The Forgotten Engine of Growth

At times, Europe feels like a museum of its own success. The streets are lined with monuments to past prosperity; the meeting rooms filled with committees trying to preserve it. And yet, there is one persistent problem that no taskforce, green deal or recovery fund seems able to solve: structural economic growth. Germany, France and Italy, three of Europe’s largest economies, have for years struggled with stagnating productivity and sluggish technological progress.

The decision to award this year’s Nobel Prize in Economics to Joel Mokyr is, in that sense, a subtle rebuke to Europe. Mokyr, the Dutch-American economist from Northwestern University, received the prize for his work on the foundations of sustainable economic growth, or, more precisely, on why some societies manage to ignite an industrial revolution while others remain trapped in promise. His research speaks directly to what Europe has lacked, and arguably has been lacking for decades: the connection between knowledge, technology and economic dynamism.

His message is as elegant as it is sobering: growth does not occur spontaneously, but emerges from a cultural ecosystem of knowledge, skill and institutions. Mokyr calls it “the Republic of Letters”, a society that rewards curiosity, links craftsmanship with science, and treats mistakes as progress. The Enlightenment of the eighteenth century created precisely that intellectual and economic climate, and with it, the Industrial Revolution.

Today’s Europe, by contrast, seems to inhabit a Republic of Permits: endless procedures, national reflexes and a kind of bureaucratic lethargy that slowly suffocates innovation. The Financial Times captured this aptly in a recent analysis, “Nobel Prize for Economics awarded to Joel Mokyr, Philippe Aghion and Peter Howitt ” The paper observed that Europe has grown “too comfortable” regulating rather than creating, protecting rather than building. While the United States continues to expand its tech ecosystem and China presses ahead with industrial innovation, Europe remains mired in administrative caution.

The Draghi Report, a newly presented blueprint for European growth, ties neatly into this diagnosis. Draghi’s conclusions are unambiguous: Europe lacks scale, speed and courage. His prescription: greater joint investment in skills, technology and infrastructure, and fewer barriers between countries and markets. Or, in Mokyr’s words: rebuild the ecosystem where knowledge can flourish, technological competence can grow, and institutions enable rather than constrain.

It is hard not to smile at the thought that it takes an eighty-year-old economist and a former ECB president to remind us of what should be common sense: that growth does not come from subsidies or slogans, but from curious people who make things, and from governments that do not make that impossible. Perhaps that is the lesson of this moment: that Europe must once again dare to invest in the long breath of progress. Not the next hype, but the next foundation. Not the protection of what was, but the building of what is yet to come.

You are most welcome to exchange thoughts on how your organisation can identify, select, develop and position the people who can play a pivotal role in strengthening the technological development and innovative momentum of your team.

Warm regards,

Aegeus