Friday , January 28 2022
Home / Managerial Econ / Why is Europe lagging the US and China?

Why is Europe lagging the US and China?

Summary:
Since 2000, the EU's share of world income has fallen has fallen from 33% to 25%; and the its companies share of world value has fallen from 31% to 16%.The Economist mistakenly attributes the difference to several factors:Europe's firms seem to have been out-managed Its biggest firms are in the wrong industriesEntrepreneurial deficiency All of these seem like symptoms of the EU's decline, not causes. My best guesses about what caused EU's decline are:EU regulations stifle innovation and growth The EU cannot tolerate the inequality that comes from incentive pay required for profitable innovation.This shows up in the graph below, showing that "...in the past decade venture capitalists have backed 661 companies that went on to be worth over bn. Only 78 of these “unicorns” are in Europe,

Topics:
(Luke Froeb) considers the following as important: ,

This could be interesting, too:

(Luke Froeb) writes Why does government always expand, and how should we respond?

(Luke Froeb) writes Does our tolerance for inequality make us rich?

(Luke Froeb) writes Price vs. Value

(Luke Froeb) writes Danish Criminals respond to incentives

Why is Europe lagging the US and China?
Since 2000, the EU's share of world income has fallen has fallen from 33% to 25%; and the its companies share of world value has fallen from 31% to 16%.

The Economist mistakenly attributes the difference to several factors:

  • Europe's firms seem to have been out-managed 
  • Its biggest firms are in the wrong industries
  • Entrepreneurial deficiency

All of these seem like symptoms of the EU's decline, not causes. My best guesses about what caused EU's decline are:

This shows up in the graph below, showing that "...in the past decade venture capitalists have backed 661 companies that went on to be worth over $1bn. Only 78 of these “unicorns” are in Europe, worth 8% of the 661 firms’ over-$2.5trn total."
Why is Europe lagging the US and China?

Leave a Reply

Your email address will not be published. Required fields are marked *