Europe creates value, others profit: EU budget's new role

Europe is falling behind in converting its technological innovations into substantial economic value, according to recent Eurostat data and analysis. While the European Union's investment in research and development reached 2.24% of GDP in 2024, it remains significantly below the 3% target and trails behind global leaders like the United States, Japan, and South Korea.

The core issue lies not in a lack of innovation, but in the structure of R&D spending. In the business sector, EU companies invested 1.49% of GDP in R&D, starkly contrasting with 2.70% in the US, 2.72% in Japan, and a remarkable 3.93% in South Korea. This suggests that innovative activities are less embedded within European enterprises, where knowledge typically transforms into products, competitive advantages, and profits.

Corporate data further highlights this disparity. Among the world's top 2000 R&D-investing companies, EU firms accounted for just 16.2% of global investment, while US enterprises contributed 47.1%. This gap extends to funding, with European scale-ups securing roughly half the capital available to their Silicon Valley counterparts. Venture capital investments in the EU averaged about 0.3% of GDP annually over the past decade, less than a third of the US level.

Consequently, many European innovations seek investors, capital markets, or buyers outside the continent at early development stages. A report by Mario Draghi on European competitiveness noted that no company valued over 100 billion euros has been founded in the EU from scratch in 50 years. Furthermore, between 2008 and 2021, nearly 30% of European unicorns relocated their headquarters outside the EU. This trend indicates a broader challenge in retaining business scale, ownership, and economic returns within Europe, effectively exporting future growth sources.