The Monegasque Economy and its Diverse Sectors of Activity


Historically, as a quick reminder at the end of the XIXth century and at the beginning of the XXth century, the public forces encouraged economic growth and provided a framework for development within the private sector. The economic activity of the Principality is based on four sectors of activity -Industrial sector of which many are unaware, has considerably evolved over the past century. Since i 906 when the State created a budget for the building of Fontvieille, industrial enterprises began preparing their installations, such as at the time, the Brasserie of Monaco, a flour mill, and chocolate factory. Over the past twenty years, up to 250,000 square meters of industrial floor space have been erected. The cramped space forced the vertical building of the industrial plants reaching up to 13 floors.

The Prince's government instigated an industrial policy which favors the installation of non-polluting and vallue- adding industrial enterprise.

The 'chemical-pharmaceutical-cosmetic' sector appears to be the most predominant sector of activity, however the transformation of plastic materials, and production of electric and electronic materials are equally present.

The other sectors, although not as large as the first one, have created a reputations for the Principality through their originality and technical performance : these are the sectors of mechanics, packaging, printing and clothing.

The industrial activity employs a quarter of the total ective population, approximately a consistent number of 4000 persons are effectively active, that is to say 13% of the work force. In 1993, these (aside the construction industry and public works) accounted for 11.6% of the Principality's total turnover. In 1994, the industrial activity represented 10% of the private work force.

The Principality of Monaco has a diversified industrial sector which is perfectly integrated to its site and envi- ronment.

Tourism sector Essentially comprises leisure and business tourism. The hotel capacity of the Principality offers 2500 hotel rooms principally in the four star category. Thhe average occupancy rate is 45 %, representing 626,000 overnights in 1995. Since the past several years, the public forces have engaged in terrific efforts in welcoming business tourisme, destined to complement the seasonal leisure tourists, which maintains a constant economic activity throughout the year.

The Tertiary sector has greatly developed over the past several years, in particular the banking and finance sectors, as well as the establishment of non-financial offices and company headquarters of international status. The service sector has experienced the most spectacular expansion. In i 993, it achieved a 49.1 % turnover in activities servicing banks, insurance, consulting establisments (technical, business, financial...), including auxiliary and intermediary activities.

Commercial sector in 1993, jthe fourth sector represented 21 % total turnover. Real estate plays a very signi- ficant role in the economy, which justifies the research and development within the field of urbanization.

Public Finances

Income for the budget of the Principality of Monaco is constituted essentially of receipts directly resulting from the economic activity of the diverse sectors; industry, commerce, hospitality and real estate.

The second source of income for the state budget is a product of the state monopolies (19.9%), that is to say; by the Monegasque Telephone Office, the Postal Stamp Printing Office, the Tobacco and Postal Administration.

Other income results from the financial sectors income, taxes on companies and enterprises profits, customs duties, real estate as well as from the conceded former monopolies (SBM, RMC, TMC, SMEG, PMU, Lottery). On this last point, it should be underlined that the Societé des Bains de Mer's royalties to the State only represent 4.4% of the total State income.

On their part, expenditures are divided into: 57.8% for administration, 24.2% equipment expenditures, and 18% on public intervention expenditures in 1995. The percentage of expenditures for equipment reflects the significant public undertakings by the government of HSH the Sovereign Prince for the ambitions urbanization works in general and in particular the social constructions. State administration expenditures by nature include, the personnel, supplies, exterior services, maintenance works in general and in particular the social constructions. A great deal of emphasis is placed on the expenditures on national education. Personnel in this sector represent 22% of the State administrators and agents.

Industrial activity

A significant industrial activity has developed since the i 950's in the Principality. This industrialization occu red to no other traditional sector detriment, such as tourism, and in no manner altered the quality of the Monegasque environment.

The role played by the industrial sector is preponderant in the Monegasque economy; it is a light, non-polluant, value-adding industry.

From the small industrial zone of the beginning of the century (the brasserie, flour mill and chocolate factory), to the dazzling expansion of the Fontvieille section which welcomes a great number of companies on a productive surface of 250,000 square meters, of which 70,000 square meters belong to state.

The industrial activity - essentially concentrated in the Fontvieille zone - is a source of employment benefiting the surrounding communes of both the French department of the Alpes-Maritimes, and Italy who hold over two thirds of the 30,000 jobs offered by the Principality.

After World War II, Monaco, timidly at first, and then resolutely, launched itself into the industrialization adven- ture motivated by the determination of HSH Prince Rainier III whose reign began in 1949.

Numerous companies were created in a variety of sectors, of which several became major companies at the forefront of European industry.

The Banking Sector

The Monegasque economy is characterized by the will of the public forces economic politics coordinating with the private enterprise dynamism. These distinctive features can be clearly recognized in the evolution of the banking system which plays a significant role in the development of the Principality Over the past ten years, banking activity has significantly developed under the control of the French banking authorities conforming with the Franco-Monegasque treaties.

The number of credits establishments has reached a total of 43 : 13 Monegasques banks, 3 foreign bank subsidialires (not established in France), ii French bank subsidiaries, 8 foreign and French bank subsidiaries under foreign control. Seven representational offices and four foreign exchange agencies. The Monegasque financial sector employs 1,500 persons. The banking sector is characterized by a wide variety, a vast range of products and the internationality of its establishments.

Finally, the Principality holds a privileged position in its international business relations, when it comes to the establishment of head offices for international companies, and for business and financial relations between Europe and the United States, or between Europe and the countries of the south. Banks have set up specialized private banking services, which have benefited enormously from the rapid growth in the financial markets over the past several years, currency and stock trading services, international credit services etc. . . Since i 990, a legislation for Pension Funds was pressed, offering a facilitated management of these.

In an uncertain and complex international environment, always in the wise and illuminated savvy guidance of the Sovereign Prince, the Principality of Monaco retains her originality: with no natural resources, finite space, it continues to develop and modernize. With 30,000 inhabitants, it employs yet another 30,000 persons outside Monaco and conscientiously exerts itself to manage its assets most effectively, whiles always concerned with the continuous improvement of the quality of life achieving the optimum balance between work and leisure.