A hub of the European Union, Luxembourg has helped guide Europe toward political and economic integration and is one of the 11 countries that participate in the euro currency. One of the main bases of the EU, the country is home to more than 220 banks, including the European Investment Bank. Although small in size, Luxembourg's central location, political stability, and multilingual population, along with tax incentives, have proved advantageous to it as a financial center. Foreign investment in light manufacturing and services has offset the decline in steel, once the nation's major industry.
Agriculture is based on small family-owned farms.
The industrial sector, until recently dominated by steel, has become increasingly more diversified. During the past decades, growth in the financial sector has more than compensated for the decline in steel. Services, especially banking, account for a growing proportion of the economy. Luxembourg participates in an economic union with Belgium on trade and most financial matters, is also closely connected economically to the Netherlands, and, as a member of the EU, enjoys the advantages of the open European market.