9/21/2024–|Last update: 9/21/202403:42 PM (Makkah Time)
An in-depth analysis published by the Financial Times has highlighted the growing economic gap between Europe and the United States, noting that despite its great efforts to stimulate economic growth, Europe has not been able to catch up with American growth, which was not the result of detailed planning as much as it was the result of a combination of unique cultural and economic factors.
The analysis suggests that this gap has been widening for two decades, even though Europe was already poorer than the United States.
1- American versus European planning
Despite the United States not having a clear economic plan since the beginning of the millennium, it has managed to outperform Europe, according to the Financial Times.
In contrast, Europe has been working since 2000 according to the Lisbon Agenda, which aims to build “the most dynamic knowledge-based economy in the world.” However, it has not been able to achieve these goals.
The report points out that Europe, with all its reports and plans such as Mario Draghi’s latest report, has not been able to keep up with the increasing US economic growth.
2- Protectionism and social welfare
The analysis addressed the protectionist economic policies recently adopted by US President Joe Biden, an approach that has been criticized by European leaders such as Mario Draghi.
According to the newspaper, Draghi believes that American protectionist policies may contribute to enhancing economic growth at the expense of global cooperation, but the bigger problem is that Europe, even if it wanted to adopt the same approach, would face major structural and cultural challenges that would prevent its successful implementation.
The newspaper points out that Europe is not a unified nation-state, and this is one of the main reasons why it is unable to adopt economic policies similar to those in the United States or China. The European Union includes 27 countries that differ linguistically and culturally, which makes it difficult for them to implement integrated economic policies.
For example, the article points out that the US labor market is largely unified thanks to a common language, while Europe lacks this essential element.
In addition, Europe has higher expectations of social welfare than the United States, with citizens relying on the state to provide high levels of social support. This makes it difficult for European leaders to make austerity decisions or cut government spending without risking social unrest.
Examples of this include the strong opposition to both Margaret Thatcher and Emmanuel Macron’s economic policies.
3-Demographic challenges and natural resources
The analysis also addresses the demographic gap between Europe and the United States. In the 1990s, the populations of the United States and Europe were relatively similar in age, but the gap has widened significantly over the past two decades, with Europe experiencing a more aging population than the United States.
In addition, the United States has enjoyed a geographic advantage through shale oil and gas discoveries, which have greatly boosted its economy, while Europe has not enjoyed the same geological luck.
4- Technological challenges
One of the challenges facing Europe, according to the newspaper, is its inability to keep up with the technological revolution with the same efficiency shown by the United States.
The report shows that Startups in the US have an easier time expanding and growing thanks to a flexible economic environment and a common language, something that is difficult to achieve in Europe, which lacks a unified labor market and a common language. Contribute to supporting entrepreneurs and investors.
Can Europe Catch Up With The US?
Ultimately, the analysis concludes that structural and cultural barriers in Europe make it difficult for it to catch up with the United States economically.
He adds that Europe may face new challenges in the future, making US-style economic growth unlikely.
However, the newspaper points out that European leaders need to think about new economic strategies that suit European specificities, instead of trying to imitate the American model, which may not fit the reality of the old continent.
Despite all the challenges facing Europe, the analysis suggests that Mario Draghi is trying through his latest report to develop strategies to enhance the continent’s competitiveness. However, these strategies may not be enough due to the cultural and political challenges facing Europe.
