Europe's Economic and Technological Challenges Outweigh Immigration and 'Woke' Politics Arguments
Europe faces significant economic and technological backwardness rather than issues stemming from immigration or 'woke' politics. Between 2008 and 2023, US GDP grew by 87% compared to just 13.5% in the EU, with EU GDP per capita declining from 76.5% to 50% of the US level during this period.
The technological gap is stark: about half of the world's 50 largest technology firms are American, while only four are European. Over the past five decades, 241 US startups have reached valuations of $10 billion or more, compared to only 14 in Europe.
A major contributor to this disparity is regulatory fragmentation across the 27 EU member states, which creates barriers to business. The IMF estimates that internal market barriers in the EU act like a 44% tariff on goods and an effective 110% tariff on services. Additionally, Europe lags in startup financing and is hindered by a risk-averse venture culture, compounded by the absence of a genuine capital markets union.
Europe also underinvests in defense spending. Meeting NATO's target of 3.5% of GDP on defense is seen as a way to spur innovation and productivity, following the US-led innovation ecosystem that correlates higher defense spending with stronger technological advances.
Recent 2024 reports on EU competitiveness and the single market by Mario Draghi and Enrico Letta indicate potential reform paths to boost innovation. Europe retains key strengths, including high-quality human capital, education, research institutions, a large internal market, and high savings rates, which could translate into greater productivity if incentives improve and regulatory barriers are reduced.
