The Demographics of Innovation

Chapter 9Europe

Europe is not a single country, so let us analyze the largest countries in Europe (i.e. the United Kingdom, France, and Germany) as potential contenders for leading nations in innovation. Even though the EU has created a single custom trading bloc and a single currency, each European country has its own language, culture, law, and public institutions. The degree of integration in terms of the goods and labor market is not nearly as complete as that of the single market in the United States. Therefore, in terms of scale, even the largest European countries (such as Germany, France, and the United Kingdom) are far smaller than the United States, China, India, or even Japan. Moreover, Europe, on average, is aging rapidly, with a fertility rate of 1.6, which is much lower than that of the United States. Hence, it is in a weaker position demographically compared with the United States. These factors will almost certainly prevent even the largest European countries, or the bloc as a whole, from challenging the United States and China for the leadership position in innovation.

The Historical Innovation Champion

Europe was once unified under the Roman Empire (if we view the Roman Empire as a predecessor to Europe, although geographically the Roman Empire did not cover exactly the same region as modern Europe). The Roman Empire was geographically and demographically the largest country in the world during this period, even significantly larger than the Han dynasty in ...