Luxembourg businesses make an investment of 1.36% of the Gross Domestic Product (GDP) in research and development (R&D), compared with the average of 1.17% for the private sector in the European Union. (source Erawatch, 2009).

This good performance can be explained by the presence of multinational businesses that have chosen Luxembourg as a place to develop R&D activities as well as through activities developed by national innovative businesses.

Companies may exploit their research results by carrying out technology transfer, developing a niche market or initiating collaborations. In certain cases, research can also lead to the launch of a new company.

The protection of research results is essential so that every company carrying out research activities can obtain a return on their investment in R&D.

Considering that efforts in R&D often require considerable resources, many companies engage in collaborations. These can take on different forms:

• collaborations with the public sector
• grouping together in clusters in order to develop cooperative relationships based on shared interests
• project partnerships, implemented within the framework of European R&D programmes

The government also grants financial aid to companies in order to support them with their efforts in research, which in turn reinforces business competitiveness and the Luxembourg economy. Activities undertaken by Small and Medium-Sized Enterprises (SMEs) are particularly encouraged.