The recent US security policy document presents a flawed assessment of the European Union. It claims that open-border policies and so-called "progressive" policies represent an grave threat to European civilization. Yet, this perspective is based on a serious misreading of the reality. The actual challenge facing the EU is not cultural but technological and economic backwardness.
A Glaring Economic Divide Separating Europe and the US
Statistics reveal a sobering picture. From 2008 and 2023, US GDP surged by 87%, while a mere 13.5% growth for the European Union. During this time, EU GDP per capita dropped from over three-quarters to just half of the US level. Strikingly, even the poorest US state now boasts a higher per capita income than major European economies like Italy and France.
Today, about half of the world’s top fifty technology firms are American, while only four are European.
The Technological Shortfall: The Core Problem
This widening disparity is driven by stronger productivity growth in the United States, fueled by breakthroughs and better use of resources. The scene of world technology dominance is overwhelmingly American. Over the past fifty years, 241 US firms have grown into companies valued at over ten billion dollars, versus just 14 in Europe.
This disparity prompts a pressing question: In the race for future industries like AI, semiconductors, and fusion energy, where does Europe positioned? Experts widely concede it is essentially a two-horse race involving the United States and China, with Europe entering at a clear disadvantage.
Underlying Factors of Europe's Technological Lag
Several key reasons account for this technological divide.
- Financing Ecosystem: The US boasts a much more robust and more dynamic network for financing new ventures. Europe still lacks a genuine capital markets union, a factor that caps the growth potential of new firms.
- Bureaucratic Hurdles: Complex and divided rules hamper Europe. A US startup can launch a product under one set of laws to access a market of over 330 million. The European Union, despite a larger population, is split among 27 different national systems, creating significant internal barriers.
- Cultural Attitudes: Views on entrepreneurial failure vary greatly. In some EU nations, a startup's collapse was historically viewed with penalties, whereas in the United States, it is often seen as a badge of experience.
- Defense Spending: The US benefits from a tightly woven innovation pipeline linking defense and academia. The continent's long-term lack of spending in military capabilities has eroded its ability in pioneering research.
A Path Forward: Reasons for Cautious Optimism
Despite these hurdles, there are causes for hope. Policymakers are growing more conscious of the severe threat and have started to advance substantial change. Key analyses on European competitiveness and the internal market point to the necessity of sweeping reforms.
With the right incentives and regulatory reforms, Europe's strengths might enable far greater levels of business-led breakthroughs.
Europe still possesses considerable strengths: high-quality human capital, top-tier schools and universities, and premier labs. Coupled with a vast domestic consumer base and high savings rates, these elements have the potential to unleash a new wave of venture creation.
Crucially, even if the EU does not become the leader in developing cutting-edge tech, it can still significantly boost productivity by implementing and tailoring advancements from elsewhere.
A Critical Juncture
Europe now faces a critical moment. To paraphrase a famous line, decline often happens "gradually and then suddenly". To date, the continent's slide in innovation has been gradual. But, if it fails to take bold steps to address its deep-seated problems, today's slow erosion could give way to a rapid and permanent loss of world influence.
