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Donald Trump's national security strategy presents a misguided assessment of Europe. The document asserts that unrestrained immigration and so-called "progressive" policies represent an existential risk to the continent's identity. Yet, this perspective rests on a serious misreading of the reality. The true danger confronting Europe is not societal but technological and economic backwardness.

The Stark Growth Divide Separating the US and Europe

The data reveal a sobering contrast. From 2008 and 2023, US GDP surged by 87%, compared to a mere 13.5% increase for the European Union. During this period, EU GDP per capita dropped from 76.5% to just 50% of the American figure. Remarkably, even the poorest US state now has a higher per capita income than major EU nations like Italy and France.

Today, about half of the global top fifty tech companies are US-based, while only four are European.

The Technological Shortfall: The Core Question

The growing disparity is driven by superior productivity growth in the United States, fueled by breakthroughs and better use of resources. The scene of global tech leadership is overwhelmingly US-centric. Over the past five decades, hundreds of American startups have grown into companies valued at more than $10bn, versus just 14 in Europe.

This gap raises a vital question: In the race for tomorrow's sectors like semiconductors, AI, and quantum computing, where does Europe stand? Experts widely agree it is essentially a contest between two involving the United States and China, with European nations entering at a clear disadvantage.

Root Causes of the Continent's Technological Lag

A number of major factors explain this innovation chasm.

• Financing Ecosystem: The United States has a much more robust and more dynamic system for financing new ventures. Europe still lacks a genuine unified investment market, a factor that caps the growth potential of new firms.
• Regulatory Fragmentation: Excessive and fragmented regulation hinder European business. A American entrepreneur can launch a product under a single set of laws to access a market of hundreds of millions. The EU, despite a bigger population size, is divided among twenty-seven different national systems, creating huge market obstacles.
• Mindset Differences: Views on entrepreneurial failure vary greatly. In parts of Europe, business failure was historically viewed with stigma, whereas in the United States, it is often seen as a badge of experience.
• Military Investment: The United States enjoys a deeply integrated academic-military-industrial complex. The continent's chronic underinvestment in defense has eroded its ability in pioneering research.

A Path Forward: Reasons for Hopefulness

Despite these hurdles, one can find reasons for hope. Policymakers are growing more conscious of the severe threat and have started to propose substantial change. Key analyses on European competitiveness and the internal market point to the necessity of sweeping reforms.

With the right incentives and regulatory reforms, Europe's strengths might enable much higher degrees of commercial innovation.

The continent retains considerable advantages: high-quality human capital, excellent schools and universities, and world-class labs. Alongside a vast domestic consumer base and substantial household savings, these elements could trigger a new wave of venture creation.

Crucially, even if Europe does not become the leader in creating cutting-edge technologies, it can still significantly boost productivity by adopting and adapting advancements from elsewhere.

A Critical Juncture

The European Union now stands at a critical moment. To paraphrase a famous line, decline often happens "slowly, then all at once". So far, the continent's technological decline has been steady. However, without decisive action to address its structural weaknesses, today's gradual weakening could give way to a sudden and irreversible decline in global economic relevance.