Donald Trump's security policy document presents a misguided view of the European Union. The document asserts that open-border policies and so-called "woke" agendas pose an grave risk to the continent's identity. However, this perspective rests on a fundamental misreading of the situation. The true danger facing the EU is not societal but technological and economic backwardness.
The Stark Economic Gap Between Europe and the US
Statistics reveal a sobering contrast. From 2008 and 2023, US GDP surged by 87%, while a mere 13.5% increase for the EU. Over this period, EU GDP per capita fell from over three-quarters to just half of the US level. Strikingly, even the poorest US state now has a greater average income than major European economies like Italy and France.
Today, roughly half of the world’s top fifty technology firms are US-based, while a mere four are European.
The Technological Shortfall: The Core Problem
This widening disparity is driven by superior productivity growth in the United States, fueled by breakthroughs and better use of resources. The scene of world technology leadership is decidedly US-centric. Over the past fifty years, 241 US firms have scaled into enterprises valued at over $10bn, compared with just 14 in Europe.
This gap prompts a vital question: As the competition for future industries like semiconductors, AI, and quantum computing, what is the EU positioned? Experts widely concede it is largely a two-horse race involving the United States and China, with European nations starting at a clear disadvantage.
Underlying Factors of the Continent's Technological Lag
A number of major factors explain this technological divide.
- Financing Ecosystem: The US boasts a far deeper and agile system for funding startups. The EU has yet to establish a true unified investment market, which limits the scale of new firms.
- Bureaucratic Hurdles: Complex and divided rules hinder Europe. A US startup can launch a service under one regulatory framework to access a market of over 330 million. The EU, despite a bigger population size, is split among 27 separate systems, creating significant internal barriers.
- Cultural Attitudes: Attitudes toward entrepreneurial failure vary greatly. In some EU nations, business failure was historically met with stigma, whereas in the US, it is often seen as a badge of experience.
- Military Investment: The United States enjoys a deeply integrated innovation pipeline linking defense and academia. The continent's long-term lack of spending in military capabilities has weakened its ability in breakthrough innovation.
A Path Forward: Reasons for Cautious Optimism
In spite of these hurdles, there are causes for hope. Policymakers are increasingly aware of the existential challenge and have started to advance serious reform. Notable analyses on European competitiveness and the single market highlight the need for major reforms.
With the right policies and regulatory reforms, these assets could support much higher levels of business-led breakthroughs.
The continent retains considerable advantages: skilled human capital, top-tier education systems, and world-class labs. Coupled with a large internal market and substantial household savings, these foundations have the potential to trigger a surge of investment and entrepreneurship.
Crucially, even if the EU does not take the lead in developing next-generation technologies, it can still dramatically increase economic output by adopting and adapting innovations from elsewhere.
An Inflection Point
The European Union now stands at a critical crossroads. To paraphrase a famous line, economic erosion often happens "slowly, then all at once". To date, Europe's technological decline has been steady. However, if it fails to take decisive action to address its deep-seated problems, today's gradual weakening could turn into a sudden and irreversible loss of world influence.
