Cluster financier luxembourgeois et travailleurs frontaliers dans la Grande Région : regards croisés entre économie et gestion

Border Region

Greater Region

Language(s)

Français

Type

Note on a scientific paper, a conference paper, etc.

Main Category

Regional Development – Sustainability

Employment – Education – Economy

Theories – Concepts – Terms

Introduction

Building on Porter’s approach, this article bears witness to the link between cross-border commuting and the attraction of key competencies, from the perspective of the competitive advantage of Luxembourg’s financial sector.

Summary

At the very heart of the Greater Region, Luxembourg is an important hub of international finance that could well be considered a financial “cluster.” The activity of the financial sector, indeed, contributes directly and indirectly to the economic growth of Luxembourg itself and its neighboring territories. Building on Porter’s approach, this article bears witness to the link between cross-border commuting and the attraction of key competencies, from the perspective of the competitive advantage of Luxembourg’s financial sector. Such a conclusion is backed up by a detailed descriptive analysis of both the cross-border workers themselves and the particularities of the job-market and of the economy in Luxembourg. Testifying to what we might call “procyclic” relationships, these interrelations appear to be impacted by both structural reforms in the catalyst country and by fluctuations in the economy.

Content

The article is governed by a series of such overarching questions as whether cross-border workers and “locals” are affected in the same way by a slowing economy; whether there are phenomena of complementarity-substitutability among the workers; whether there is any observable segmentation of the job-market among the two categories of workers; or whether such cross-border work be seen to function as a “buffer” against economic crises? In order to address such questions, the article first discusses the complexity of the notion of a “financial cluster” (I), particularly in light of the definition provided by Porter. It then provides a detailed and descriptive study of the labor dynamics at work in the Greater Region (II), highlighting the relations that bind the cluster’s cyclical activities to the dynamics of the labor-market (III). And it offers in conclusion a number of possible avenues for reflection and response.

The article discusses the notion of a cluster in terms provided by recent academic writing on the subject, and in particular by work done in the science of management. It is essentially interested in the international movement of workers, by way of the concept of expatriation. This research leads towards the definition of a cluster as a space in which is concentrated different material and immaterial resources allowing the production of good and services. Furthermore, the article shows how the economic dynamism of the Grand-Duchy leading up to the 2008 financial crisis depended very much on the use of a foreign workforce, mostly from across the border in France. Finally, the article analyses the relations between the recourse to cross-border workers and economic fluctuations. From the authors’ perspective, Luxembourg is in this sense a text-book case of a financial cluster.

Conclusions

Having shown that the notion of a cluster has a multiform and complex character, particularly from the perspective provided by Porter’s work, this article offers a descriptive analysis of the dynamics of cross-border work. Such a clustering, over the last twenty years especially, has allowed for workers from bordering countries to find relatively very stable work in Luxembourg, which has in turn benefited from being able to compensate for its own lack of available, qualified workers. Still, such a mutually beneficial relationship can be negatively affected by the advent of a sudden economic and financial crisis, particularly since Luxembourg is a cluster which is defined by its financial activity. The evolution of regulations (fiscal in the context of the “tax haven” that Luxembourg provides, and financial in terms of the Basel III Accord) can, moreover, modify the relationship between the demand for in Luxembourg and the supply of labor from across the border. Further research of such a macroeconomic sort, which had recourse moreover to time-series econometrics, would allow for a refining, by extension, of such a diagnosis.

Key Messages

In full boom over the last twenty years, the cluster around Luxembourg has provided relatively very stable forms of employment for a good number of cross-border workers. This in turn has allowed Luxembourg to resolve its lack of available, qualified labor. This article shows that such a mutually beneficial relationship remains subject to the disruption caused by the occurrence of economic and financial crises. Similarly, the evolution of fiscal and financial regulations (in the context, respectively, of the “tax haven” that Luxembourg provides, and of the Basel III Accord) would affect the relationship between the job offers available in Luxembourg and the supply of labor coming from across the border.

Lead

Vincent Fromentin

Author of the entry

Rachid

BELKACEM

Contributions

CEREFIGE – Université de Lorraine

BETA – Université de Lorraine

CREA – University of Luxembourg

MSH Lorraine

Links

https://sites.google.com/site/vfromentin/home