Europe’s technological stagnation
America innovates and Europe regulates
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‘‘Without change there is no innovation, creativity, or incentive for improvement. Those who initiate change will have a better opportunity to manage the change that is inevitable.’’
— William Pollard
Technology is the cornerstone of the modern world, so if you want to see how well a country is doing, you can look at all the technology companies it produces. If you look at the top worldwide companies by market capitalization, you will probably see something like in Figure 1: heavily dominated by players from the United States. No matter the criteria you use to rank the companies, be it market capitalization or revenue or earnings, there will always be a predominance of US companies followed by those from Asia.
This is not a coincidence. After all, the United States is an economic powerhouse with its companies projecting American power throughout the world. The US market is so big, in fact, that the market capitalization of Microsoft is roughly the same size as the UK market.
The same UK that spearheaded the Industrial Revolution 150 years ago that propelled Europe to the top and enriched its countries. Even today Europe as a whole is considered an advanced economy, so where are its companies?
What happened to European competitiveness?
The largest European tech company by market capitalization is Novo Nordisk, the maker of the weight loss medication, Wegovy. They are followed by ASML, the semiconductor unicorn. The rest of the top 5 European companies, not just tech companies, by market capitalization are as follows:
Novo Nordisk - Market cap of $558.55 B - Pharmaceuticals - Denmark
LVMH - Market cap of $416.73 B - Luxury goods - France
ASML - Market cap of $357.31 B - Semiconductors - Netherlands
Nestle - Market cap of $264.20 B - Food - Switzerland
Hermes - Market cap of $258.17 B- Luxury goods - France
Their combined market capitalization is lower than that of Google, Amazon, Microsoft, Apple, or Nvidia. Out of the top 5 only two are in the technology sector. The rest are in luxury goods and food. While these are nice, you would expect more tech companies from first-world economies. In fact, it has become a kind of a running joke that Europeans are just not good at innovating (Figure 2) and while America innovates, Europe regulates.
