Luxembourg has high income levels, strong firms, good research institutions and access to European markets. Yet productivity growth has slowed, while business R&D and firm-level innovation remain weaker than expected. In Scarce Funds, Infinite Ideas: Choosing the Right Innovation Policies, Cindy Lopes-Bento argues that there is no single instrument that can solve this puzzle. R&D support, public procurement, collaboration schemes and fundamental science can all strengthen innovation, but only if they are designed as part of a coherent policy portfolio.
For Luxembourg, the priority is therefore not simply to spend more, but to spend more effectively: targeting the right actors, understanding how policy instruments interact, and investing in rigorous evaluation. Better access to linked firm-level and policy data is essential to identify where the main bottlenecks lie and to support the transition from factor-driven growth to productivity-led growth.
