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The recent US national security strategy presents a flawed assessment of Europe. The document asserts that open-border policies and so-called "progressive" policies pose an existential risk to European civilization. Yet, this argument rests on a serious misinterpretation of the reality. The actual challenge confronting Europe is not cultural but technological and economic backwardness.

A Glaring Growth Divide Separating the US and Europe

The data paint a sobering picture. From 2008 and 2023, US GDP grew by eighty-seven percent, compared to a paltry thirteen and a half percent growth for the EU. Over this period, European income per person fell from over three-quarters to just 50% of the US level. Strikingly, even the poorest US state now boasts a higher per capita income than several leading European economies like Italy and France.

Currently, roughly half of the global 50 largest technology firms are American, while a mere four are from Europe.

The Innovation Shortfall: A Critical Problem

The growing disparity is driven by stronger efficiency gains in the US, fueled by breakthroughs and better use of resources. The landscape of world technology dominance is overwhelmingly American. In the last five decades, hundreds of American startups have grown into enterprises valued at more than ten billion dollars, compared with only fourteen in the European continent.

This gap raises a pressing issue: As the competition for future industries like AI, semiconductors, and quantum computing, what is the EU stand? Experts widely agree it is largely a two-horse race between the United States and China, with European nations entering at a significant disadvantage.

Underlying Factors of the Continent's Technological Lag

A number of major factors explain this technological divide.

• Financing Ecosystem: The United States has a far deeper and more dynamic system for financing new ventures. Europe still lacks a true capital markets union, which limits the scale of emerging companies.
• Bureaucratic Hurdles: Complex and divided rules hamper European business. A US startup can launch a product under one set of laws to access a market of hundreds of millions. The European Union, despite a larger population size, is divided among twenty-seven different national systems, creating huge market obstacles.
• Cultural Attitudes: Attitudes toward entrepreneurial failure differ sharply. In some EU nations, a startup's collapse was historically viewed with penalties, whereas in the United States, it is often considered a badge of experience.
• Defense Spending: The United States enjoys a tightly woven innovation pipeline linking defense and academia. Europe's chronic underinvestment in defense has weakened its ability in pioneering research.

The Road Ahead: Grounds for Hopefulness

Despite these challenges, there are causes for optimism. European leaders are increasingly aware of the severe threat and have started to advance substantial change. Notable reports on EU competitiveness and the internal market point to the necessity of major reforms.

Given appropriate incentives and rule changes, these assets might enable far greater degrees of commercial innovation.

Europe retains significant advantages: high-quality human capital, top-tier schools and universities, and world-class research institutions. Alongside a vast domestic consumer base and high savings rates, these elements could trigger a new wave of investment and entrepreneurship.

Crucially, even if the EU does not take the lead in creating next-generation technologies, it can still significantly boost economic output by implementing and tailoring innovations from other regions.

A Critical Juncture

Europe now stands at a critical crossroads. As the saying goes, economic erosion often happens "slowly, then all at once". To date, the continent's slide in innovation has been gradual. However, if it fails to take bold steps to address its structural weaknesses, today's gradual weakening could turn into a rapid and permanent decline in global economic relevance.