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.