In a policy brief published on Thursday, 16 May, the think tank European Centre for International Political Economy (‘ECIPE’) examines the productivity gap between the EU and the United States. The authors of the brief—Fredrik Erixon, Oscar Guinea, and Oscar du Roy—explain what the reasons, from their point of view, are for the gap between the two continents and make recommendations on how the EU can close this gap.
The authors consider investment in research and development (R&D) to be at the heart of the problem. In 2021, R&D spending in the United States was 77% higher than in the EU. To remedy this, the EU should increase its spending in this area and aim for a 4 to 5% share of GDP by 2040, according to the brief. This would require doubling R&D spending in the next multiannual financial framework.
Another area of work that has been identified is investment in intangible capital, i.e. artificial intelligence, industrial design, organisational structures, and even employee training programs. In ECIPE’s opinion, this is a subject that is “crucial for adopting and diffusing new technologies that drive productivity”. As a result, the EU should prioritise investment in intangible capital and thus “lay down the digital infrastructure that will underpin future growth”, according to the ECIPE brief.
The authors also point to there being less attraction for foreign direct investment in Europe. According to ECIPE, remedying this inevitably involves strengthening the single market by supporting entrepreneurship and by offering a favourable business environment.
See the brief: https://aeur.eu/f/c8z (Original version in French by Léa Marchal)