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The recent US security policy document offers a misguided assessment of Europe. The document asserts that open-border policies and what it terms "progressive" policies represent an existential risk to European civilization. However, this perspective is based on a serious misreading of the reality. The true challenge confronting Europe is not societal but technological and economic backwardness.

A Glaring Growth Gap Separating Europe and the US

Statistics reveal a stark contrast. From 2008 and 2023, US GDP grew by eighty-seven percent, compared to a paltry 13.5% increase for the EU. During this period, EU GDP per capita fell from 76.5% to just half of the US level. Strikingly, even the poorest US state now has a higher per capita income than major European economies like Italy and France.

Currently, roughly half of the global top fifty technology firms are American, while only four are from Europe.

The Innovation Shortfall: A Critical Question

The growing disparity is driven by stronger productivity growth in the United States, fueled by breakthroughs and higher total factor productivity. The scene of global tech leadership is decidedly American. Over the past five decades, hundreds of American startups have grown into enterprises valued at more than $10bn, versus only fourteen in the European continent.

This gap prompts a pressing question: In the race for future industries like AI, semiconductors, and quantum computing, what is Europe stand? Experts widely concede it is largely a two-horse race involving the United States and China, with Europe entering at a clear handicap.

Underlying Factors of the Continent's Technological Lag

A number of major factors account for this technological divide.

• Venture Capital: The US boasts a far deeper and more dynamic network for financing new ventures. The EU still lacks a true unified investment market, a factor that caps the growth potential of emerging companies.
• Bureaucratic Hurdles: Complex and divided rules hamper European business. A American entrepreneur can launch a service under one regulatory framework to access a market of hundreds of millions. The European Union, despite a bigger population, is split among 27 different national regimes, creating huge internal barriers.
• Mindset Differences: Attitudes toward entrepreneurial failure differ sharply. In parts of Europe, business failure was once met with penalties, whereas in the United States, it is often seen as a badge of experience.
• Defense Spending: The United States enjoys a tightly woven innovation pipeline linking defense and academia. The continent's long-term lack of spending in military capabilities has eroded its capacity for breakthrough innovation.

The Road Ahead: Reasons for Cautious Optimism

Despite these hurdles, there are reasons for optimism. Policymakers are increasingly aware of the existential challenge and have started to propose serious reform. Key reports on EU competitiveness and the single market highlight the need for major reforms.

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

Europe still possesses considerable strengths: skilled human capital, excellent schools and universities, and world-class research institutions. Alongside a vast domestic consumer base and high savings rates, these elements have the potential to trigger a surge of venture creation.

Crucially, even if the EU does not become the leader in developing next-generation technologies, it can still dramatically boost productivity by implementing and tailoring advancements from other regions.

A Critical Juncture

Europe now stands at a decisive moment. As the saying goes, economic erosion often happens "gradually and then suddenly". So far, the continent's technological decline has been steady. However, if it fails to take decisive action to address its structural weaknesses, today's slow erosion could give way to a sudden and irreversible decline in world influence.