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The recent US security policy document offers a misguided view of Europe. It claims that open-border policies and so-called "woke" agendas represent an existential threat to the continent's identity. However, this argument is based on a serious misinterpretation of the reality. The actual challenge facing Europe is not cultural but economic and technological backwardness.

A Glaring Growth Divide Between the US and Europe

The data reveal a sobering picture. Between 2008 and 2023, American economic output surged by eighty-seven percent, compared to a paltry 13.5% increase for the European Union. During this period, EU GDP per capita fell from over three-quarters to just half of the American figure. Strikingly, even the poorest US state now boasts a greater average income than several leading European economies like France and Italy.

Today, about 50% of the world’s 50 largest technology firms are American, while only four are from Europe.

The Innovation Shortfall: The Core Question

This widening disparity stems from stronger productivity growth in the US, largely due to breakthroughs and better use of resources. The landscape of world technology leadership is overwhelmingly American. Over the past fifty years, 241 US firms have grown into enterprises valued at more than ten billion dollars, versus just 14 in the European continent.

This disparity prompts a pressing question: In the race for tomorrow's sectors like AI, semiconductors, and quantum computing, what is the EU positioned? Most analysts concede it is essentially a contest between two involving the US and China, with European nations entering at a significant disadvantage.

Underlying Factors of Europe's Technological Lag

Several key reasons account for this technological divide.

• Financing Ecosystem: The United States has a far deeper and more dynamic system for financing new ventures. The EU still lacks a genuine unified investment market, which caps the scale of new firms.
• Bureaucratic Hurdles: Complex and divided rules hinder Europe. A US startup can launch a product under one regulatory framework to access a market of over 330 million. The European Union, despite a bigger population, is divided among 27 different national regimes, creating huge market obstacles.
• Cultural Attitudes: Views on entrepreneurial failure differ sharply. In parts of Europe, business failure was historically viewed with stigma, whereas in the US, it is often considered a badge of experience.
• Defense Spending: The US benefits from a deeply integrated academic-military-industrial complex. The continent's long-term lack of spending in military capabilities has weakened its ability in pioneering research.

A Path Forward: Reasons for Hopefulness

Despite these challenges, there are reasons for hope. Policymakers are growing more conscious of the existential challenge and have begun to advance substantial change. Notable reports on EU competitiveness and the single market highlight the necessity of major changes.

Given appropriate incentives and regulatory reforms, Europe's strengths could support far greater degrees of business-led breakthroughs.

Europe retains considerable strengths: high-quality workforce, top-tier education systems, and world-class labs. Coupled with a vast domestic consumer base and substantial household savings, these elements have the potential to unleash a surge of venture creation.

Crucially, even if the EU does not take the lead in creating cutting-edge technologies, it can still dramatically boost economic output by adopting and adapting innovations from elsewhere.

An Inflection Point

Europe now faces a decisive crossroads. As the saying goes, decline often happens "slowly, then all at once". So far, Europe's slide in innovation has been steady. But, if it fails to take bold steps to address its deep-seated problems, today's gradual weakening could give way to a rapid and permanent loss of world influence.