Few people know much about microstates, though millions visit them each year.
Economically, the microstates are urbanized and rely heavily on exporting and tourism. Although originally the microstates had poor agricultural economies, they now have “mature service economies, and most have very little heavy industry or agriculture.” The small population of the microstates pushes them to look toward exporting. The tiny nations of Europe are so small that their native populations usually do not provide a market large enough for their own industries’ products.When the world hit the era of modernization, the microstates each found one industry to specialize in, which transformed them into modern countries.
Consequently their major products are usually their major exports as well. For example, Liechtenstein, Luxembourg and Malta export specialty machinery. Thus Luxembourgs’ steel industry supplies the world’s builders with extra strong iron. Malta and Monaco export glassware. Andorra exports tobacco and furniture. Liechtenstein exports dental products (especially false teeth). San Marino exports building stone and food. As to Monaco, the countries main export products are cosmetics pharmaceuticals. Only Vatican City is prohibited by law from exporting any goods. The Vatican is too small to manufacture anything on its own. Anything that could be exported, would be “transshipped” imported goods from Italy and since goods coming into the Vatican from Italy are not taxed, but goods sold in Italy are , reselling them could easily be profitable. Precisely to prevent this, when Italy signed the treaty establishing the Vatican, all exportation was prohibited except by special permission. Needless to say, Vatican City must import all products consumed there. Similarly, except for the few products, that they can export, all the other microstates, import the rest of the items they consume.
It should be noted that all these states are currently attempting to diversify their exports so that they are less dependent on one export.
Tourism naturally became a strong industry for the states; however, most people only visit the microstates for a day and leave in the evening so it is a different type of tourism than in the rest of Europe. To encourage emigrating companies, the microstates offer tax breaks and low.
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