Europe’s quest for global economic relevance: on the productivity paradox and the Draghi report

Europe’s existential economic challenge has been laid bare in Mario Draghi’s September 2024 competitiveness report. The continent faces a profound productivity crisis, one that threatens to relegate Europe to the margins of global economic influence. Yet, while the report offers a comprehensive diagnosis and prescribes remedies for Europe’s anaemic productivity growth, it overlooks a crucial dimension: the power of place. This paper examines how this territorial oversight undermines the report’s effectiveness. We argue that Europe’s path to renewed economic vigour lies not in homogeneous continental strategies, but in harnessing its potential and diverse regional capabilities. The continent’s economic renaissance depends on recognising that its apparent weakness – its territorial diversity – may indeed be a great strength. From our perspective, unlocking Europe’s latent potential requires policies tailored to regional specificities. Only by embracing rather than suppressing its endogenous potential, wher-ever it can be found, can Europe hope to reverse its productivity decline. The challenge ahead is not merely technical but fundamentally territorial: Europe must craft a future where productivity growth emerges from its territorial distinctiveness, not in spite of it.