Luxembourg has begun the new millennium with a highly ambitious programme designed to enable the nation to become a recognised leader in the 21st century’s Knowledge and Technology Society. The City of Sciences, now under construction, assembles University buildings and National Research Laboratory infrastructures as well as private real estate development for the Luxembourg technology business community. Together, they are a telling symbol of this ambition.

The National Research Fund’s financial resources have also been increased to fund projects of the National Research Laboratories and the newly-established University of Luxembourg, which is primarily a research-oriented University. The objective is to spend 1% of GDP on research as well as outside talent recruitment and exchange in the public sector institutions by 2012. Key focus areas of these research institutions are materials, coating technologies, molecular biosciences, IT and communications security, and energy and environmental technologies. One major illustration of this ambition is the launch in late 2008 of a $200 million, 5-year cooperative programme with major US research institutions in the field of molecular biology. These are intended to produce substantial technological advances and economic benefits in the personalised medicine area. The high R&D investment objective in the public sector is matched by an equally ambitious programme to stimulate private sector innovation. The aim is to reach an R&D expenditure effort of 2% of GDP by 2012.

A comprehensive set of legal, tax and financial incentives aimed at generating, managing and commercialising intellectual property rights are at the centre of this strategy (www.innovation.public.lu):

- 80% of revenues or capital gains from IP are tax exempt R&D grants reaching up to 75% of expenditure for SMS start-up assistance of up to 1 million euros may be granted to innovative young companies

- technology transfer activities in the form of consulting, cooperation with National Research Laboratories and transfer of highly qualified talent to SMEs are financially assisted

- assistance extending beyond technological to service and organisational innovation.

SMEs benefit from free advice to formulate their application for government assistance programmes.

Assistance is also granted toward the financing of capital expenditures. Such assistance may take the form of cash grants and low interest loans. Public funding levels can reach up to 35% of capital expenditures for large companies, all the way to more than 50% for small start-ups. Investors may also apply to the government or regional authorities for land in national or regional business parcs. Start-ups may qualify for space in one of several incubator facilities.

 The following areas are the focus of private sector innovation programmes:

- automotive parts and equipment

- plastics and other new materials and coatings

- information and communications technologies

- e-commerce and new media

- health technologies, particularly diagnostics

- new energy sources and eco-technologies

- financial services, products and software.

International companies such as Goodyear, Delphi Automotive, Guardian Industries or DuPont have taken advantage of the fertile soil for R&D and Innovation in Luxembourg.

A state-of-the-art IT infrastructure and ultra-broadband international connectivity support these R&D and Innovation Centres. Internet security, with a comprehensive countrywide electronic signature program (www.luxtrust.lu) and security awareness initiatives, are an integral part of this high value infrastructure and services environment. (www.cases.public.lu).