework and protections for intellectual property

• small domestic market
• limited efforts to "incubate" new information technology businesses
• qualified labor force is already oversubscribed with other work
• small country's ability to focus on additional industries in addition to offshore banking, satellite transmissions, steel, and broadcasting

            Investment Prospects for new IT Manufacturing

            Luxembourg's long and successful history in the steel industry provides strong evidence that it                   has the capability to compete effectively in the manufacturing arena.  The capital investments necessary have  been made and the country has already attained a position of leadership in the industry.  In the case of new IT manufacturing, significant capital investments would have to been made in a country where labor has to be imported and where operating costs are much higher than in most other countries of the world.  For these reasons, I would not recommend investment in new generic IT manufacturing operations.  However, given the concentration and strength of the satellite and broadcast industries in Luxembourg, I would support small, specialized IT manufacturing projects which cater specifically to these markets and would benefit from the synergies available through the convergence of the IT, satellite, and broadcast arenas.           

     
            Investment Prospects for Software Development
 
        Luxembourg's limited available workforce and high operating costs do not offer ample opportunity for large-scale software development investments.  However, because of the strength and concentration of knowledge of their core businesses, offshore banking, satellite, broadcast, and steel, I would support targeted software development efforts for these industries.  Opportunities are particularly strong for software development opportunities for the offshore banking industry, as 60% of the world's transactions are handled through Luxembourg.  Luxembourg's dominance in this area may be diluted in the future as harmonization across the EU occurs, but for now and several years to come, developers could benefit from the concentrated knowledge base and ready market.  

 
            Perspective on the Past, Present, and Future

    Luxembourg's decision, in the 1960's, to diversify its economic base beyond steel and into the fields of banking, satellite, and broadcast has paved the way for this small country to today count itself among the most highly-connected, equipped, and technologically savvy in Western Europe and in the world on a per capita basis.  Luxembourg can now build on this solid foundation and I expect it will remain at the forefront in terms of adoption and use of information technology.    

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