The OECD review of Luxembourg’s innovation policy 2016 is part of a series of OECD country reviews of innovation policy.* It is the second of its kind, following the review published in 2007. It was requested by the Luxembourg authorities, represented by the Ministry of Higher Education and Research and was carried out by the OECD Directorate for Science, Technology and Innovation (DSTI) under the auspices of the Committee for Scientific and Technological Policy (CSTP).

The overriding task of Luxembourg’s innovation policy is to strengthen innovation as a driver of sustainable growth and increased standards of living. The Luxembourg government expects innovation to make important contributions to future productivity growth and to lead to further diversification of the economy through the development of new high value-added economic activities in non-financial services and manufacturing. High value-added activities tend to be technology- and knowledge-intensive and require investment in human resources, research and development (R&D) and innovation. The government has made significant investments along these lines, contributing to a major transformation of the Luxembourg innovation system over the last 15 years.

This chapter presents an overall assessment of Luxembourg’s innovation system and policy, reflecting key findings of the review. It reviews recommendations of the OECD Innovation Policy Review: Luxembourg 2007 and their implementation and identifies strengths and weaknesses of the innovation system today. It sets out strategic tasks for innovation policy and develops specific policy recommendations for improving Luxembourg’s research and innovation performance.

This chapter discusses Luxembourg’s macroeconomic performance. The first section presents salient features of the Luxembourg economy – such as its openness to international trade and investment, and the important role of services – (especially financial services) – and sketches patterns of structural change in production and trade. It also looks at the current state of framework conditions as they relate to entrepreneurship and innovation. It concludes with a brief discussion of the role of innovation in the country’s longer-term economic development. The second section reviews Luxembourg’s aggregate innovation performance relative to other OECD countries with comparable levels of innovation system development, size and geographical proximity. It starts by examining expenditure across institutional sectors (business, higher education and government) and considers the human resources for innovation. It then reviews indicators of innovation output (drawn from bibliometric and patent data) to highlight some qualitative characteristics of Luxembourg’s innovation system.

This chapter describes the main actors in the Luxembourg innovation system – business enterprises, the University of Luxembourg and public research centres – highlighting their respective roles in the development of the innovation system in recent years. It reviews scientific, technological and related functions carried out by the main actors within the system and their contributions to innovation.

This chapter examines public activities that have a bearing on the Luxembourg innovation system. It begins with an overview of the historical evolution of science, technology and innovation policy in Luxembourg. It then examines the main policy actors and governance arrangements. Finally, it reviews current policies in the light of observations made in earlier chapters and outlines areas in need of dedicated policy attention.