OPINION: What a big state like Alaska can learn from one of the world’s tiniest countries

Last month, I had the opportunity to visit Luxembourg as part of a European Union-sponsored tour for young American leaders. The focus of the trip was space and how it fits into a “greener” future. (For example, space has the potential to help achieve a better understanding of Earth’s changing climate through remote sensing satellites, supporting more predictive weather forecasting, policy formulation, and monitoring of emissions and biodiversity). As someone who works professionally to support Alaska’s energy transition and new clean technology companies, there were a lot of lessons to bring back home, particularly all the ways Luxembourg’s government supports innovation and economic diversification with an eye toward the emerging space race.

Bordered by France, Germany and Belgium, Luxembourg is one of the European Union’s founding countries, and one of its smallest, roughly the size of Rhode Island, with a population of just 640,000. At first glance, it has little in common with Alaska — a landlocked country with a Grand Duke still holding symbolic power, and castle fortifications everywhere you look.

But what I found inspiring, and applicable to Alaska, is how this scrappy nation managed to transform its economy with a mix of vision, planning and strategically leveraging its existing resources.

I joined nine other tour participants from NASA, space-related startups and climate scientists. We met with members of the EU Parliament, EU Commission leaders, diplomats, professors and scientists, industry leaders and entrepreneurs over the course of a week.

Luxembourg’s economic history is similar to that of Alaska, with a strong reliance on natural resources. Once a relatively poor agrarian society, Luxembourg managed to modernize by taking full advantage of its iron ore deposits to stand up one of the most important steel-producing companies in the world. As heavy industry waned in the 1970s, the country intentionally pivoted, making itself into one of Europe’s major players for banking and financial services. Now, Luxembourg is the world’s second-largest home to investment funds, after only the United States, with more than $5 trillion of assets in custody at local financial institutions.

And more recently, the country has pivoted again, this time toward space.

Around the time of the global financial crisis, Luxembourg’s leaders recognized the need to further diversify the economy. Led by the Ministry of Economy, the country passed its first space policy in 2008. Then, its Space Resources program started in 2016, aiming to ensure that Luxembourg’s extraction of celestial resources is done in a peaceful and sustainable manner. Interestingly, the Luxembourg Space Agency, founded in 2018, functions more like an investment agency, heavily relying on and enabling the private sector. After all, its primary mission is to diversify the national economy.

The country’s clear vision and strategy, combined with a long-term commitment to space by the government, has started paying off. Currently about 4% of Luxembourg’s GDP is space-related. This includes legacy players like the satellite communications provider, SES, which has 2,000 employees and provides streaming and data services to global customers, as well as almost 100 commercial space startup companies based in the country.

Luxembourg has grown expert at supporting startups, fueled by robust federal programs like LuxInnovation, the national innovation agency; Startup Luxembourg; and the House of Startups, a multistory coworking space owned by the country’s Chamber of Commerce, housing up to 200 innovative companies. Entire teams are dedicated to international business development, wooing companies to incorporate in Luxembourg. They are drawn in by local talent, office space, government financial support like loans, access to other founders, accelerator programs targeting specific industries, plentiful venture capital and private equity, and being in the geographic center of the EU. The Ministry of Economy’s Luxembourg Startups Association represents innovative new businesses of all stages based in the country, supporting them with legal templates tailored to Luxembourgish legislation, and elevating company challenges with local, national and regional governments to seek solutions.

There is also a recognition of the need to simultaneously develop the skills, education and training needed to staff these industries of the future, both for policy and technical roles. The Luxembourg public university system, established just 20 years ago, offers an Interdisciplinary Space Master’s degree. From the beginning, Luxembourg has relied on internationalization and partnerships as a key tenet of its space program, knowing the country was too small to compete for dominance in the commercial space sector on its own.

Imagine if Alaska were to adopt some of these same tools and strategies to grow our own economy. To use our vast natural and strategic resources for the industries of the future, whether that is in the emerging commercial space industry, climate technology, or the global energy transition.

Imagine if we created an outlook that outlasted one boom and bust cycle of oil and gas, or political election season. Alaska has immense assets to leverage in the space economy that other states would envy, such as the Pacific Spaceport Complex in Kodiak, extreme conditions that could simulate landscapes on other planets to test out robotic technologies, a significant military presence, and our strong engineering and research institutions within the University of Alaska.

We, too, have the opportunity to take inspiration from tiny Luxembourg and look to the future, making ourselves a launch pad for a more sustainable and innovative economy to keep young Alaskans here, grow opportunity, and change the narrative.

Penny Gage is managing director of Launch Alaska, an Anchorage-based technology deployment accelerator focused on decarbonizing systems of energy, transportation and industry.

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