Episode 106: Europe’s Competitiveness Compass – Lost or Just Misdirected? with Pieter Garicano

Our Senior Economist, Óscar Guinea, talks with Pieter Garicano, author of Silicon Continent, about Europe’s competitiveness and the recently released Competitiveness Compass proposal by the European Commission.

Garicano highlights three key issues:

1. Lack of funding and member state buy-in for initiatives like the 28th legal regime for startups,
2. Denial of trade-offs, particularly regarding decarbonisation and energy prices,
3. Over-reliance on government strategies rather than private sector enterprise.

He also discusses the EU’s energy investment issues, focusing on intermittent renewables and the resulting price volatility.

Furthermore, he addresses the challenges of data center development in Europe due to power availability and the complexities of AI development, citing restrictive regulations like the AI Act and GDPR as hindering innovation.

Finally, he contrasts Europe’s industrial policy with China’s successful EV strategy, emphasising the need to allow failure, focus on clear objectives, and encourage competition.

He concludes that Europe’s regulatory environment and labour laws stifle innovation and scaling, risking a significant growth gap with the US.

Pieter Garicano is a Philosophy, Politics, and Economics graduate from the University of Oxford and co-author, along with Luis Garicano, of Silicon Continent—a weekly blog on Substack that analyses why the EU is falling behind Asia and the US in AI, innovation, and growth. He is also the Managing Editor at Works in Progress, a magazine of new and underrated ideas to improve the world (Stripe), and an Emergent Ventures Grantee at the Mercatus Center, George Mason University.