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Luxembourg is a small open economy with one of the world’s highest income per capita. In recent years, the government has invested heavily in building an advanced science base, virtually from scratch, and is now looking to consolidate these investments, with a strong focus on the efficiency and effectiveness of the science base and the roles it can play in supporting national innovation performance and structural change of the Luxembourg economy.

Hot Issues

Hot Issues are major national STI policy priorities, as self-reported by countries in their responses to the OECD STIO 2014 policy questionnaire.

Strengthening public R&D capacity and infrastructures

The government’s R&D budget has continued to increase, with total government budget appropriations or outlays for R&D (GBAORD) climbing from USD 72 million (EUR 60 million) in 2004 to USD 318 million (EUR 264 million) in 2013 (Panel 2). The number of researchers in the public sector has also grown substantially (Panel 3). These large increases reflect the government’s intention to expand the research system in order to develop and diversify the economy. The rate of budget increase has slowed markedly in the last couple of years, however, a trend that can be expected to continue as the research system enters a phase of consolidation. Two draft laws, currently under consideration by the legislature, aim to further strengthen and harmonise the research system. One law focuses on reforms of Luxembourg’s only research council, the Fonds National de la Recherche (FNR) to allow it to fund research in a wider variety of types of organisations. The second proposes modifications to the public research institutes, the Centres de Recherche Public (CRPs), specifically the merger of CRP-Gabriel Lippmann and CRP-Henri Tudor and the incorporation of the Integrated BioBank into CRP-Santé. An ambitious infrastructure project, the Cité des Sciences, de la Recherche et de l’Innovation at Belval, will group most of Luxembourg’s public research (the University of Luxembourg and CRPs) in one campus by 2015, with facilities for public-private partnerships and an incubator for start-ups. Ultimately, the campus will have 7 000 students and 3 000 teaching staff and researchers.

Targeting priority areas/sectors

With only a few thousand scientists across the public and private sectors (Panel 3), Luxembourg has to focus on areas in which it can have international impact. The FNR therefore continues to concentratemuch of its funding on a limited number of priority domains identified in an earlier foresight exercise. The priorities of the university, an increasingly important player in the system (Panel 4), are also important in shaping national priorities. They include systems biomedicine and security and reliability of ICT systems, which already have relatively large interdisciplinary centres. Other university priorities are international finance and European and business law, which relate to Luxembourg’s role as host of financial institutions, corporate headquarters and European institutions. The government also has special action plans on logistics, health care and sustainable development.

Improving overall human resources, skills and capacity building

The proportion of the adult population with tertiary-level education is above the OECD median (Panel 1t). However, there is widespread perception that young people are not very interested in scientific careers. Measures such as Go for Science and ProScience seek to raise awareness of science among young people and to attract them to scientific careers. The FNR’s Aides a la Formation- Recherche (AFR) programme aims to make scientific careers more attractive by offering better work contracts, working conditions and training opportunities to PhD and postdoctoral students. The government is considering professionalising the doctorate by setting up a series of doctoral schools to improve the professional skills of doctorate candidates in the coming years. The FNR also provides institutions with funding to attract high-level senior researchers and exceptional young researchers from abroad.

Improving returns and impact of science

Public research funding is tied to performance contracts between the government and research performers (the CRPs and the university) and the funding agency FNR as well as the innovation promotion agency Luxinnovation. For research performers, numbers of publications, doctorates, patents and spin-offs are among the main indicators used, along with targets for securing external funding. Regular evaluations of departments have also been introduced. New measures to support exploitation of research include the joint evaluation of thematic research project proposals by FNR and Luxinnovation and FNR’s Proof of Concept pilot programme,which supports excellent research projects that seek to attract potential investors.

Country Charts

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Selected Highlights

Innovation in firms

Relative to its size, Luxembourg hosts the headquarters of the largest number of top corporate R&D investors among OECD countries (Panel 1e). It files more trademarks (Panel 1g) than triadic patents (Panel 1f). Business is the largest performer of R&D (Panel 4), although BERD has fallen since the financial crisis and has yet to recover (Panel 5). The reasons for the decline are currently under investigation. A law on state aid for R&D, implemented in 2009, extended the scope of policy intervention. Measures include special subsidies for SMEs and innovative start-ups and schemes to promote knowledge flows between academia and industry.

Innovative entrepreneurship

Luxinnovation is the main agency supporting innovative entrepreneurship, chiefly through advisory services, network building and information campaigns. Luxembourg has recently consolidated its various incubator structures in a single entity, Technoport S.A., whose mission is to facilitate the setup of start-ups and spin-offs. It offers a new physical incubator at the Cité des Sciences, de la Recherche et de l’Innovation, and aims to become an important relay between the university, the CRPs and the wider economy. It can also provide temporary premises for foreign companies planning to begin operations in Luxembourg. The installation of a fabrication laboratory has increased the diversity of the facilities. In addition, work has started on creating two new incubators in areas deemed national priorities, health technology and eco-technology.


Luxembourg has made international research co-operation a priority, and this is reflected in high shares of international co-authorship (Panel 1q) and international co-invention (Panel 1r). The government places considerable emphasis on strong participation in the EU’s Horizon 2020, particularly as levels of national funding are set to stabilise over the next few years. It has also signed many bilateral agreements. Over 2011-13, bilateral programmes of the FNR and foreign funding agencies supported 33 projects with funding of USD 13.3 million (EUR 11 million).

Clusters and regional policies

The Luxembourg Cluster Initiative has six theme-based clusters: materials, ICTs, aeronautics and space, health care and biotechnology, eco-innovation, and automotive components. In 2013, the clusters, in collaboration with the Ministry of the Economy, set up a new working framework based on five priority areas: business development, supporting flagship projects, improving brand image for the sector, intensifying promotion and prospecting, and developing the internationalisation of the initiative. Specific quantitative objectives have been set for each cluster.

ICT and Internet infrastructures

The national ICT infrastructure is well developed (Panel 1l, m), an important location factor for many leading international ICT companies. ICT expertise underpins the sustainable development of the financial, media, environment, logistics, automotive and space industries, all of which are important in Luxembourg. The financial sector, for example, depends strongly on the fact that Luxembourg has become one of Europe’s top locations for ICT infrastructures (e.g. in terms of data centres and low latency network connectivity) and offers specialised expertise to keep firms’ data safe. Luxembourg is also investing heavily in ICT research in order to build scientific excellence. For example, the Interdisciplinary Centre for Security, Reliability and Trust at the University of Luxembourg aims to put the country on the world map in terms of high-quality research in secure, reliable and trustworthy ICT systems and services.