Nowhere in Europe do people have as much disposable income as in Liechtenstein. That makes the country even more attractive for digital businesses.

Liechtenstein is the country in Europe with the highest disposable income, according to the study “GfK Kaufkraft Europa 2020.” Disposable income means the income a person has left after deducting taxes and social security payments. That’s the money private households use to pay for their living expenses, private insurance, retirement savings, and consumer purchases.

Liechtenstein is on top of the list, with a net income per citizen of 67,550 Euro. That’s about four times as much as the European average of 14,739 Euro and significantly higher than neighboring Switzerland and Germany.

Why does it matter for digital businesses?

ICO.li is not an economics blog; we write about digitalization in Liechtenstein. So why does Liechtenstein’s household income matter?

First, digitalization is expensive. Sure, in the long run, digital technologies will cut costs, facilitate economic transactions, and increase the level of automation and efficiency – and thus increase an economy’s overall economic output.

However, in the short run, digitalization comes at a high cost: New technologies require upfront development expenses and infrastructure, and as long as they lack scale, applications will first be expensive to use. That means, to introduce new digital technologies, consumers need to be able to afford them.

Take open banking, for example. Applications that connect all your bank accounts to one platform and enable you to manage your entire banking with just one app are convenient and improve your personal wealth management efficiency big time. Such applications exist already, but they are mostly being used by high net worth individuals. They are simply too expensive for average consumers to use; the added value they offer to most consumers is not worth several hundred dollars per month. However, running such a platform and enabling the infrastructure behind it is too expensive for companies to offer their apps at a small price tag.

The more these applications are being used, developed, and adopted, the cheaper they will ultimately become. The “industrialization” of open banking will eventually enable the average Joe to use wealth management tools as well, but for that to happen, there needs to be a high-end niche market first.

What’s true for digital wealth tools is also true for many other digital applications. And that’s why disposable income matters. Digital businesses need a population that can afford digital tools. The more they are in use, the cheaper they become, and the more people can use them.

High income attracts digital specialists

Another reason why Liechtenstein’s high income level is positive for digital businesses is that it makes it easier to attract top talent. Earning money in Liechtenstein and then spending it in a neighboring country can be a good deal. That makes it easier for businesses to attract talent, which is the most critical asset in any company that develops new technologies.

Liechtenstein, being the wealthiest European country according to purchasing power, is one of many reasons businesses consider Liechtenstein as the place to set up shop. Others are a favorable regulatory environment and the fact that Liechtenstein is a member of the European Economic Area (EEA) and offers easy access to the European market. If you haven’t yet had enough reasons to move your business to Liechtenstein, now you have one more.

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