ABSTRACT

With around 450,000 inhabitants, Luxembourg is the smallest member country of the EU-15. In comparison with the European average, small and medium-sized fi rms are above-averagely strong in terms of both their number and employment share, whereas the opposite applies to micro fi rms and large fi rms (Table 2.1). The situation is more complex, as far as domestic companies belonging to Europe’s 500 largest businesses are concerned. Their share in the total number of companies is relatively high, whereas their employment share is below the average of the EU-15. Over the last decade or so, small, medium-sized, and large companies expanded, whereas micro companies declined. This development as well as the special size structure of the companies may be traced to favourable legislation which has prompted many foreign fi rms, especially those from the fi nancial sector (see below) and from the transport sector to establish operations in Luxembourg. Overall, SMEs, defi ned by conventional standards, dominate the economy.1 In 2002, their share in the total number of companies and in total employment was 99.2 per cent and 63.6 per cent, respectively.