Project

Investment Report 2024/25 - Chapter 5: Innovation in a shifting global landscape

European Investment Bank

DOI: 10.26303/ztvh-y684

What is it about?

Chapter 5 looks at innovation across the world and the implications for Europe’s economic competitiveness. It highlights the need for EU firms to increase their investment in and use of cutting-edge technologies, such as artificial intelligence and big data analysis. Companies also need to strengthen supply chains and reduce their dependence on imported raw materials and strategic inputs. Europe also remains overly reliant on foreign sources of technology. While the European Union leads in clean technology, it lags behind the United States and China in digital innovation. It needs to strengthen domestic high-tech industries, in part by addressing difficulties companies have in financing innovation and barriers they encounter when trying to expand to other EU countries.

Why is it important?

Innovation is a key driver of economic growth, resilience and competitiveness, making this chapter essential for understanding Europe’s position in a rapidly shifting global economy. As geopolitical tensions reshape trade dynamics and countries adopt inward-looking industrial policies, Europe must adapt to maintain its economic security. The European Union’s dependence on foreign companies’ digital technologies and foreign sources of raw materials poses risks to long-term economic growth and innovation. These challenges can be addressed through strategic investments, regulatory reforms and diversified supply chains, all of which are crucial to maintain Europe’s leadership in clean technology and expand its presence in high-tech industries. Furthermore, strengthening the internal market and creating a more innovation-friendly environment will help European firms compete globally.

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