More and more voices are sounding the alarm about Europe’s competitiveness, and not without reason. For decades, the continent has been characterized by excessive regulation, internal divisions, and poor economic policy decisions. The low productivity growth of European companies and their relatively weak innovation potential have led to an almost insurmountable disadvantage compared to the United States and China.
In several areas, the disadvantage is significant. Employment is a notable example, as nearly 1 million jobs have been lost in European manufacturing over the past four years. Negative trends are also evident in the field of new investments. It is no surprise that the factors most influencing investors are not in favor of Europe. According to a report by the International Energy Agency, the price of electricity in the EU last year was nearly double that in the U.S. and China. This trend represents a major competitive disadvantage for energy-intensive industries on the continent. Energy shortages, for instance, forced Germany to restart previously closed coal plants last fall to meet energy demand during the winter, marking a significant setback in achieving climate goals.
In addition, the long-delayed infrastructure development and the uncertain industrial policy in Europe have also hindered the success of investment promotion. However, FDI trends show that the wave of megaprojects – those with at least $1 billion in capital investment – has not subsided. In the first half of 2024, 85 new such projects were recorded worldwide, most of them outside Europe.
Translated and edited by Alex Kada
