3FOOD

Third Industrial Revolution Consulting Group
beyond an energy-led investment strategy. In addition, a short narrative offers further details
about the economic model used to complete this assessment for the Luxembourg economy.
FRAMEWORK OF THE ECONOMIC ASSESSMENT
Properly assessing the economic impacts of different policy opportunities for the Grand Duchy
of Luxembourg—what we call in this document a Third Industrial Revolution Innovation
Scenario—is a function of perspective, data, and logic. The perspective is an understanding of
how an economy can become much more productive and robust in the use of capital, materials,
and especially energy. The data presented throughout the various sections of the master plan
reflect the economic underpinnings of Luxembourg as well as the specific costs and benefits
associated with the development and deployment of new energy service technologies,
information and communication systems, transport and logistics, Internet of Things
deployment, and other critical infrastructure improvements.
Rethinking the Underpinnings of the Luxembourg Economy
Luxembourg sits at a moment in history in which doing nothing is not an option. Indeed, the
country finds itself at the crossroads of both challenges and opportunities. On the one hand,
compared to past historical experience, the regional economy shows a lagging growth in
performance. Over the period 1985-2000, for example, the amount of Gross Domestic Product
(GDP) supported by each job in the Luxembourg economy—a useful proxy of economy-wide
productivity—grew at a very healthy rate of a 2.6 percent annually. With a solid growth in both
population and jobs, that meant the economy grew, on average, by nearly 6 percent per year
over that 15-year period. Over the next 15-year period, however, the economy-wide gain in
productivity was essentially flat and even a bit smaller in 2015 compared to 2000. Yet, a
continuing increase in both population and jobs enabled the national economy to expand at a
2.8 percent rate per year (STATEC 2016). While significantly lower than earlier trends, this is still
a healthy economic growth rate, especially when compared to the collective performance of
the more than 30 countries of the Organization of Economic Development and Cooperation
(OECD), which, taken as a whole, expanded by only 1.7 percent annually over that same
period. 371
371 There is a tendency among many policy analysts to assume a reasonable and smooth projection of recent
historical trends and assume such patterns will continue into the mid- to long-term terms projections. At the same
time, however, there is a worrisome trend that suggests a significant weakening of future GDP. See, for example,
OECD (2016), GDP long-term forecast (indicator). doi: 10.1787/d927bc18-en (Accessed on 30 July 2016). This latest
data set suggests less than 2 percent growth over the period 2015 through 2060. Such projections greatly
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