Simone Monauni, Regierungschef- Stellvertreterin von Liechtenstein

When it comes to eco-innovations, the sixth-smallest state in the world is at the forefront even by global standards Ms. Monauni, Liechtenstein is primarily known for its specialized, internationally networked financial center. But the Principality also has a high level of industrialization. What makes the location so attractive for companies?

In Liechtenstein, almost 40 percent of the workforce is employed in industry. This is a fact many people are not aware of when they think of our country. I believe that the attractiveness of the location is based on several factors. As Liechtenstein is a small country, decision-making paths are short. There are no bureaucratic monsters; instead, we have a small but efficient administration. We also attach great importance to an innovative business climate. There are numerous opportunities for companies to receive financial support from the state – be it in promoting innovation, facilitating exports or implementing energy efficiency measures. With low social security contributions, the tax and social legislation is attractive for companies. Of course, the location is also crucial: Liechtenstein is situated in the middle of Europe, between Switzerland and Austria. There has been a customs and currency union with Switzerland since 1924. However, unlike our neighboring country we have also been a member of the European Economic Area, and thus participants in the EU internal market, since 1995. And, last but not least, Liechtenstein's political model, a constitutional hereditary monarchy on a democratic and parliamentary basis, ensures stability and legal security.

Around 5,100 companies are active in Liechtenstein. Are there certain industrial clusters or does the country score with its broad diversification?

Indeed, the industrial sector in Liechtenstein is broadly diversified. The most important branches of local industry include mechanical engineering and equipment manufacturing, the automotive supply industry, dental technology and food production. In addition, Liechtenstein companies are active in numerous niches, some of which are very specialized. These companies are often also world market leaders in their sector. This broad diversification has proven to be a stroke of luck, especially against the background of the COVID-19 pandemic. Diversification has enabled us to avoid cluster risk and to date we have come through the crisis relatively well. Of course, the financial center is also important as a stabilizing element in this respect.

What is the current economic situation in Liechtenstein?

Fortunately, the situation on the labor market has returned to pre-crisis levels. In 2020, the unemployment rate was 1.9 percent. In 2021, it was only 1.7 percent. A look at these figures makes it clear that the country is doing well. But, of course, we also have industries that have been hit hard by the COVID-19 pandemic, including the restaurant and hotel industry and the event sector. The state is supporting these industries with short-time working compensation and financial aid. Looking ahead to the coming months, the mood among well-positioned manufacturing companies is also becoming somewhat gloomier. The supply bottlenecks in the global market are increasingly making themselves felt.

What framework conditions are needed for economic areas to remain innovative and for companies to remain competitive?

As a small country, we strongly rely on exports. It is in our own best interest to support free trade and stand up against protectionism. I would say that, on the one hand, we need open markets. On the other hand, an innovative and competitive economic area cannot exist without an appropriately skilled workforce. Liechtenstein offers more jobs than the country has inhabitants. That is why the local companies often depend on foreign employees, including cross-border commuters from Austria, Switzerland or southern Germany. So far, it has been possible to recruit the required specialists from this labor pool. But we are not immune to the shortage of skilled employees, which is certainly one of the greatest challenges of the future. By the way, we are pinning great hopes on home office. Together with our European partners, we are currently working on a solution that will give cross-border commuters in particular greater flexibility in this context.

The current government program sets out the goal of making the country sustainable and reliable. What does that mean in concrete terms?

Sustainability has many dimensions, including social, economic, ecological and financial aspects. For the first time, all of Liechtenstein's government actions are aligned with these different dimensions of sustainability. Governing is no longer a matter of pure profit maximization, but rather of operating sustainably and assuming responsibility for future generations. How vulnerable we have become in this globalized world has been shown to us not least by the current pandemic. COVID-19 is a turning point for the economy, but also for society as a whole. It has initiated a rethinking process among all the players involved.

How can the state and the private sector work more closely together to achieve the sustainability goals?

In Liechtenstein, we already maintain a very close partnership with companies and business associations. In the future, we will push for even stronger public-private partnerships than before. A successful example of this is the Waterfootprint Liechtenstein initiative. For every inhabitant of the Principality, it aims to provide one person in a developing country with access to good-quality water. In other words, the goal is to improve the living conditions of around 40,000 people.

Sustainability and climate protection are topics of global scope that are also discussed globally. What contribution can Liechtenstein make?

Regardless of size, every country can and must make its contribution. We accept this responsibility and have ratified the Paris Climate Agreement, among other things. Now we are working at full speed to ensure that Liechtenstein achieves the net zero emissions target by 2050. To this end, we have adopted a comprehensive energy strategy with over 40 measures, ranging from construction to the promotion of electromobility.

With which topic could Liechtenstein position itself as a role model internationally?

I believe we can certainly be a role model when it comes to sustainability. Liechtenstein already has a leading position as the "solar world champion" in terms of installed photovoltaic capacity per inhabitant. And we are also at the forefront of organic agriculture: 40 percent of farms in Liechtenstein are organic. We will consistently continue along this path in the future.

For decades, the World Economic Forum has been held in Davos, in the immediate vicinity of Liechtenstein. What are this year's current topics?

The central questions for us are the following: How do we get out of the COVID-19 pandemic together? How do we transform the world of work in a sustainable and future-oriented way? How do we tackle climate change? We can only face these challenges together with other countries. However, the small size of our country gives us the freedom to contribute to the discussion with bold and sometimes unconventional solutions, detached from geopolitical interests.