Eli5 Why do microstates (Liechtenstein, Monaco etc) have such high GDP per capitas?
In: 26
They are tax havens, meaning that ultra-rich people and corporations tend to park their money there for financial reasons. The micro-states can pull this off exactly because they are small, so even with almost no taxes they can basically live off the money-parking business and associated activities for rich people and corporations. Larger countries can’t do it because they have too many people living in them, so they really need those taxes.
Also many micro-states that for various reasons didn’t become tax havens are actually quite poor, like a lot of island nations in the Pacific and the Caribbean.
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