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Regional challenge

Regional response

There is an urgent need for Luxembourg to diversify its economy in order to reduce its dependence on the financial services sector that currently contributes 30% to the country’s GDP.

At the same time, Luxembourg, like most of Europe, is confronted by an ever-growing pressure on its healthcare system. Technological changes, socio-demographic changes including ageing, life-styles and immigration and economic changes all lead to an ever-increasing demand for services. Luxembourg already has the third most expensive system in the world, and needs to face the challenges of these increasing demands. Therefore, Luxembourg needs to identify ways to keep the health economy sustainable.

To tackle these challenges, Luxembourg has developed an economic diversification strategy, which applies the country’s assets in knowledge-based services to support a transformation in the health economy towards personalised approaches to treatment and prevention.

In 2008, the government adopted a five-year action plan to promote innovative services in health sciences and technologies, as a key driver of economic diversification. The aim of this first phase is to build an economic and research infrastructure that will attract relevant companies to Luxembourg. A total of €140 million was made available, notably for the creation of the Integrated Biobank Luxembourg (IBBL) and the Luxembourg Centre for Systems Biomedicine (LCSB). Since 2009, the ERDF-supported Bio-Health Cluster has grown to include 22 companies and 9 research organisations.

The second phase of the diversification strategy builds on these investments and partnerships to institutionalise innovation within the health system. Luxembourg’s proposed demonstrator approach consists of a system of pilot projects, which will act as catalysts for opening up markets and testing new ideas.

The work with ESIC is intended to refine the industrial policy strategy, help stakeholders identify and acknowledge existing obstacles, enable the successful scaling-up of the pilot approach and increase the visibility of Luxembourg as a country that is transforming its economy to exploit the potential of service innovation.

The voice of the region

“It is important to tap growth where it actually is! Within this context, I would like to mention several concrete actions that I am currently developing. In order to be specific, I would like to highlight my policy for launching new growth sectors. We have also made considerable investments in biotechnological research. The BioBank as well as the Luxembourg Centre for Systems Biomedicine are real success stories. I now wish to establish more companies in this field in Luxembourg.”

Etienne Schneider
Luxembourg Minister of the Economy and Foreign Trade, speaking at the Economy Days event in February 2013.

Regional ESIC publications

Regional case: Diversifying the industrial base – a Luxembourg priority

For a long time, Luxembourg has relied on a few but strong industries – in the past this has been the steel industry and more recently the country has become a major player in the financial services sector. However, the dependence from a relatively few industries is not considered a viable approach for the future and therefore there is an urgent need for Luxembourg to diversify its economy and to reduce its dependence on the financial services sector which currently contributes 30% to the country’s GDP.

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Further information

Facts and figures

The total area of the region: 2 586 km²

The size of the population: 524 900

Regional GDP: € 42 800 000 000

Per Capita: € 82.70

The share of services in GDP: 86.3%

Dominant industries: financial services, ICT, automotive components, materials and plastics, logistics

Emerging industries: health sciences and technologies, clean technologies

Unemployment Rate: 6.4% (January 2013)

Share of Knowledge Workers in the Economically Active Population: 57.1%

Gross Expenditure on R&D per GDP: 1.43% (2011)

Contact details

Dr Gaston Trauffler
Head of Innovation Management, Design and Strategic Intelligence
+352 43 62 63-1

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