Is Europe is falling behind on transversal technologies?

| Video

McKinsey: How does Europe’s performance on transversal technologies compare to other regions?

Dr. Jan Mischke: In our research, we looked at ten technologies we identified as critical for future competitiveness and growth. We then compared them across nine indicators along the entire innovation funnel, from innovation to production to adoption. And as we did that, it turned out Europe is unfortunately leading in only two of the ten, and falling behind in eight.

On average across the indicators, Europe is scoring 30 percent below the respective leading region, which in many cases is the United States, and in some cases China. And if we look at the underlying technologies, the gap is particularly stark in the next wave of information and communication technology. For instance, in AI, Europe devotes only a third of the external funding into this technology compared to the United States or China. And large European firms are adopting AI technology at only half the rate of large Chinese firms.

In quantum computing, none of the ten leading firms in the world are European, and announced public funding in Europe is only half that in China. If you look at traditional European strongholds, like new materials, the largest three European materials companies generate twice the revenue of their US counterparts. But there’s only one European nanomaterials firm among the global top ten.

This is starting to affect corporate competitiveness. For when we look at large global firms, European companies have on average grown 40 percent more slowly than their US counterparts, a trend expected to continue. They’ve also been investing 40 percent less in R&D as a share of revenue.

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