Divided We Fall Behind: Why a fragmented EU cannot compete in complex technologies

Pierre-Alexandre Balland (), Valentina Di Girolamo (), Florence Benoit, Julien Ravet () and Alexandr Hobza ()
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Pierre-Alexandre Balland: European Commission
Valentina Di Girolamo: European Commission
Julien Ravet: European Commission
Alexandr Hobza: European Commission

EU research and innovation paper series from Directorate General for Research and Innovation (DG RTD) of the European Commission

Abstract: We might be experiencing the most rapid and transformative technological revolution in human history. In this era of global competition, the strength of research and innovation systems (RISs) is the cornerstone of economic success and global influence. Despite its considerable collective resources and talent, Europe faces a unique fragmentation challenge. The Draghi report (2024) highlighted significant internal barriers within the EU, which was reiterated in a recent Financial Times column, noting that they effectively impose a 45% trade tariff on manufacturing goods and 110% on services. In this regard, the Letta report (2024) proposed a "fifth freedom" centred on research, innovation, and education. Meanwhile the European Commission’s new Competitiveness Compass calls for the removal of cross-border barriers to enhance competitiveness and strengthen the Single Market. It is clear that this lack of integration hinders the efficient flow of knowledge and innovation, creating major inefficiencies and missed opportunities for collaboration. It weakens Europe’s ability to compete with innovation leaders like the United States (US), and to address global challenges such as climate change and health crises, where cross-border cooperation is essential. Although European leaders have highlighted fragmentation as a key obstacle, the literature has largely failed to provide robust theoretical frameworks or empirical evidence to explain, measure and monitor R&I fragmentation.

Keywords: Research and Innovation funding; impact assessment; econometric methods; spillover effects; mediation analysis; policy evaluation (search for similar items in EconPapers)
JEL-codes: C18 O32 O38 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2025-04
New Economics Papers: this item is included in nep-eec, nep-ino and nep-knm
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eug:wpaper:ki-01-25-083-en-n

DOI: 10.2777/8548441

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