Donald Trump's national security strategy offers a flawed view of the European Union. It claims that open-border policies and so-called "progressive" policies represent an grave risk to the continent's identity. However, this argument is based on a serious misreading of the reality. The true danger confronting the EU is not societal but technological and economic lag.
The Stark Growth Gap Between Europe and the US
Statistics paint a sobering contrast. Between 2008 and 2023, American economic output grew by 87%, compared to a mere thirteen and a half percent growth for the European Union. Over this time, EU GDP per capita dropped from over three-quarters to just 50% of the American figure. Strikingly, even Mississippi now boasts a higher per capita income than major EU nations like France and Italy.
Today, roughly half of the global top fifty tech companies are US-based, while a mere four are from Europe.
The Technological Shortfall: The Core Problem
This widening disparity stems from superior efficiency gains in the US, fueled by technological innovation and better use of resources. The landscape of global tech dominance is overwhelmingly American. In the last five decades, hundreds of American startups have scaled into companies valued at more than $10bn, versus just 14 in the European continent.
This gap prompts a pressing issue: In the race for future industries like AI, semiconductors, and quantum computing, where does Europe stand? Most analysts concede it is largely a two-horse race involving the US and China, with Europe entering at a clear disadvantage.
Underlying Factors of Europe's Technological Lag
A number of major factors account for this technological divide.
- Financing Ecosystem: The US boasts a far deeper and more dynamic system for funding startups. The EU still lacks a genuine capital markets union, which limits the scale of new firms.
- Bureaucratic Hurdles: Excessive and fragmented rules hinder European business. A US startup can introduce a service under one regulatory framework to access a consumer base of hundreds of millions. The EU, despite a bigger population size, is split among twenty-seven different national regimes, creating significant internal barriers.
- Cultural Attitudes: Attitudes toward risk-taking vary greatly. In some EU nations, a startup's collapse was historically viewed with stigma, whereas in the United States, it is often considered a badge of experience.
- Defense Spending: The United States enjoys a tightly woven academic-military-industrial complex. Europe's chronic underinvestment in military capabilities has weakened its capacity for pioneering research.
A Path Forward: Grounds for Hopefulness
In spite of these hurdles, one can find reasons for hope. European leaders are increasingly aware of the existential challenge and have started to propose serious reform. Key analyses on EU competitiveness and the internal market highlight the necessity of major reforms.
With the right policies and rule changes, Europe's strengths could support much higher degrees of business-led breakthroughs.
Europe retains considerable strengths: high-quality workforce, excellent education systems, and premier labs. Alongside a large internal market and high savings rates, these elements have the potential to unleash a new wave of investment and entrepreneurship.
Importantly, even if Europe does not take the lead in developing cutting-edge tech, it can still dramatically increase productivity by adopting and adapting advancements from other regions.
An Inflection Point
Europe now faces a critical moment. To paraphrase a famous line, economic erosion often happens "gradually and then suddenly". So far, Europe's technological decline has been steady. However, without bold steps to tackle its deep-seated problems, today's slow erosion could give way to a sudden and irreversible decline in world influence.
