Chances are you live in a nation-state of some sort. If you’re somehow reading this and you don’t, my author profile is right above this block of text, so please contact me and let me know where on this planet you’ve set up your magical tax-free utopia (note: do not contact unless you have running water). For the rest of us, be it by virtue of birth or by immigration, we live our lives in the borders of some sort of state – organizations created on cultural, ethnic, or downright arbitrary lines that dictate a great deal of what we can and cannot do in our day-to-day lives.
Political correctness aside, not all states are made equal. Some are wild, relatively lawless lands where the government has little control of the populace in practice, even if they do have it on paper. On the other end of the control spectrum there are nations like North Korea with a rigid, militaristic hierarchy and near-total control over the population down to what kind of haircut you’re allowed to have. Some nations have massive populations; China and India alone have almost 1/3 of the world’s population, giving them a great deal of sway in international affairs. Likewise, on the opposite end of that spectrum lies the microstate.
Microstates are sovereign nations with incredibly tiny populations and/or areas of land under their control. Some of them are practically unkown to many people in the world, as they never make international headlines or attract any unwanted attention. That being said, some of them have taken advantage of their below the radar status and become – for their size – very rich. European microstates are particularly wealthy when you stop and consider that the wealth of the nation is split amongst a small population. They benefit from the relative political and social stability of the European Union while maintaining their own unique status and the privileges that come with it. These are the 10 richest microstates in Europe, as determined by 2012 GDP adjusted for purchasing power parity.
#10 Vatican City – ??? GDP
Vatican City is the smallest microstate in the world in terms of landmass, and is also one of the most important. A landlocked country in Italy, Vatican City is the home of Catholicism worldwide, the seat of the Pope and one of the world’s holiest sites among devoted Catholics. In terms of wealth, it’s hard to determine where exactly Vatican City lies. Since it’s essentially just a papal seat with a population of 839 people, there is no GDP that’s calculated year over year. The economy of Vatican city is based on a budget that’s funded by the sales of tourist memorabilia and donations from Catholics all over the world. The Vatican may be sitting on untold wealth accumulated through centuries of Christian geopolitical domination, or it may have very little. Depends on who you ask. Treasure aside, actual economic activity in the state is so insignificant that it’s not calculated, which places Vatican City at #10 by default.
#9 San Marino – $1.365 Billion GDP
San Marino is a landlocked microstate that is, like Vatican City, located in Italy. The economy of San Marino is considered to be highly stable and successful considering its minuscule landmass and population. With just 32,576 people living accross a 61.2 km2 area, the people of San Marino have leveraged their small space and lack of natural resources into a thriving finance and tourism industry. The success of these industries in particular has helped contribute towards a GDP that in 2012 was valued at $1.365 billion after being adjusted for purchasing power parity.
#8 Andorra – $3.163 Billion GDP
The Principality of Andorra is another landlocked European microstate. Andorra is situated in southwestern Europe in between Spain and France, and has a history dating back to 988, although the principality in its current form was only founded in 1278. The Catalan-speaking Andorrans use the Euro as their official currency, although they’re not part of the European Union. The Andorran economy is centered around tourism, although the economy has benefited greatly from its status as a tax haven for the wealthy. In 2012, Andorra had a GDP of $3.163 Billion.
#7 Monaco – $5.748 Billion GDP
The Principality of Monaco is intertwined with the history of the wealthy families of Europe. Monaco is a constitutional monarchy whose monarch, Prince Albert II, is much more than just a figurehead. His family, the House of Grimaldi, have controlled Monaco since 1297. The opening of the world famous Monte Carlo casino in 1858 established Monaco as a destination for Europe’s wealth, and perhaps consequently present day Monaco is a well-known tax haven. Monaco has a $5.748 billion GDP, and an economy focused mainly on banking and tourism.
#6 Liechtenstein – $5.8 Billion GDP
As you may have caught on by now, one of the best ways to ensure your tiny nation is prosperous is to attract Europe’s highly mobile wealth. Liechtenstein is a tiny nation sandwiched between Switzerland and Austria that has an economy that specializes in – you guessed it – tourism and banking. Its location in the alpine mountains has made it a popular destination for winter tourism activities like skiing, while it’s relatively low tax rates and loose banking laws made it a destination as a tax haven for Europeans looking to hide money from their domestic governments. With a $5.8 billion GDP, it seems to be a mutually beneficial exchange for the tiny nation of 36,281.
#5 Montenegro – $7.34 Billion GDP
Montenegro is perhaps the largest nation on this list in terms of population with 625,266 inhabitants, but with a population under 1 million and a relatively small territory it still qualifies as a microstate. Montenegro is a brand new state; independence from Serbia was only achieved in 2006. Since indendence, Montenegro has shortly but steadily been developing all the trappings of a modern nation – infrastructure development, the transition from a service economy to a market economy, and – importantly – the development of a tourism industry. A great deal of Montenegro’s $7.34 billion GDP comes from tourists who come in to visit its scenic cities in the Balkans. Montenegro’s entry into the EU is currently pending approval.
#4 Malta – $11.14 Billion GDP
Malta is somewhat European and somewhat African, but not quite either. The island nation is situated in the middle of the Mediterranean Sea, north of Libya, East of Tunisia, and south of Italy. The island’s strategic location meant that various factions throughout Europe and the Arab world conquered it repeatedly throughout history. Consequently the Maltese have formed a unique culture derived from the empires who controlled the island at one time or another. The Maltese economy (and its $11.14 billion GDP) is largely based on tourism and banking, though there has been a push in recent years to diversify into other industries such as film production and petroleum exploration in the surrounding waters.
#3 Iceland – $12.831 Billion GDP
The inclusion of Iceland as a microstate may surprise some people, but with a tiny population of 325,671 – a little over half of Montenegro’s – it’s certainly a microstate, albeit one that punches well above its weight in the global conversation. Iceland is situated between the North Atlantic and Arctic oceans, in between Europe and North America, but with a distinct attachment to Europe. The Icelandic economy is based on exporting natural resources and, prior to 2008, was on its way to becoming one of the most important banking and financial services centers in the world. The financial collapse of 2008 decimated the Icelandic banking industry, but it’s since rebounded and is beginning to come back from the brink.
#2 Cyprus – $22.271 Billion GDP
Cyprus, like Malta, is an island nation situated in the Mediterranean ocean. Cyprus is south of Turkey, west of Syria and Lebanon, north of Israel and Egypt, and east of Greece. With so many different cultures surrounding it, it’s no wonder that Cyprus has developed its own unique culture. The Cypriot economy is diverse, but it had developed a strong banking sector that was sometimes accused of being a tax haven for Russian wealth. The 2012-2013 Cypriot banking crisis damaged the reputation of its financial industry, but all signs point to it rebounding in the near future.
#1 Luxembourg – $44.225 Billion GDP
Luxembourg is a central European state situated between France, Germany and Belgium. It’s the last remaining grand duchy in the world, and is also one of the most prosperous nations in Europe. With a relatively small population of 537,853, Luxembourg has amassed an astounding GDP of $44.225 billion when adjusted for purchasing power parity, giving it the world’s second highest GDP per capita after Qatar. Luxembourg has a diversified economy, but traditionally has strong manufacturing and financial industries. Luxembourg is yet another European microstate that’s been accused of being a tax haven for Europe’s wealthy, which is certainly a key component of their economic success. Recently, Luxembourg has positioned itself as a destination for data centres and other internet based companies; it hosts the HQ’s of Skype, Amazon, and – up until very recently – Netflix. One thing is certain; Luxembourg is the undisputed king of the European microstates, with a GDP more in line with its larger, neighbouring countries.
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