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Business lobby bemoans dearth of research investment

Business lobby bemoans dearth of research investment

by Yannick LAMBERT 2 min. 17.11.2021 From our online archive
Public investments cannot make up for lack of private investments and staff, Chamber of Commerce says
Belval campus which hosts the University of Luxembourg, founded in 2003, research institutes and labs
Belval campus which hosts the University of Luxembourg, founded in 2003, research institutes and labs
Photo credit: Shutterstock

Research and development in Luxembourg is struggling due to dearth of private initiatives which is stifling innovation in the country, the main business lobby said on Wednesday.

The decline in research and development expenditure in relation to the Grand Duchy's gross domestic product raise questions, the Chamber of Commerce said, taking into account some mitigating factors such as Luxembourg's small size.

"R&D in Luxembourg is a relatively young field which has evolved rapidly over the last twenty years, driven by a strong political will," the report, based on data from the IMD Business School in Switzerland and the World Economic Forum, noted. 

Compared to 2010 many indicators have veered downwards, partly due to a decrease in private investment, the report found.

Luxembourg dropped by nine positions on total research and development spending over the period from 2010, the report stated. In proportion to the country's GDP, it dropped by 13 spots, "mainly due to the contraction of expenditure in the private sector", the Chamber of Commerce said.

The Grand Duchy is Europe's richest country, with the highest GDP per capita, but spends far less on research and development than the EU average, with countries such as France, Belgium, Germany and Sweden all outrunning it.  In 2010, the expenditure of the private sector  alone represented 1.02% of GDP, against 0.60% in 2021, which corresponds to €432.5 million and €416 million respectively.

Further issues are the lack of access to scientific and technical talent, and the "quasi-complete absence of SMEs [small and medium sized enterprises] in innovative activities", the Chamber of Commerce said.  Despite the country's heavy publicity campaigns and rafts of programmes to support businesses, venture capital firms in Luxembourg are tending to invest outside of the country to make their money grow.

A downwards trend of people working on innovation since 2010 is also noticeable, the report says. People working in research and development made up 2.3% of Luxembourg's workforce in 2010 and 2% by 2019.

There are some positive signs such as the number of high-ranking scientific publications per capita, driven by the University of Luxembourg, founded in 2003, and research institutes such as LIST, Liser, and the Max Planck Institute for Procedural Law. Patent filings have also gone up in the the last decade.

"This report invites Luxembourg's stakeholders to think about ways of consolidating an innovative ecosystem with a foundation that can still be improved upon", the Chamber of Commerce said, emphasising the need for collaboration between the public and private sectors.

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