Eco&Stat n°03-2026 - LuxKLEMS: Productivity trends and drivers in Luxembourg

For over a decade, the LuxKLEMS initiative, led by STATEC, has provided robust productivity measures for Luxembourg. The LuxKLEMS report documents the evolution of Total Factor Productivity (TFP) in Luxembourg from 1995 to 2023, using National Accounts data released in February 2025. TFP is measured as the ratio of gross output to inputs—capital, labour, and intermediate consumption—and decomposed into efficiency change and technical change. A focus on broad aggregates highlights contrasting developments: Luxembourg’s service industries have experienced weak TFP growth since the early 2000s, largely due to negative technological change. Given their dominant role in national output, this explains much of the country’s overall productivity slowdown. In contrast, manufacturing has maintained positive TFP growth, supported by technological advances. Data at more detailed section-level shows that most service sections experienced technical regress, resulting in negative long run TFP trends. In contrast, mining and quarrying (B), manufacturing (C), and energy supply (D) achieved sustained positive TFP growth over 1996–2023, mainly due to technical progress. The report also analyses productivity trends through the lens of ICT capital intensity, classifying industries as low, medium, or high ICT. Before the 2008 financial crisis, high ICT industries exhibited strong TFP growth. After the crisis, however, this link weakened significantly.