For centuries, this tiny Alpine country, founded in 1719, was considered the poor relation of Europe: confined in the Rhine valley between Austria to the east and Switzerland to the west, with no natural resources – the principality even had to import its wood. Agriculture was subsistence only; the domestic market was insignificant and the capital for business enterprises was lacking.

The rising tide of European industrialisation did not reach Liechtenstein until 1836, when the Schädler tiled stove factory opened, which developed into a ceramic art company that still exists today. The customs treaty concluded with the Habsburg monarchy in 1852 finally opened up access to a larger market. The first bank was founded, and infrastructure was expanded for the first time: bridges were built over the Rhine at Schaan and Bendern. The Samina Valley was opened up with a road and a tunnel in 1864, enabling the gradual emergence of Alpine tourism. Starting in 1872, trains of the Austrian railway “k.k. priv. Vorarlberger-Bahn” traversed the country, and a station was built in the capital city of Schaan-Vaduz – although it was not served by the long-distance lines between Austria and Switzerland.

Multiple weaving mills were established, powered by fast-flowing mountain streams - particularly the operations of the Swiss entrepreneurs Caspar Jenny and Johann Jakob Spoerry, who sought to profit from duty-free access to the Austrian market. In 1905, they merged to create a major textile company that produced continuously until 1982, with the exception of an interruption following World War I. The imposing factory buildings in Tresen, erected in 1870, and the associated workers housing are protected monuments today.

However, this modest expansion was not sufficient to feed the population: as late as the start of the 20th century, many Liechtensteiners were forced to seek work in neighbouring countries, or to emigrate. The key to the country’s subsequent successful economic development is that the Principality sought a close relationship with Switzerland following the collapse of the Habsburg Empire: Liechtenstein adopted the Swiss franc in 1921, the country was integrated in the Swiss market through a customs treaty concluded in 1923, and from the mid-1930s on, an increasing number of businesses were founded – helped by low wages and taxes. As generally only one business permit was granted per industry, the result was a sustained diversification of industry, and many of these businesses are still in operation today.

The Liechtenstein businessman Toni Hilti opened the Scana canning plant in 1935, which developed into the food conglomerate Hilcona. His brother Martin founded the Hilti machine tool company in 1941, which today is known world-wide for its fastening technology. The operation “Gerätebau-Anstalt Balzers” became Oerlikon Balzers, a leading enterprise for vacuum and surface technology. The country’s economy also benefited from the founding of branch operations of German arms companies, such as the “Press- und Stanzwerk AG” in 1941, which today operates primarily as a manufacturer of vehicle steering systems under the name ThyssenKrupp Presta AG. In the 1950s, the country’s recently founded industries experienced dramatic growth, with the numbers of employees sometimes increasing fivefold.

Today, primarily high-tech, research-intensive industrial enterprises generate around 40 percent of the gross domestic product with their exports. However, the majority of the population works in the service sector. In particularl the Liechtenstein financial services industry, which until recently was considered a safe haven for tax evaders, contributes to the general prosperity of a country whose population still continues to cede far-reaching powers to its monarch.