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In September 2024, former Italian Prime Minister and European Central Bank President Mario Draghi released a European Commission report taking stock of the EU’s slowing productivity and innovation. What he found was startling.
Over the previous 50 years, Europe had produced zero companies created from scratch with a market capitalization above 100 billion euros ($116.7 billion), while in the same time span six American companies now valued at more than $1 trillion had launched. Since 2013, 137 venture capital funds larger than $1 billion had been created in the U.S., while only 11 such funds had emerged in the EU. And when it comes to cutting-edge technology, 61 percent of global funding for artificial intelligence startups went to American companies, compared with just 6 percent to companies in the EU. That’s despite the EU having a larger population than the U.S. by over 100 million people.
Taken together, these numbers paint a clear picture of a stagnating European economy where the conditions needed for innovation and growth lag significantly behind the U.S. and China. Although Europe has had no trouble producing a substantial volume of startups, almost none have grown into globally dominant companies. In few areas is this phenomenon more pronounced than in technology-intensive sectors. The EU’s share of global corporate research and development spending fell from 25 percent in 2004 to 17 percent in 2024, and that drop-off was especially steep in the electronic equipment and technology hardware sectors, according to calculations by Italian economist Andrea Dugo. So how did Europe fall so far behind, so quickly?
