How to speed up innovation and investment in Europe?

Is harnessing the potential of artificial intelligence a way to address deep-seated problems in the various economies within Europe? We are lagging behind the rip-roaring growth of the US. Europe's underperformance has for a long time been a cause for worry for policymakers. While it is on top of the agenda after following the wins shocks of the coronavirus pandemic and Russia's war on Ukraine.



At first glance this graph does look impressive. At a closer look we see "patents in advanced digital technologies". This perceived supremacy relies only on the overfunded tech-sector which hardly sees any real progress. Uber is just circumventing traditional Taxi licensing. Tinder is one section of craigslist. Like most large webpages are just niching down on one aspect of craigslist and creating a highly niched down website for that purpose. LinkedIn for Jobs and so on.


Instagram started with having plenty of other functions, after realizing people just like to scroll through pictures, they cut down the other functions of the page. I wonder how many of those patents boil down to real world economic growth. This not to say, that Europe does not have a serious problem of overregulation. Next to the fact that for instance in Germany venture capital is only available to you if another company succeeds with your niche-solution.


This transatlantic divergence has become so acute that it is creating a rift between the US and Europe on monetary policy. With growth and inflation expected to remain stronger in the US than in Europe, investors expect the Federal Reserve to cut interest rates fewer times this year than the European Central Bank or the Bank of England.


The combination of high European energy costs, now well above those in the US, and the attractive subsidies offered by Washington for green energy and semiconductor projects built in the country is tempting large numbers of European companies to shift activities there.

Last month French President Emmanuel Macron warned that Europe faces a mortal threat from:

  • Economic decline
  • Rising illiberalism
  • War on the eastern border

One might add declining workforce/birthrate, smaller investments in Europe, worse venture capital funding and I have to stress this a lot. Regulations. Of which the EU is a world champion. Innovation not so much. After all they outlawed my AI with a 30 Million €uro fine attached to it.

We shouldn't forget however that part of the story is the very lose fiscal policy in the US which may not be sustainable. The next election is likely to not change that trajectory with large-scale spending expected by both candidates Trump & Biden.


I shall end with one quote which stands out. It's about the narrative we tell ourselves: