Europe’s technology investment lags significantly behind the U.S., creating a competitive gap across 14 critical technologies, potentially forfeiting trillions in GDP contributions. A cohesive framework for leveraging strengths, private sector initiatives, and ambitious public projects is essential for fostering innovation and improving competitiveness in key technology sectors.
In an era where technology dictates national prosperity and sovereignty, Europe faces significant competition in the arena of advanced technologies. With large European firms investing €700 billion less annually than their U.S. equivalents from 2015 to 2022, European corporate returns lag behind those of the U.S. by four percentage points. As a result, Europe competes effectively in only four out of 14 critical technologies vital for future global economic health, leaving potentially €2 trillion to €4 trillion unutilized, thereby hindering essential funding efforts in net zero, defense, and healthcare sectors.
To enhance economic and technological competitiveness, broad consensus is growing on the necessary strategic levers. Various reports, including those from prominent figures like Mario Draghi and Enrico Letta, propose solutions. Completing the single market and streamlining regulations could significantly elevate investment levels. However, impactful changes have yet to materialize, necessitating the formulation of actionable strategies with focused goals, private initiatives, and ambitious public projects vital for fostering entrepreneurial spirit and competitiveness.
This report outlines a differentiated strategy tailored to 14 key technologies based on their strategic significance, current maturity levels, and Europe’s competitive status. For technologies where Europe leads, strategies should aim to defend and expand these leading positions. In areas where Europe has potential, rapid scaling and commercialization should be prioritized, while in lagging sectors, resources may need reallocation to focus on strategic technology transfer and niche developments.
Private sector-led initiatives are critical in gaining momentum for necessary changes. These high-impact projects can simplify investment environments while illustrating where improvements are needed to support viable business models. Concurrently, the report emphasizes ten public sector projects aimed at creating a more conducive investment landscape across Europe, including initiatives for a unified set of EU business regulations and a digital permitting system designed to streamline innovation.
Europe’s competitive landscape in critical technologies underscores urgent calls for strategic investment and innovation. With current investment disparities compared to the U.S. and China, Europe must leverage its strengths while addressing gaps through public-private collaboration. Implementing proposed initiatives and fostering strong regulatory frameworks are vital steps towards enhancing European competitiveness and harnessing technological advancements that align with the continent’s goals for growth and development.
Original Source: www.mckinsey.com
