Globally, there is an intriguing competition between major economies: the United States, Europe, and China. The U.S. stands out for its ability to innovate, Europe focuses on regulation, while China is steadily gaining ground with an increasingly competitive approach. This dynamic is well-documented in the Draghi Report, which highlights how European bureaucracy hampers innovation, while the U.S. economy thrives on resilience and productivity.
American exceptionalism: a lesson in productivity
In the U.S., American exceptionalism is rooted in competition and individual incentives. This model has enabled the economy to successfully navigate interest rate hikes, moving from 0% to 5.5% in less than two years, without stalling growth. In November alone, 227,000 new jobs were created, reinforcing investor confidence and boosting stock markets.
The American tech giants, known as the “Magnificent 7,” exemplify this success. With market capitalizations exceeding $800 billion, they dominate the global market. Meanwhile, in Europe, no company founded in the past 50 years has surpassed €100 billion in capitalization.
Europe’s lag: regulation vs innovation
In Europe, rigid policies and complex regulations on artificial intelligence and data protection hinder technological advancement. This not only stifles corporate growth but widens the gap with the U.S. and China. European companies remain focused on traditional sectors, falling behind the U.S. in productivity gains, which reached +8.9% in Q3 compared to pre-pandemic levels.
China: from imitation to innovation
Once known for its imitation strategies, China is now emerging as a strong competitor to the U.S. With a sharper focus on innovation, it continues to close the tech gap, leaving Europe further behind in the race.
Future outlook
American exceptionalism remains a benchmark for global investors, thanks to sustained economic growth and solid tech earnings. However, geopolitical tensions and trade barriers may influence markets, making investment diversification an essential strategy.
