(Commonwealth Union) – The advancements in technology have been moving in rapid pace across the world. However, given Europe’s prominence on the global stage, technology is a sector that European companies have not embraced as their counterparts in parts of the world such as the USA or China, according to a study conducted by McKinsey Global Institute.
The Russia – Ukraine war, as well as the global economic crisis with rising inflation recently brought mass demonstrations across several European cities from France to Germany with protestors demanding to leave NATO and stating that the policies directed to towards the war by the authorities are severely impacting the livelihoods of many Europeans.
The McKinsey Global Institute research also indicated that in spite of Europe’s highly productive and profitable companies, the combination of the companies in the continent as a whole are low performing when compared to other regions. European firms were growing at a slower pace with lesser profits and less funds for Research & Development in comparison to American corporations. This has been heavily attributed to Europe’s slow pace in technological growth and the slow pace of information and communications technology (ICT) together with the lagging in disruptive innovations.
Many global corporations and government organizations realizing the significance of Information Technology, biotechnology and nanotechnology, have heavily invested in R&D seeking an innovative advantage and a chance to be self-sufficient.
The study demonstrated that ICT and tech have produced transversal technologies, giving them the less of an edge over competitors, the study focuses on 10 transversal technologies but saw Europe having an edge over its competitors in 2 out of 10. This indicated Europe’s failure to embrace more technology could see its dominance decline in traditional industries where an example was given of European domination in the automotive sectors but may see slow pace in autonomous driving.
Findings from the study further demonstrated that Europe’s corporate productivity is less impressive in total. To explore the differences McKinsey’s Corporate Performance and Analytics Tool (CPAT) were implemented to evaluate a section of over two thousand American and European corporations which had an income exceeding one billion dollars.
During the years 2014 and 2019 Europe’s major firms had 20% lower profit and saw an elevation in revenue 40% slower, investing less than 8% and spending lower than 40% on R&D in comparison to other firms.
A bulk of the variations were noticed for technology-creating industries such as ICT and pharmaceuticals, which make up 90% of the Return on capital, or return on invested gap, 80% for the investment gap, 60% for the growth gap, as well as 75% for the R&D gap.
The study further suggested that to address Europe’s severe lagging needs to addressed before Europe is set back further.
