Donald Trump's security policy document presents a flawed assessment of Europe. 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 serious misreading of the reality. The actual challenge confronting Europe is not societal but technological and economic lag.
A Glaring Growth Gap Separating Europe and the US
Statistics reveal a sobering picture. From 2008 and 2023, US GDP grew by 87%, compared to a paltry 13.5% growth for the European Union. During this period, European income per person fell from 76.5% to just half of the American figure. Remarkably, even Mississippi now has a higher per capita income than several leading EU nations like France and Italy.
Currently, roughly half of the global 50 largest tech companies are American, while only four are European.
The Technological Deficit: A Critical Question
This widening disparity is driven by superior efficiency gains in the United States, fueled by breakthroughs and higher total factor productivity. The landscape of global tech leadership is decidedly American. In the last five decades, hundreds of American startups have grown into enterprises valued at more than $10bn, compared with just 14 in the European continent.
This disparity prompts a vital issue: As the competition for tomorrow's sectors like semiconductors, AI, and fusion energy, what is the EU positioned? Experts widely concede it is largely a contest between two involving the US and China, with Europe starting at a significant disadvantage.
Underlying Factors of Europe's Technological Lag
Several major factors explain this technological divide.
- Financing Ecosystem: The US boasts a much more robust and more dynamic system for financing new ventures. Europe still lacks a true unified investment market, which limits the scale of emerging companies.
- Regulatory Fragmentation: Excessive and fragmented rules hinder Europe. A US startup can launch a service under a single set of laws to access a consumer base of hundreds of millions. The European Union, despite a bigger population size, is split among twenty-seven separate regimes, creating huge internal barriers.
- Cultural Attitudes: Views on risk-taking differ sharply. In parts of Europe, a startup's collapse was historically met with stigma, whereas in the US, it is often considered a valuable lesson.
- Defense Spending: The United States enjoys a deeply integrated innovation pipeline linking defense and academia. Europe's long-term lack of spending in defense has eroded its capacity for pioneering research.
The Road Ahead: Reasons for Hopefulness
Despite these hurdles, one can find reasons for hope. Policymakers are increasingly aware of the severe threat and have started to advance substantial change. Key reports on EU competitiveness and the internal market highlight the necessity of sweeping changes.
With the right incentives and regulatory reforms, Europe's strengths could support far greater degrees of business-led breakthroughs.
The continent still possesses considerable advantages: high-quality workforce, excellent schools and universities, and premier labs. Coupled with a large internal market and high savings rates, these elements could trigger a new wave of venture creation.
Crucially, even if the EU does not become the leader in creating cutting-edge technologies, it can still significantly boost productivity by implementing and tailoring innovations from other regions.
An Inflection Point
The European Union now faces a decisive moment. As the saying goes, decline often happens "slowly, then all at once". So far, Europe's slide in innovation has been gradual. But, without bold steps to address its structural weaknesses, today's slow erosion could give way to a rapid and permanent loss of world influence.
