But where are the European Googles?

There’s this article going around the net in many versions. In all of them there is a question about Googles and Europe. An example here , here, or here

A big question for the past 20 years has been: where are the European Googles? Why are all the funky, creative, dynamic, innovative companies like Apple, Amazon, Google and Facebook coming out of the US and not out of Europe? The answer you will often hear is: Europe has lots of culture, good food and fashion, but it is not ‘entrepreneurial enough’, not enough ‘garage tinkerers’ and that this is mainly because we have too much state and not enough market. This view, fed to us on a daily basis by the media and conservative politicians, ignores the fact that all the revolutionary technologies that make the iPhone so smart were actually funded by government. Not through narrow ‘market fixing’ policies, but through ‘mission oriented’ policies that catalysed the creation of entirely new technologies and sectors

The thing is, in those articles, the question of where are the European Googles is asked, but not answered. It is asserted that lots of innovation in the US come from the government, but the point is left there. What are we to infer? That there are no European Googles because there is too little State entrepreneurialism in Europe compared to the US? Surely this seems the most charitable interpretation. But it doesn’t seem obviously right. The US government spends 0.34 % of US GDP in R&D, while Europe spends 0.25%. Unless there is a magic point near 0.34%, it does’t seem evident that an increase to US levels of Science funding would be helpful, specially when you take into account the fact that 95% of Europe’s governmental funded R&D is dedicated to civil purposes, while that number is just 48% for the US. And according to the mainstream view on this (see here and here), military spending in R&D does not lead to more innovation, or productivity, and this is more evident for development spending. And within US Defense expending, 82% of it is systems development! Maybe researching electromagnetism to build railguns leads to more innovation and goodies, but, argue the researchers on this, not actually building and designing the railguns, the Zumwaltzs or the F35 themselves: those are highly specific (and largely secret) designs that won’t find their way into commercial spinoffs easily.

Also, Europe seems to have a friendlier culture towards the State than the US. It’d be of interest to construct a ‘love of the State’ index and see if that affects innovation on the margin. According to Mazzucato, a positive vision of the State leads to smart people joining its ranks, and making it more effective. So despite that, there is no comparable European innovation generation.

If it is not just spending, perhaps it’s the composition of spending, and how the system is configured. But here in Europe there are also government labs in a wide array of fields, public universities, innovation agencies, European-wide grants for scientists, and so on. Explaining this is homework for her to do, and she has not done it, not even in her book.

One could also posit other explanations: Regulations, taxes, the linguistic borders present in EU resulting in a smaller market, less attraction of skilled human capital (Many US corporations and startups have first or second generation immigrants involved), US capture of the most succesful EU entrepreneurs and scientists, etc.

This is an interesting topic of research, because in principle there is nothing obvious the US does that the EU isn’t doing. Here there is some comment on that.

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