The recent US national security strategy offers a flawed view of the European Union. It claims that open-border policies and what it terms "woke" policies represent an grave risk to European civilization. However, this argument is based on a fundamental misreading of the situation. The true danger facing Europe is not societal but economic and technological lag.
The Stark Growth Gap Between Europe and the US
Statistics paint a stark contrast. Between 2008 and 2023, US GDP grew by 87%, while a mere 13.5% increase for the EU. Over this time, EU GDP per capita dropped from over three-quarters to just half of the American figure. Strikingly, even the poorest US state now boasts a higher per capita income than several leading EU nations like Italy and France.
Currently, roughly half of the global top fifty technology firms are US-based, while a mere four are from Europe.
The Technological Deficit: A Critical Question
The growing disparity is driven by superior productivity growth in the US, largely due to breakthroughs and better use of resources. The landscape of global tech leadership is overwhelmingly American. In the last fifty years, 241 US firms have grown into companies valued at more than ten billion dollars, compared with just 14 in the European continent.
This gap prompts a vital issue: In the race for tomorrow's sectors like AI, semiconductors, and quantum computing, where does the EU positioned? Experts widely concede it is largely a contest between two involving the US and China, with European nations entering at a significant disadvantage.
Root Causes of the Continent's Technological Lag
Several key factors account for this technological divide.
- Venture Capital: The United States has a far deeper and agile system for financing new ventures. Europe has yet to establish a true capital markets union, a factor that limits the scale of new firms.
- Bureaucratic Hurdles: Complex and divided rules hinder Europe. A US startup can launch a product under a single regulatory framework to access a consumer base of hundreds of millions. The EU, despite a larger population, is split among 27 different national regimes, creating significant market obstacles.
- Cultural Attitudes: Attitudes toward risk-taking differ sharply. In parts of Europe, a startup's collapse was once met with stigma, whereas in the United States, it is often seen as a badge of experience.
- Military Investment: The US benefits from a tightly woven academic-military-industrial complex. The continent's chronic underinvestment in defense has weakened its ability in breakthrough innovation.
A Path Forward: Reasons for Hopefulness
In spite of these challenges, there are reasons for hope. European leaders are increasingly aware of the severe threat and have started to advance substantial change. Notable reports on European competitiveness and the internal market point to the need for major changes.
With the right policies and rule changes, Europe's strengths could support far greater levels of commercial innovation.
Europe retains considerable strengths: high-quality workforce, top-tier schools and universities, and world-class research institutions. Coupled with a vast domestic consumer base and high savings rates, these foundations have the potential to trigger a new wave of venture creation.
Crucially, even if the EU does not take the lead in developing next-generation tech, it can still dramatically boost productivity by implementing and tailoring advancements from other regions.
An Inflection Point
The European Union now faces a decisive moment. To paraphrase a famous line, economic erosion often happens "gradually and then suddenly". So far, Europe's technological decline has been gradual. However, without decisive action to tackle its structural weaknesses, today's gradual weakening could turn into a sudden and irreversible decline in world influence.
