Smart Specialisation Strategy

The European Union strives to make its investment in favour of growth and competitiveness as effective as possible. In order to avoid to finance projects indiscriminately, duplicating or fragmenting investments, each European Member State is encouraged to define areas of specialisation for its regions. According to former EU Commissioner Máire Geoghegan-Quinn, “Smart Specialisation is a good yardstick for identifying growth priorities.”

Making the EU Regional and Cohesion policy more effective through regional specialisation

Setting up “smart specialisations” should be a collaborative effort between public authorities, the private sector, and other stakeholders. These strategies should define a vision, identify the region’s competitive advantage, and set priorities for the future of research and innovation.

“Smart Specialisation is a strategic approach to economic development through targeted support to Research and Innovation (R&I).” It will be the basis for investments in R&I under the European Structural and Investment Funds (ESIF) for the 2014-2020 period.”  

Smart Specialisation in Luxembourg

Following the European Commission’s initiative, Luxembourg has presented its national Smart Specialisation strategy this fall. The document stresses the government's continuous willingness to invest in RDI, backed by a policy that encourages economic development and diversification.

However, Luxembourg faces some challenges

  • The dependence on financial services: the economy relies on the economic contribution of financial services in many respects.
  • The concentration of private R&D: Investment in research and development is led by few large companies, while private sector investment tends to be sensitive to the economic climate or to the strategies of certain companies.

A new action plan for five priority areas

To address this situation, the Government is implementing an active policy to develop and diversify the fabric of the economy. These diversification efforts focus on a number of specific sectors. In December 2013, the new government’s Coalition Agreement made the following sectors Luxembourg’s priority for research, innovation, and economic development:

  • Industry
  • Eco-technologies, with a particular emphasis on eco-building, sustainable mobility and the circular economy
  • Logistics, principally high added-value logistics;
  • Healthcare technologies by capitalising on the large-scale investment in terms of public research which has developed a critical mass of skills around the common theme of personalised medicine;
  • Information and communication technologies (ICT), particularly in the distribution of electronic content and data storage in a highly secure environment.

The ICT sector is also a point of commonality between the various diversification sectors, because it is highly interconnected both with the eco-technology sector (e.g. smart grid and IT management), logistics (e.g. e-commerce), biotechnology (e.g. data archiving and management) and the industrial and financial sector (e.g. high-performance cloud computing).

Key Enabling Technologies for better employment

In line with the efforts of the European Commission to implement its strategy on Key Enabling Technologies (KETs), advanced materials and nanotechnologies, and biotechnologies are the main drivers of competitiveness for Luxembourg. These KETs will be put to good use in those sectors where employment in industrial companies need to be fostered, in particular:

  • Ecotechnologies
  • Health sciences
  • Information and communication technologies
  • Logistics

The social dimension in implementing R&DI strategy and projects in these sectors mustn’t be neglected. Therefore, work relating to the humanities and social sciences that applies to the above sectors will also be supported.

Committing to R&DI: A Vision for the future of RDI in Luxembourg

Research, development, and innovation are fundamental in a small and open economy. In the context of the Europe 2020 strategy, the Luxembourg government has set a target of 2.3 % to 2.6 % of GDP as a national objective for R&D intensity. The trend in state spending on RDI has been continued growth, growing tenfold between 2000 and 2013 (from EUR 28 million in 2000, or 0.13 % of GDP, to EUR 280.1 million in 2013, or 0.62 % of GDP. These indicators show the Government's willingness to invest in RDI and to develop a sustainable policy to encourage the country's development and diversification.