By Konstantinos M. Kokkinoplitis*

The European Commission's latest report entitled "The EU's Global Position in Complex Technologies (2019-2022)" reveals a worrying reality, with Europe losing ground in critical cutting-edge sectors.

This lag is not just a technological issue but threatens Europe's long-term economic stability and geopolitical influence. Inaction in addressing this strategic necessity today will have incalculable consequences tomorrow. 

So-called complex technologies include sophisticated and interconnected innovations that require significant investment in research and development (R&D), advanced technical expertise and sophisticated infrastructure. These key technologies include artificial intelligence (AI), quantum computing, semiconductors, biotechnology, digital communications, and cybersecurity. These technologies are not only impressive but also necessary for creating new markets, solving societal challenges and ensuring strategic autonomy. By taking control of these technologies, states can position themselves as world leaders and gain enormous economic benefits, enhanced security, and greater influence in global affairs. 

The graph below illustrates Europe's deteriorating position in relation to its main global competitors. 

From 2019 to 2022, Europe's position in critical technology sectors has deteriorated dramatically, with the US and China maintaining a clear lead. The U.S. continues to dominate in information and communications technologies (ICT) and digital innovation. Simultaneously, China’s aggressive investments and strategic initiatives have enabled it to leap ahead of Europe, with the gap widening substantially.

The (x) axis shows how closely a country-region is connected to one of the technological fields under consideration, with high values indicating technologies based on already developed capabilities. The vertical axis (y) ranks technologies according to their level of complexity, on a scale from 0 to 100. Here, the higher a value, the more complex it corresponds to.  The size of each bubble in the graph shows how specialized a country is in a particular technology field, with the larger bubbles showing stronger expertise in this area.

Source:  European Commission: Directorate-General for Research and Innovation, Science, research and innovation performance of the EU, 2024 – A competitive Europe for a sustainable future, Publications Office of the European Union, 2024, https://data.europa.eu/doi/10.2777/965670.

From the graph above, it is clear that the EU excels in green technologies, such as wind energy and hydrogen, in line with its sustainability and climate change priorities. However, it lags behind in digital and advanced technologies, such as artificial intelligence, quantum computing, and cybersecurity, sectors that are essential for competitiveness. This weakness intensifies the risk of technological dependence on the US (in AI and cloud services) and China (in hardware technologies).

The EU's technological competitiveness continued to decline beyond 2022, with this gap widening to complex technologies such as artificial intelligence, semiconductors and digital infrastructure in general. Reports in recent years confirm that rigid policies and insufficient strategic investments further weaken Europe's position vis-à-vis world leaders. The EU, once a leader in innovation and competing with the US, is now at a disadvantage, with little sign of recovery in high-tech sectors.

As complex technologies are a fundamental pillar affecting all sectors of the economy, European delays have a multifaceted impact. Developments in semiconductors are underpinning modern manufacturing, automobiles, consumer electronics, and defense systems. Artificial intelligence is transforming healthcare through predictive diagnosis, improving supply chain efficiency, and will enhance cybersecurity. Quantum computing will revolutionize pharmaceutical and materials science, redefining economic competitiveness and security.

The downward trend in Europe since the early 2000s paints a worrying picture and marks a structural shift in the global technological balance. Europe is struggling to maintain its competitiveness, while China, which has grown rapidly thanks to strategic investments in research since the mid-2000s, is in stark contrast to Europe's stagnation. By 2020, China had overtaken the EU in overall R&D intensity. This is a clear indication of the shift in global technological dominance.

Europe's decline is not only due to a lack of resources, but is fundamentally based on strategic mistakes. For more than a decade, European policymakers have focused solely on green technologies. While commendable, this narrow approach has neglected key complex technological sectors that are essential for geopolitical influence and sustainable economic competitiveness. Mario Draghi, former president of the European Central Bank, has warned: "Europe must recognise its technological weaknesses and urgently rebalance its strategic priorities. Our economic future depends not only on green technologies, but also on the mastery of digital technologies and complex technological innovations that are essential for global competitiveness."

Europe is facing a serious investment deficit in high technology, while the US and China are channelling huge resources into digital industries and ICT. Instead of strengthening its technological leadership, Europe remains trapped in medium-tech sectors, such as the automotive industry and traditional industries. However, even there, it failed to protect its competitiveness. Its policies, which emphasized regulatory constraints and unilateral targets, weakened its industrial base and the locomotive of its economy, making it more vulnerable to international pressures.

Europe's digital sovereignty is moving further and further away, threatening both its economic growth and its geopolitical influence.

The failure to diversify technology investment is not just a growth issue, but a strategic bottleneck. To remain competitive, it is not enough to turn to climate change technologies – a balanced strategy is needed that also supports cutting-edge technologies. Europe is at a crossroads. It can either invest decisively in innovation and industrial resilience or follow global developments instead of shaping them. The time for complacency has passed.

References:

• European Commission, DG Research and Innovation, "Science, Research and Innovation Performance of the EU 2024".
• European Commission, 'The Global Position of the EU in Complex Technologies (2019-2022)'.
• Mario Draghi, speech on European technological competitiveness (2023).

* Mr. Konstantinos Kokkinoplitis is a director of Seven Sigma P.C. and RISE and former Secretary General of Research and Technology.