Chapter 2 The economy in Monaco

The progress of the Monegaskische economy

Monaco developed their economy very good during the last years. You see this on the rising line in the diagram of the total turnover. It’s a fact that the increase to blame at the rising population of Monaco. Many people are coming to live in Monaco because of the favourable taxclimate, but it’s also attractive because of the subtropical climate and the location at the Mediterranean Sea. More people mean a higher turnover. This is the diagram of the total turnover in billion French francs. In here you can see a clear positive progress.

The Economy nowadays

Monaco is on this moment very booming. People drive in very expensive cars, live in luxury flats and own a yacht. The GNP by inhabitant in 1994 in Monaco was $25.000, which is very high (2,5 times higher than in The Netherlands). Below you will find a diagram of the income by inhabitant.

Unemployment is very high for a booming country as Monaco and is 3,1 %. That is higher than the Netherlands. The unemployment is in fact not as bad as it looks. There are many people who that living off one’s investments. People who already made up a big capital are not really poor. And people who can’t find work and haven’t got a big capital are already will dissapear, because Monaco is to expensive for those people.

The Government

In every country the Government has an income and outlays. Monaco also. The government takes more than 50 % of it’s income out of the taxes of the profit from companies. This taxrate isn’t very high, but very important for Monaco. That is why Monaco also tries to attract companies on the reclamation. The second biggest source of income is the profit that the government makes with the public corporations, which have monopoly a in Monaco. For Example: Telephone network, postage stamp printing house and the post office. That money is used to buy material for public works. Also is it used for staff, stocks, external duties (for example French police, education and culture projects.

Some public works:

Train track and stations.
Culture- and exposition centre
Extension/maintenance of the harbour
Renovation of the market in Condamine
Underground car park.

The sectors in Monaco

The most important sectors in Monaco, where people make their living with, are the industry, the touring, the service sector, the commerce and the brokers. In the circle diagram below can you see the percentages.

Industry

The industry has developed strong after the Second World War. In 1949 came Rainier III at the top. He looked after the developing of the industry. At the beginning was Monaco a small, rocky country and there wasn’t place for industry on a large scale. Rainier III created new ground. The new part was called Fontvieille. It was flat and without houses, extremely useful for industry. Other advantages for the industry in Monaco is the low tax on the profit the make and Monaco is the ideal place to meat businessman. The only disadvantage is the high base price. The image of Monaco, as a paradise, isn’t attacked: there came only light industry. 2/3 of the people who works in the industry in Monaco is coming from France or Italy. You can split the industry in 6 sectors:

Chemical/pharmaceutical sector. The most important sector in the industry: the turnover of this sector is 45,4% of the total industry. There are 23 firms in these sector with 1000 employees. Examples: Asepta, Biotherm and Thermamex Laboratoria.
Plastic making sector. 13 Firms and 1000 employees. Example: Megaplast.
Elektronic/technical sector. 22 Firms and 1000 employees. Examples: EATON.
Printing sector. 21 Firms and 360 employees.
Textile/clothing sector. 8 Firms and 200 employees.
Construction sector. 200 Firms and 2200 Employees.

Touring

Touring is a very important sector in Monaco. The French coastplaces became very popular after the fifties. People went to places such as Nice, Saint-Tropez and Frejus. The change to go to Monaco is not difficult to make. One of the things what makes the French southcoast so attractive is the climate, beautiful shores and rocks and the bleu Mediterranean Sea. Another factor, which was very important for the success was the relatively short distance of the coast compared with Spain and Italy. South-France is lying on a acceptable distance for North-European people. The attractions of Monaco are the casino, the marina, the Grand Prix and funny (and expensive) shops. The restaurants, cafés and hotels are expensive but they are good. Most of the hotels in Monaco have four stars. There are 2500 hotelrooms in Monaco with a procentual occupation of 48,3 %.

The third sector

The third sector is the sector in which people earn the highest wages. The most important services are the services of the banks, assurances and consultancies. Banks are making very well profits in Monaco, because people have big capitals and they have to pay only a little of tax. Assurances make also good profits, because the state doesn't give any social assurances.

Commerce

Touring grow as fast as the grow of shop. Tourists visit very expensive shops and buy souvenirs. The people of Monaco have money and buy everything in Monaco. Another success is the population grow. More people is more market and is more turnover. The advantage also is the low tax.

Brokerage

The end we come to the brokerage. The success brokerage is an origin of the population grow. Beautiful weather and low tax, that’s why people want to live in Monaco. Monaco is highly populated and there is less room, therfore low supply of houses and ground. Rich people want to live in Monaco, so there is a high demand for houses and ground in Monaco. Low supply, much demand gives a high prize. That's good for the brokerage's fee.