Charting a European path to competitiveness

‘​Charting a European path to competitiveness’ reviews Europe’s ongoing efforts to address its twin challenges: enhancing economic competitiveness and securing technological sovereignty. The publication contains three papers which offer a detailed analysis of the progress made, the persistent obstacles encountered, and the policy pathways required to achieve these closely interconnected objectives.

The first paper delves into Europe’s long-standing difficulty in converting its innovative potential into market success, a shortfall that has left the continent overly dependent on foreign technologies. Although competitiveness and sovereignty can mutually reinforce each other in the long term, the paper highlights immediate tensions: on one hand, embracing foreign technology is essential for maintaining productivity and economic growth; on the other, it risks deepening Europe’s strategic dependencies and undermining its autonomy.

The second paper identifies Europe’s significant lag in the adoption and deployment of advanced technologies—such as 5G, cloud computing, and artificial intelligence—as well as the limitations of its capital markets, as the primary drivers of its widening productivity gap, especially in sectors where ICT plays a critical role.

The third paper exposes how Europe’s regulatory and institutional frameworks could be adapted to ease the implementation of growth-oriented reforms. To address these challenges, the paper advocates for the creation of a European Digital Agency, which would streamline digital governance, enhance policy coherence, and improve agility in responding to rapidly evolving technological and economic landscapes.

Key findings from the papers are that there is a fragmented approach to EU digital policy, characterised by a lack of alignment between state aid, trade, competition, and innovation policies. The research cautions against pursuing technological sovereignty through isolationist measures, which could marginalise Europe in the global economy. Instead, it recommends a balanced strategy: protecting or developing strategic or security-sensitive niches, maintaining open markets, and making selective, high-impact investments in sectors where Europe can emerge as a global leader. Institutional reform is identified as a critical enabler for overcoming bureaucratic inertia and creating an environment that fosters innovation and sustainable growth.

Project Context

The research aims to support the development of a competitive, sovereign, and resilient European digital economy. The recommendations emphasise the importance of balanced openness, targeted public investment, and regulatory coherence—principles that are central to CERRE’s vision for a dynamic, inclusive, and globally competitive Europe.