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Europe’s Competitive Landscape in Technology: Investment Gaps and Challenges

Europe struggles with competitiveness in technology, excelling only in four out of fourteen domains. A significant investment gap of €700 billion exists, leading to potential GDP losses of €2-4 trillion annually by 2040. The European Commission is addressing unfair practices from China in intellectual property while launching initiatives like AI factories with a €1.5 billion investment. However, economic growth remains low, under 1%, combined with high public debt.

Recent research from McKinsey and the World Economic Forum finds that Europe is competitive in only four out of fourteen technology domains, with a need to bridge a significant €700 billion investment gap. The specific areas where Europe excels include carbon capture utilization and storage (CCUS), circular technologies, engineered carbon removal, and quantum computing, along with advancements in bioengineering and connectivity. Conversely, sectors like hydrogen, sustainable fuels, electrification, and renewables show lower competitiveness.

Additional sectors, including artificial intelligence, cloud and edge computing, and the future of mobility, also rank poorly. While semiconductors are a borderline area, Europe still lags in high-value segments such as chip design and manufacturing. To address this, initiatives like defining chip procurement preferences and EU certification for procurement tenders could encourage local production and innovation.

The existing technology gaps may result in a GDP loss of €2 to €4 trillion annually by 2040, which far exceeds Europe’s current annual funding for key sectors like Net Zero, defense, and healthcare combined. In response to these challenges, the European Commission has sought consultations with the World Trade Organization (WTO) to combat unfair practices by China concerning intellectual property.

The Commission emphasized that, “China has empowered its courts to set binding worldwide royalty rates for EU standard essential patents, without the consent of the patent owner,” which pressures European high-tech firms to reduce their royalties. Furthermore, last month, the European High Performance Computing Joint Undertaking (EuroHPC) allocated €1.5 billion for establishing AI factories across several EU countries, including Spain, Italy, and Germany, leveraging both national and EU funds.

Despite these developments, the European economy remains strained, with economic output growth estimated at under 1% in 2024 and persistently high public debt levels. The effects of the energy price crisis and the US’s Inflation Reduction Act continue to weigh heavily on Europe’s economic recovery efforts.

Original Source: www.gasworld.com

Jamal Robinson

Jamal Robinson is a seasoned investigative journalist renowned for tackling difficult subjects with clarity and empathy. After earning his degree in Journalism and Sociology, he honed his skills at a local newspaper before moving on to prominent magazines. His articles have received numerous accolades and highlight key social issues, showing his dedication to impactful storytelling.

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