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The recent US national security strategy offers a flawed assessment of Europe. The document asserts that open-border policies and so-called "progressive" policies pose an existential risk to the continent's identity. However, this argument is based on a serious misinterpretation of the reality. The actual danger facing Europe is not societal but technological and economic backwardness.

A Glaring Growth Gap Separating the US and Europe

Statistics reveal a sobering contrast. From 2008 and 2023, American economic output surged by eighty-seven percent, compared to a paltry thirteen and a half percent growth for the EU. Over this time, EU GDP per capita dropped from over three-quarters to just 50% of the American figure. Remarkably, even the poorest US state now boasts a higher per capita income than major European economies like France and Italy.

Today, roughly half of the global top fifty technology firms are US-based, while only four are from Europe.

The Technological Shortfall: A Critical Question

The growing economic gap is driven by stronger efficiency gains in the US, fueled by breakthroughs and higher total factor productivity. The landscape of global tech dominance is decidedly US-centric. Over the past five decades, 241 US firms have grown into enterprises valued at over $10bn, versus only fourteen in the European continent.

This disparity raises a vital issue: In the race for tomorrow's sectors like semiconductors, AI, and fusion energy, where does the EU positioned? Experts widely agree it is largely a two-horse race between the United States and China, with Europe entering at a clear handicap.

Underlying Factors of Europe's Technological Lag

A number of key factors explain this technological divide.

• Venture Capital: The United States has a much more robust and agile system for financing new ventures. Europe still lacks a genuine capital markets union, which limits the growth potential of emerging companies.
• Regulatory Fragmentation: Excessive and fragmented rules hinder European business. A American entrepreneur can launch a product under a single regulatory framework to access a market of hundreds of millions. The European Union, despite a bigger population, is divided among 27 separate regimes, creating significant internal barriers.
• Mindset Differences: Attitudes toward risk-taking differ sharply. In some EU nations, a startup's collapse was historically viewed with stigma, whereas in the US, it is often considered a valuable lesson.
• Defense Spending: The United States enjoys a tightly woven innovation pipeline linking defense and academia. The continent's chronic underinvestment in defense has weakened its ability in breakthrough innovation.

The Road Ahead: 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 point to the necessity of major changes.

Given appropriate policies and regulatory reforms, Europe's strengths might enable far greater degrees of commercial innovation.

Europe retains significant advantages: skilled human capital, excellent schools and universities, and premier research institutions. Coupled with a large internal market and substantial household savings, these elements could unleash a surge of venture creation.

Importantly, even if Europe does not become the leader in developing cutting-edge tech, it can still dramatically increase economic output by adopting and adapting advancements from other regions.

A Critical Juncture

The European Union now stands at a critical moment. To paraphrase a famous line, decline often happens "slowly, then all at once". To date, the continent'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 turn into a rapid and permanent loss of world influence.