European Investment Bank economists have called for decisive measures from policymakers, investors and the private sector alike to raise the competitiveness of the region.
European Investment Bank director, Werner Hoyer said: "if anyone wonders why Europe needs integration, the scale of the challenge ahead is the answer. No single European country could meet it alone. Europe still has a strong base in science and some industrial technologies; but we risk missing the boat in the technologies of the next Industrial Revolution."
"At the EIB we are committed to strengthening Europe’s competitiveness, through significant and unprecedented levels of financing for innovation and through the European Fund for Strategic Investments which is now off to a successful start."
He continued, "Crucially, in order to preserve its strength, the EU economy needs to be at the global innovation frontier. But investments in today’s innovation only make sense if they can rely on access to a vast integrated market and a developed digital infrastructure.
"Market integration is the backbone of Europe’s prosperity. Our research clearly shows the alarming proportions of the innovation gap with the US, especially in leading-edge technologies, such as digital and biotechnology. It’s time for all of us to face the urgent need to remedy decades of underspending — and under-thinking — about innovation."
According to EIB study, Europe requires about €130bn of investment every year in R&D to achieve at least 3% of GDP growth rate.
It added EU is lagging behind US by about 30% in relation to the number of patents filed per citizen.
The study revealed that European firms are slower in integrating technology that in turn leads to lag in productivity and quality. Keeping up with latest technology would cost about €90 bn every year. The report also noted that the share of fast growing companies was about 25% less than that of the US. In order to compete with US levels of venture capital, an additional €35 bn will be needed every year.
These are some of the challenges that are faced by Europe’s economy that need to be addressed immediately.