Despite a health disaster and one of the worst economic downturns in modern history, the number of startups increased in the United States last year. According to a report by the Peterson Institute for International Economics, from 3.5 million in 2019, startups grew to 4.4 million in 2020, an increase of 24%. The number of new businesses has also increased in Chile, Turkey and the United Kingdom.
Other economies, especially those of the EU, were not as dynamic.
In Germany, they fell by 11%.
In a recent report titled ‘If the EU Fails, Here’s How’, Oxford-based Euro Intelligence think-tank chief Wolfgang Munchau insisted that while no statistic ever tells the full story, this one – this comes from afar.
Mr Munchau argued that the EU is still living in the past.
He explained: “When we discuss European policy, we are talking about EU governance, fiscal and monetary policy, immigration and EU enlargement.
“What Europe’s multiple crises have in common is that they are largely due to a lack of innovation and the resulting lack of productivity growth.
“Stagnant societies are closed to change.
“They oppose the policies of integration and open immigration.”
My Munchau noted that the lack of innovation and over-reliance on old technologies are the reasons why German foreign policy is trapped in “neo-mercantilism”.
He wrote: “If your current account surplus is 8% of GDP, what else can you do?
“You have insufficient degrees of freedom to pursue other political goals.”
He concluded in his report: “For now, the EU is still living in an extended 20th century, led by 20th century politicians like Angela Merkel and Ursula von der Leyen.
“Politicians alone cannot produce creative destruction, but they can create the conditions for it to flourish.
“They did not do it.
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“The EU is an entrepreneurial wasteland. Ireland and the Netherlands are business friendly, in the sense that they have loopholes for large US companies. But unlike the United States itself, none are particularly friendly towards young entrepreneurs.
“If European integration fails, here’s why and how. It won’t be because of Viktor Orbán, or austerity, or the political mistakes made by central bankers.
“It will be because Europe continues to live in the past.”
European startups are raising more money at an unprecedented rate, according to a POLITICO report.
However, Brussels’ relentless focus on taming American Big Tech, coupled with the inexperience of European entrepreneurs in Brussels, could leave European startups adrift.
Experts say the focus on curbing the excesses of the biggest, mostly American, companies diminishes the good that policymakers and regulators can do for Europe’s own industry.
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Mariya Gabriel, innovation commissioner and staunch supporter of startups, called for an end to Europe’s “fixation” with Silicon Valley.
She told POLITICO: “The quest to create a European Google is lost.
“We must not waste time because we will not create a European Google or Facebook.
“Let’s be very realistic about this.”