3FOOD

Third Industrial Revolution Consulting Group
Trends that Shape the Reference Case
Using a number of these national economic projections, and with preliminary inputs from
STATEC, as well as key high-level reference case data, Tables 2 and 6 (shown previously) provide
a useful starting point in the assessment through the year 2050. As highlighted in the results
reported in Table 7 that follows, we can compare these reference case assumptions with
expected results that might emerge from one or more TIR Innovation Scenarios.
There are two key trends that have not been highlighted in the tables above but underscore the
emerging positive impact of the TIR Innovation Scenario. The first is the growth in economywide
productivity as measured by GDP value per job (in million real 2005 Euros). Compared to
a historical 1.4 percent annual growth rate over the years 1985 to 2010 (not shown here),
recent projections for per capita GDP suggest a growth that is less than half that historical pace.
In the 10-year period 2010 to 2020, reflecting the economic volatility of the previous 10-year
period, the rate of productivity of the Luxembourg economy is projected to fall to 0.58 percent
per year. The good news is that the trend increases slightly to 1.28 percent annually over the
30-year period 2020 through 2050. It is this trend, among other metrics, the prompted the
OECD to release its 2015 report on the Future of Productivity (see footnote 11 for a further
discussion and citation).
At the same time, there is a second trend that hints at a less resilient future economy – in this
case because of a declining rate of investment. Recent projections indicate that the rate of
Gross Fixed Capital Formation—in effect the growth of annual investments in Luxembourg’s
total fixed assets—is also decreasing compared to historical performance. 397 Data from the
OECD show that over the same 25-year period 1985 to 2010, it averaged 20.4 percent of GDP
(not shown here).
397 Fixed assets include land improvements (fences, ditches, drains, and so on); plant, machinery, and equipment
purchases; and the construction of roads, railways, and the like, including schools, offices, hospitals, private
residential dwellings, and commercial and industrial buildings. Inventories are stocks of goods held by firms to
meet temporary or unexpected fluctuations in production or sales, and "work in progress."
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