Europe’s big tech contradiction

Andrea Renda.

Why are all the tech giants American or Chinese? Should Europe have its own Facebook? Why aren’t any of the top digital companies European? If you live in the Brussels bubble, or attend tech conferences throughout Europe, you will have heard these questions dozens of times. And there’s a reason: Europe has not been very good at raising tech giants, despite a vibrant startup environment and a fistful of very solid companies in this domain. Europe simply did not create any of those ‘superstar firms’ that economists coo over, and which largely explain the different economic performance of EU and US business over the past decade (as a matter of fact, excluding the so-called FAANGS, 95% of the most advanced US companies (part of the S&P 500) have not improved their productivity in the past decade). Already in 2016, Michael Moritz observed in the Financial Times that “Europe’s eight most valuable companies are only worth about 10 per cent of Facebook or 6 per cent of Google”. A recent publication by the European Political Strategy Centre recalls that “while the EU was home to 42 ‘Fortune 100’ businesses in 2007, it boasted only 28 in 2017”, and “only 5 of the world’s top 100 unicorns – companies with a valuation of over 1 billion US dollars – are from the EU27, with the first only in 56th place”. Europe’s fear of lagging behind the US and China keeps spreading like an oil slick across public debate. Commentators point to several factors that would, in their opinion, explain this mounting problem: heavy regulation, lack of venture capital, lack of skills, big government, political unwillingness to complete the single market, and more.

Πηγή: CEPS

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