EconomyJun 6, 2024
Europe’s Economic Productivity is Falling Behind The US, Jeopardizing Its Stake In The Future of AI
Transatlantic Divide
Noah Weidner
Discover
They work less and are happier than Americans — but not without trade-offs. Europeans earn only 44% of what Americans make — and their productivity, measuring hours worked against output, lagged by 24.6% compared to Americans in 2023.
Losing ground: Despite a population of over 345M, the Eurozone’s economy now accounts for only 65% of the US economy’s size when measured in dollars, down from 90% in 2013. While some European nations are more efficient, American productivity has vastly outstripped most of Europe since the turn of the century — rousing concern from business leaders, politicians, and central bankers in the world’s largest economic bloc.
America achieved a new productivity record in the first quarter due to a surge in new businesses, higher wages, and embracing new technology like AI. However, replicating these successes should be easy for Europe’s wealthy and well-educated population, but European Central Bank President Christine Lagarde notes that innovators and entrepreneurs tend to “run away from Europe.”
Tale of two economic goliaths: While the US invests trillions in infrastructure and private subsidies to prop up domestic production in green energy, semiconductors, and industrial goods, Europe lags behind. According to GlassView’s Co-Founder Yann Coantanlem, European tech R&D spending is only one-fifth of the US expenditure — and AI investments are 50x higher in the US. Without swift action, Europe risks falling further behind.
