McKinsey: What are the biggest technology challenges Europe needs to address?
Eric Hazan: We first commissioned this report not to understand where Europe is lagging technologically, but to identify the drivers of competitiveness. We quickly noticed a difference in valuation between US and European companies, and the main reason for that gap is technology. And it’s not just one technology—it’s actually ten technologies.
Of those ten technologies, we are approximately on par with the US on only two of them. So, on the other eight technologies, including quantum computing, AI, distributed infrastructure and cloud, we are lagging behind the US. For example, US companies are investing six times more than European ones on AI, so we have many things to do.
If we are to bridge this gap, we should pick our battles. The way to do that is to examine the ecosystem and the infrastructure of European economies and industries and focus on where we can really make a difference. That could be materials, because we have a great manufacturing base. Or it could be pharmaceuticals, where we have great industry, but a completely fragmented regulatory environment. Or it could be autonomous driving, if we were not lagging in experimentation.
We are also excellent on the environment and decarbonization, but we have let other regions take the lead on clean tech. So we need to choose the areas where we can still take the lead, and there are many. We also have the right human capital, which is on par with the US. What is lacking is not the fact that we are too fragmented—it’s that we have not put a framework in place that permits us to cooperate and scale in terms of investment and industrial policy going forward.