Innovation: Where Europe is stronger than China – economy

Germany is a pro-European country. 79 percent of Germans hold according to the Eurobarometer survey membership in the European Union for a good cause. After Ireland, Luxembourg and the Netherlands, this is the fourth highest value within the EU. Nevertheless, one has the impression that the German relationship with Europe is sometimes a bit cerebral. In the domestic political discourse, two narratives dominate why the European integration process is so important to us: the EU as a guarantee for peace in Europe and as a guarantee that Germany can continue to play an important role in the concert of the greats. Unfortunately, now, 64 years after the signing of the Treaty of Rome, both stories have little impact. Fortunately, no reasonable person can now imagine a war between France and Germany. And the idea of ​​a great power Europe, regardless of pragmatic considerations in favor of closer coordination of European foreign policy, rightly meets with skepticism.

Paul Hünermund is Assistant Professor at the Institute for Strategy and Innovation at Copenhagen Business School. Before that he worked at the ZEW in Mannheim and did his doctorate at the KU Leuven in Belgium.

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For many people, Europe has a very practical meaning. The EU enables students to study at the best foreign universities – and in many cases for free. Employees find employment in neighboring European countries that is sometimes only scarcely available in their home country. The harmonization of legal framework conditions and the dismantling of entry barriers make it easier for young entrepreneurs to gain market access abroad. Scientists benefit from the exchange with their international colleagues, for example in joint joint projects funded by the European Commission’s research framework programs. And an integrated European capital market lays the foundation for financing the best ideas and the brightest minds.

Economic research documents: Innovations and the resulting increases in productivity occur geographically in a highly concentrated manner. Science and technology locations such as Munich, Barcelona, ​​Vilnius, Copenhagen or Milan create an economic dynamicthat goes far beyond regional borders and is indispensable for the growth and prosperity of an economy. Because of this concentric effect, however, a high degree of labor mobility is necessary so that well-trained specialists and the most productive employers can come together in the best possible way. This aspect is much more pronounced in the United States, for example, than in Germany. It is common there for employees to relocate their place of residence more often across state borders due to better job offers, which is of course also reflected in the wages that can be achieved.

The resources that Europe has at its disposal should not be underestimated for a modern, knowledge-based economy. Creative ideas are most likely to arise when people with different backgrounds, experiences and perspectives meet. Europe has a multitude of urban centers with very different, historically grown political and educational institutions. The motto of the European Union is “United in diversity”. If Europe succeeds in mobilizing its enormous intellectual and cultural diversity even more strongly in the future, that would be a huge locational advantage, also compared to the USA and China.

View of the University of Milan: Because of Corona, it is currently emptier there than usual. Knowledge is still being produced there.

(Photo: Antonio Calanni / AP)

The European Union is of the utopia of a boundless economic and working area but still a long way off. Language barriers and the slow internationalization of companies and administrations make it difficult for employees to accept suitable job offers abroad. There is a lack of a uniform system for financing university places, which leads to inefficient quota regulations, as domestic taxpayers often show little interest in paying for international students. When today’s generation of expats ever retires, they will have to laboriously collect their pension entitlements in different countries with different social and tax systems. Even for young companies, expansion into other European countries continues to be associated with enormous costs, which reduces growth potential and the scalability of innovative business models. The economic damage caused by a lack of cooperation across national borders and a lack of concepts for joint health protection was not least highlighted by the corona pandemic.

Europe is the source of future prosperity. However, it does not bubble for free

Apart from the usual Sunday speeches, European policy issues are surprisingly little represented in the domestic German debate. In the current election campaign, too, the question of how we imagine the future of the European Union is once again only a marginal issue. Europe has long since become part of everyday life for many Germans. For these people, European integration is not an abstract political historical process.

The specific course set by politics will largely determine how the mobility of workers, inventors and scientists within the EU, which is so important for growth and innovation, will develop in the coming years. Europe will increasingly become the source of our prosperity. Anyone who does not understand this is not preparing the country adequately for the future.

However, this prosperity does not come for free. An ever closer political union inevitably goes hand in hand with the transfer of sovereign rights. If the European Parliament is to have real room for maneuver, it must also be given appropriate tax sovereignty. A monetary policy that is decided in Frankfurt for the entire euro zone cannot only focus on German interests. And transfer payments between regions with different economic capacities are inevitable in a common currency and economic area. Driving the European integration process forward is no easy undertaking and requires a certain amount of patience and tough negotiations. Small steps are allowed as long as they are done continuously. To appreciate the EU only rhetorically, but not to strengthen it practically, cannot be the motto in European politics.


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