This paper, published in January 2025 by the European Investment Bank, the Vienna Institute for International Economic Studies, and the Austrian National Bank, examines the state of innovation and competitiveness in Central, Eastern, and South-Eastern European (CESEE) EU countries. It highlights that while these countries have increased their innovation capacity, significant challenges remain, including skills shortages and barriers to commercializing innovative ideas. The research notes the importance of foreign direct investment in driving innovation and productivity, particularly through greenfield investments. Ultimately, the paper recommends policy measures to improve the availability of skilled labor, secure risk capital, and enhance collaboration between academia and industry to support innovation-driven growth in the region.

#MEGA - Make Europe Great Again

This European Central Bank publication examines the challenges facing European competitiveness, emphasizing the critical role of institutions and the necessity for structural reforms. It identifies low productivity growth, burdensome regulations, and demographic shifts as key issues, exacerbated by global tensions. The article argues that boosting productivity through investment, innovation, and digital/green transitions is essential for long-term competitiveness and resilience. Furthermore, it highlights the need for improved institutional frameworks, better infrastructure, enhanced education, and streamlined regulations to foster a more dynamic and competitive European economy.

#MEGA - Make Europe Great Again

A recent policy brief from ECIPE investigates why the European Union's productivity growth has consistently lagged behind the United States. The authors argue that this gap, evident since the 1990s and widening despite some bright spots in Eastern Europe, stems from structural deficiencies in the EU economy. Key factors identified include lower EU investment in R&D and intangible capital, slower business dynamism, and less attraction of foreign direct investment compared to the US. To reverse this trend, the brief recommends that European policymakers should prioritize increasing R&D spending, investing in digital infrastructure and intangible assets, revitalizing the single market, and fostering a more competitive business environment. Ultimately, the analysis aims to pinpoint areas for improvement to help the EU achieve stronger productivity and economic growth.

#MEGA - Make Europe Great Again

The European Commission's "EU Competitiveness Compass" outlines a strategy to revitalize Europe's economic standing by addressing innovation gaps, promoting a joint path for decarbonization and competitiveness, and reducing strategic dependencies. This communication identifies longstanding structural weaknesses hindering the EU's growth, particularly in productivity and technological advancement compared to global competitors. To counter this, the Compass proposes a new competitiveness model centered on innovation-led productivity, supported by actions across three key pillars and horizontal enablers. These include fostering a thriving innovation ecosystem, ensuring a competitiveness-friendly green transition, and enhancing economic security through diversified partnerships and reduced reliance on vulnerable supply chains. Ultimately, the document serves as a strategic guide for the EU to regain its economic dynamism, safeguard its social model, and assert its global influence in a challenging geopolitical landscape.

#MEGA - Make Europe Great Again

This IMF working paper investigates the causes behind Europe's lagging productivity growth compared to the United States. Through firm-level analysis, the authors identify performance gaps in both leading and young, high-growth European companies. The paper highlights smaller market sizes and limited access to equity financing as key obstacles for larger firms, while skill shortages and insufficient venture capital hinder the development of startups. Ultimately, the study suggests that deeper market integration and national reforms aimed at resource reallocation and human capital enhancement could revitalize Europe's productivity.

A Nature News article reports on a directive from Trump's team ordering significant government layoffs, which is anticipated to negatively impact science due to associated budget cuts. The piece features insights from scientists within US agencies regarding the potential consequences for their staff and funding. An update notes the National Science Foundation later reinstated some probationary employees. The article also references related content concerning the effects of the Trump administration's actions on research, including grant freezes and the experiences of scientists in environmental agencies.

#MEGA - Make Europe Great Again

Sorry for the missing episode: I've been busy with consulting assignments! We're back:

The first document is the European Commission's 2025 Annual Single Market and Competitiveness Report, assessing the EU's economic competitiveness. It highlights weaknesses like high energy prices, lagging productivity, and insufficient innovation, alongside strengths such as a large single market. The report uses key performance indicators to track progress and proposes solutions. The second document is a staff working paper accompanying the report, focusing on the European Monitor of Industrial Ecosystems (EMI). The EMI examines the green and digital transitions across twelve industrial ecosystems, analyzing industry efforts, framework conditions, and impacts on the environment and productivity. Both sources aim to inform policy and improve the EU’s economic performance.

Germany and France jointly propose a new EU agenda to boost competitiveness and growth over the next five years. Key priorities include strengthening the Green Deal and its Industrial Plan, reducing bureaucratic burdens, and fostering innovation. The plan addresses competitiveness challenges, including strategic dependencies and structural weaknesses, by promoting investments in green and digital technologies, improving the Single Market, and enhancing the EU's trade policy. Significant investment in both public and private sectors is proposed to achieve these ambitious goals.

MEGA - Make Europe Great Again

This European Commission communication addresses the EU's long-term competitiveness beyond 2030. It examines current challenges, including weaker productivity growth compared to other major economies and increasing reliance on global supply chains. The communication proposes nine key drivers to enhance competitiveness, focusing on strengthening the single market, boosting investment, improving infrastructure, fostering innovation, ensuring affordable energy, promoting a circular economy, driving digitalization, developing skills, and strengthening trade. The document also emphasizes the need for a growth-enhancing regulatory framework and utilizes key performance indicators to monitor progress across these areas. Finally, it calls for joint action from businesses and policymakers to secure the EU's future economic prosperity.

Today we analyze a recent Elcano Royal Institute report that analyzes the widening competitiveness gap between the EU and the US. Using nine key performance indicators from the European Commission and additional metrics. The authors assess EU performance in areas such as the single market, access to capital, public investment, R&D, energy, digitalization, and education. The analysis reveals significant EU weaknesses, particularly in digitalization and R&D spending, while highlighting relative strengths in renewable energy and trade surpluses. The report also examines factors like productivity, regulatory burdens, and company size contributing to the disparity. Finally, it concludes with observations on the need for improved EU policies and a more efficient public sector to bridge the gap.