Three Strategies for Europe to Improve the Cultivation of Knowledge and Power

On July 21, 2020, the EU-27 reached a deal that covers the €750 billion Coronavirus recovery fund and the EU budget for 2021–2027. The €1.1 trillion EU budget will help define Europe’s relevance as a global power. But the slashing of spending on research and innovation gives reason to worry.

As the US and China Compete for Power, Europe is Losing Ground

A new Cold War is looming. This time the strife is between the United States and China as they are competing to become the world’s top power of the 21st century. One of the domains where this manifests itself is technological innovation. In key tech domains such as artificial intelligence, quantum computing, and robotics, Europe is being outpaced by the US and China. Fundamental sectors such as technology, manufacturing, and finance are increasingly dominated by American and Chinese firms. As Europe is losing ground, our norms, values, and prosperity are put at risk.

A study by the McKinsey Global Institute (MGI) showed that European private investment in research and development (R&D) amounts to just 19% of the global total, versus 24% for China and 28% for the United States. Despite the fact that Europe has the largest public R&D spend, Europe produces only half as many patents per capita as the United States in digital, quantum computing, and big data.

Europe needs to strengthen its position as a global power and can do so through better strategies to cultivate knowledge and innovation.

Why Knowledge Leads to Power

The ultimate source of power is knowledge, as knowledge allows one to excel in more direct forces that lead to power, specifically economic force, military force, and political force. With these forces, one can exercise influence. With influence, one can protect and advance a society’s norms, values, prosperity, and ways of living.

What follows is that the creation and cultivation of knowledge should be a strategic focus of any government. Key is that the strategies for the cultivation of knowledge are directed at two levels: the group and the individual.

Strategies for Cultivation of Knowledge at the Group Level

Knowledge is created through collaboration and interaction. This relates to the group level. To improve the cultivation of knowledge the EU needs to create stronger groups where collaboration and interaction take place. This brings us to the first strategy: the creation of EU Innovation Centers of Excellence (CoEs). For every strategic knowledge domain, the idea is to assign two to three European cities to build CoEs. It is important to have more than one CoE per domain, as this allows for healthy competition and reduces the risk of tunnel vision. It is equally important to limit the number of CoEs to about three in order to enable scale benefits. Pooling and concentrating funds allow the procurement of the most advanced (and often expensive) equipment. The selection of CoEs should be based on today’s relative strength in the knowledge domain and its future potential. There is an opportunity to tie two already strong cities (the ‘Stars’) to a third with great future potential (the ‘Rising Star’). The increased knowledge transfer from Stars to Rising Stars will boost economic opportunities in those up-and-coming cities, build even stronger ties between member states, and contribute to the reduction of (knowledge) inequality.

The development of knowledge is costly, but the long-term payoffs are rewarding. As Ray Dalio elegantly illustrates in his study “The Changing World Order: Why Nations Succeed Or Fail”, periods of power dominance are always preceded by periods of strong innovation. European private investment in R&D as a percentage of the global total is 5% lower than China’s and 9% below that of the US. This brings us to the second strategy: the EU should set up large-scale public-private investment funds and expand the use of tax credits for those who invest, to encourage private investment in innovation. Additional opportunities for fiscal encouragement arise once the European Commission gets a broader mandate to collect taxes from member states.

Strategies for Cultivation of Knowledge at the Individual Level

Knowledge is held in the minds and practices of people. That is why it is important to not only cultivate knowledge at the group level but also at the individual level. A great place to start is Europe’s next-generation workforce: young adults.

The preparation of young adults for their future career choice is disturbingly bad. Ask yourself: How was your preparation? Was your experience unique? High schools are focussed on providing their students the best education possible in fields such as science, history, and math, but lack the tools and know-how to help them think about continued education and career choices. Children born in low-income families are especially disadvantaged, as their parents typically lack the network to expose their kids to different types of high-paying professions.

Career mentors can play a pivotal role. Data on European labor markets should inform both the mentor and the mentee. Once guided in their choice, the young adult should then be matched to an experienced professional in the chosen field to accelerate the learning and development. This leads us to the third strategy: the creation of career-mentorship programs that connect young adults to experienced professionals in the relevant field. The program should be geared towards building a long-term (5–7 year) mentor-protégé relationship. Special attention should be given to transferring knowledge to those from disadvantaged communities.

These mentorship programs should be structured as community service, giving experienced professionals the opportunity to give back to society. The program’s goal should be to set Europe’s young adults up for future success and enable them to contribute to a stronger European Union.

An Opportunity to Unleash Europe’s Potential

The EU’s current effort and new budget lack the ambition required to compete as a global power. A positive side effect from the events that evolve on the world stage, is that Europe is losing its naivete and understands that a bolder approach is required.

It is expected that Ursula von der Leyen, the president of the European Commission, will go back to the negotiation table with the European Parliament to get more funding to execute the EU’s innovation strategy. Let us all hope she succeeds and pushes for the development of EU Innovation CoEs, bigger public-private innovation investment funds, and career-mentorship programs for Europe’s young adults.

Knowledge is power. Europe needs more of both.

You can find this and other stories on my website www.thalein.com.

Sources

• European Commission. EU long-term budget 2021–2027: Commission Proposal May 2020. Link to page.
• Nicholas Wallace on ScienceMag: EU leaders slash science spending in €1.8 trillion deal. Link to article, published July 21, 2020.
• McKinsey Global Institute (2019). Innovation in Europe: Changing the game to regain a competitive edge. Link to report.
• Ray Dalio (2020). The Changing World Order. Link to online series.
• World Economic Forum. Europe is no longer an innovation leader. Here’s how it can get ahead. Link to article, published March 14, 2019.