The reason why the US economy grows faster and is more productive than Europe’s is down to one thing: technology, UK economist Daniel Susskind told a conference hosted by Dublin-based EU agency Eurofound on Thursday.
He noted that the GDP (gross domestic product) gap between the two regions has widened from 17 per cent in 2002 to 30 per cent in 2023, equating to $8,500 (€7,370) on a per capita basis.
The reason “the US has soared relative to the EU” is because it has an extraordinary productive tech sector driven by ideas, innovation and creativity which the EU does not have, Prof Susskind said.
To close this innovation gap, Europe needs to overhaul its IP (intellectual property) regimes while promoting greater private sector R&D (research and development), to make the continent less risk averse.
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But it also needed to pursue its own growth path that was consistent with its own values, he said.
Dr Susskind’s recent book, Growth, A Reckoning, takes aim at the so-called degrowth movement, those who claim endless economic growth is incompatible with climate action.
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Economic growth and climate action are no longer mutually exclusive, he said.
In 2010, it was calculated that it would cost 2 per cent of GDP to reduce carbon emissions by 80 per cent. But more recent calculations suggest the cost of eliminating emissions had fallen to just 0.5 per cent of GDP.
A couple of decades of climate interventions in the form of taxes, subsidies and regulations had created strong incentives for people to be more sustainable and for companies to develop clean rather than dirty technologies, he said.
“The trade-off has collapsed,” Prof Susskind said, highlighting the precipitous fall in the cost of solar energy.
Eurofound (the European Foundation for the Improvement of Living and Working Conditions) held its eighth foundation forum at the Royal Hospital Kilmainham on Thursday.
Also speaking at the event was Roxana Mînzatu, the European Commission’s executive vice-president for social rights and skills and quality jobs, who argued that Europe’s social model, contrary to some claims, gave Europe a “competitive advantage”.
She said improving Europe’s competitiveness was not about cutting wages, but enhancing skills.
Earlier, Taoiseach Micheál Martin said the Government had begun consultations with social partners, stakeholders and with other EU member states in preparation for taking on the role of EU presidency in the second half of 2026.
“This is a challenging time in global affairs, with continuing conflicts across the world, trade disruptions and pressures on the multilateral rules-based system,” he said.
“The European Union remains the leading global exemplar of sophisticated multilateralism and collective decision-making at its finest,” Mr Martin said.
