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Two months after publishing its “idea of ​​the month” dedicated to RDI (research, development and innovation), the Fondation IDEA – an independent, multidisciplinary and open ideas laboratory set up by the Luxembourg Chamber of Commerce – held a debate around the question: “Boosting Luxembourg’s R&D: is this too great a challenge for a small, open economy?”

“There is still some way to go in terms of investment levels, but if we’re talking about innovation, the country is well positioned”, pointed out Fondation IDEA head Marc Wagener in his opening speech. Although Luxembourg only ranks 16th in terms of R&D expenditure levels with 1.31% of GDP in 2015, against an objective of between 2.3% and 2.6% by 2020, it appears in 8th position out of 28 countries in terms of the speed at which companies are stepping up their innovation measures, and is now considered to be a “pioneer” in the field.

In addition, with a 65% innovation adoption rate within companies with more than 10 employees, Luxembourg ranks 2nd in Europe (behind Germany) in the segment.

 

Public research in force

“When we talk about research, we’re not necessarily talking about innovation”, says Vincent Hein, author of the Fondation IDEA’s RDI-related publication. “Innovation, as defined in the Oslo Manual, covers a much broader spectrum. It involves the adoption of new initiatives in terms of processes, organisation and products. R&D is not the only condition necessary for the implementation of a modern ecosystem.”

In Luxembourg, public research has risen sharply in recent years: since 2000, nominal public spending on R&D has increased 12-fold (excluding inflation) while the public-sector research staff has increased 7-fold. At the end of the day, the State plays a leading role in the promotion of R&D in Luxembourg, accounting for 48% of its funding (as compared with 33% in the rest of the EU).

On the other hand, private research is stagnating (in terms of the numbers), although, as we have seen, this does not necessarily affect the momentum of the domestic economy when it comes to innovation. What’s more, many Luxembourg-based companies benefit from the results of R&D conducted (i.e. financed) in other countries. “Don’t forget that research is only funded by a small number of very large companies”, says Vincent Hein. “Companies with over 500 employees, of which there are about 70 in Luxembourg, make up 80% of private research”.

 

Ramping up

Almost two-thirds (63%) of this research relates to industry. However, this sector, which represents 6% of the national GDP, is greatly under-represented compared to the European average (15%). On the other hand, in the services sector, research levels are very weak: 0.7% of GDP for non-financial market services and 0.1% for financial services.

“Overall, it should be remembered that the GDP indicator alone is not enough to measure the quality of the transition to a knowledge-based economy envisaged by the Horizon 2020 European programme. Having said that, Luxembourg is now very much a key player in the European R&D sector, which was not the case ten years ago. The country’s R&D efforts are really ramping up in line with European expectations.”

Nevertheless, one of the weak points raised by the Fondation IDEA is the lack of a concrete national strategy in the field of research, despite the government’s regular announcements in this regard. “Devising a strategy is moreover essential to clarifying medium and long-term goals”, explains Vincent Hein. “The OECD made the same observation when it conducted its last evaluation in 2016.”

 

Nurturing grey matter

This situation is no cause for concern for Yves Elsen, Chairman of the University of Luxembourg Board of Governors, and former chair (between 2010 and 2016) of Luxembourg’s national research fund, however. “Remember that Luxembourg has always demonstrated a fantastic ability to understand how the world around it operates, and position itself strategically in accordance with these insights. Don’t forget also how well the Thomas and Grey patents (two major innovation in the steel Industry at the end of the 19th– Editors Note) have been safeguarded, something which has served our country well.”

Not forgetting, either, that the next series of performance contracts between the State and public research institutions are likely to be signed early next year. “We have to make sure that the key indicators introduced are synchronised among the various players in the sector in order to devise a workable strategy. Finalising the performance contracts could practically address the criticism regarding a lack of strategy.”

Yves Elsen knows very well, moreover, that the country’s principle resource is the grey matter of those who work in it, regardless of whether they are residents or cross-border workers. He points out the need to focus efforts in attracting new talent, especially, but not limited to, areas like space engineering or complex project management. “The humanities and social sciences, for example, also endeavour to share the results of their work with society. All this confirms the importance of research and higher education institutes as a whole. It is not a question of simply prioritising the natural sciences”, explains Yves Elsen. “There is also no need to contrast basic and applied research. Doing so is a mistake. The two go hand-in-hand. Basic research can be a source of innovation and applied research is one of the fundamentals of scientific discovery.”

 

A shared culture of promoting successes

As a recent study published jointly by Dell and California-based think tank Institute for the Future says, 85% of the jobs we will see in 2030 do not exist today. This means people have to challenge themselves on a daily basis, and constantly upskill and retrain. “Continuing professional development will play a vital role”, says the Chairman of the University of Luxembourg Board of Governors.

Nevertheless, other factors also come into play, starting with the introduction of what he calls “a shared culture of promoting successes” which involves “better communicating our successes and abilities, and better promoting our expertise”. It is also vital to show that the public money received is soundly invested.”

A change in mentality and an awareness among young researchers is also on the cards. “In addition to their specialist subjects, these young PhD students also need to be trained in entrepreneurship and transfer of technology”, adds Yves Elsen. “Instead of being limited to working in a ‘cocooned’ environment, they really need to know how to speak the language of prospective financiers and business partners.”

Photo: © Pierre Guersing – Chambre de Commerce

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