Playing Europe's hand: competitiveness, place and the high stakes of territorial myopia

Andrés Rodríguez-Pose and Lewis Dijkstra

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The European Union (EU) confronts a widening productivity gap with the United States (US) and China. Informed by the Draghi Report (2024), the emerging response is a bold but narrow one, dominated by massive investment in the technologies and sectors where Europe most conspicuously lags. This article argues that pursuing parity in areas where Europe shows considerable weakness is the wrong race. The surer path runs through Europe's existing strengths —its pharmaceutical hubs, aerospace clusters, machine-tool districts and chemical bases, among others— used not as a pretext for standing still but as a springboard for reinvention. This implies mobilising the potential of every European territory by climbing the complexity ladder, absorbing new technologies into living industrial ecosystems, and diversifying into related activities that grow organically out of existing capabilities. A differentiated, place-sensitive strategy built on path dependence, brownfield digitalisation and the deliberate strengthening of European chokepoints in strategic sectors offers a more durable route to competitiveness than chasing after American or Chinese shadows. Europe is not short of talent or invention: the problem lies in institutional barriers to integration, the weakness of its knowledge-to-innovation pipeline, and its chronic inability to help promising start-ups graduate into globally significant firms. Fix those, and the case for territorial myopia collapses. For if Europe is bound to struggle at imitation, it might as well succeed at being itself and, on its own terms, lead.

Keywords: competitiveness; economic chokepoints; economic geography; Europe; industrial policy; place-sensitive strategies; regional inequality; related diversification; scale-up (search for similar items in EconPapers)
JEL-codes: F52 O33 R11 R58 (search for similar items in EconPapers)
Date: 2026-09-07
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Published in Regional Science Policy and Practice, 7, September, 2026, 18(11). ISSN: 1757-7802

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