Productivity Dynamics and Long-Run Growth: Principality of Liechtenstein

This Selected Issues Paper analyzes productivity and long-run growth in Liechtenstein. Despite among the highest labor productivity levels in Europe, growth has been weak over an extended period, leading to declining relative performance. Sectoral differences persist between high-productivity manufacturing and lower-productivity services. Long-run growth is constrained by demographic pressures, skills shortages, reliance on cross-border commuters, and infrastructure bottlenecks, despite strong private innovation. The paper concludes that sustaining high living standards will require targeted structural reforms, including upgrading human capital, expanding labor supply, strengthening public-private innovation partnerships, and improving physical and digital infrastructure.