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61. The Future of European Digital Competitiveness

Author:
Oscar Guinea and Vanika Sharma
Publication Date:
01-2025
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Former Italian prime minister Mario Draghi’s recent report on Europe’s competitiveness lays bare the negative effects of overregulation in the EU economy and the underperformance of its digital sector. However, Draghi failed to draw connections between these two phenomena. The future of Europe’s competitiveness is inextricably linked to the future of its digital economy. Unfortunately, the economic contribution of Europe’s Information and Communication Technology (ICT) sector remains significantly smaller than that of the US ICT sector to the US economy. There are well-known reasons behind this divergence. Chief among them is the lack of sufficient investment in Europe’s intangible and tangible assets. Regulation, particularly those regulations governing the digital economy, has emerged as a key factor that restricts Europe’s usage of digital technologies and hinders subsequent productivity growth. The EU now has nearly 100 tech-focused laws, comprising thousands of pages, provisions, and restrictions. This must change. The EU should develop a joint plan for digitalisation and competitiveness. This plan should build upon Europe’s comparative advantages: openness, strong institutions, the rule of law, robust intellectual property protections, and high levels of human capital. Above all, the EU must recognise that, while protecting consumer rights, EU policies and regulations must also prioritise the competitiveness of Europe’s ICT sector and promote the widespread adoption of digital technologies across the entire EU economy.
Topic:
Markets, European Union, Digital Economy, and Economic Competition
Political Geography:
Europe

62. Quantum Technology: A Policy Primer for EU Policymakers

Author:
Oscar Guinea, Dyuti Pandya, Oscar du Roy, and Andrea Dugo
Publication Date:
01-2025
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Quantum technology is rapidly emerging as a transformative force with the potential to reshape industries ranging from finance and pharmaceuticals to automotive and aerospace. In 2024 alone, investments in quantum technology reached over USD 56 billion. Its development, however, presents unique geopolitical challenges, stemming from its applications in defence and encryption, as well as its power to unsettle established comparative advantages and market specialisations across countries. Against this backdrop, an open and collaborative approach to quantum innovation is critical for maximising the benefits of this technology. Countries perform more effectively in quantum technology when they support cross-border collaborations and market specialisation. Firms producing quantum hardware or software solutions can sell to a range of industrial users who, in turn, integrate these cutting-edge systems into goods and services. Such synergy reduces the overall risks and costs of R&D, as different partners share both the financial burden and any uncertainties related to the commercial viability of quantum applications. Moreover, collaboration fosters a wider diffusion of quantum technologies. As firms specialising in quantum computing, communication, or sensing deepen their expertise, their insights permeate adjacent sectors through the shared knowledge enabled by joint collaborations. Conversely, restrictive policies that limit interaction between domestic and foreign firms risk stifling innovation. Self-reliance strategies reduce opportunities for knowledge-sharing, limit the pool of potential partners, and ultimately slow the pace of quantum breakthroughs. This operating framework supports the current EU approach to quantum technology, which emphasises openness and encourages a higher number of collaborations between EU and non-EU companies. This approach is grounded in economic realities: the EU ranks second only to the US in terms of the number of companies and collaborations between firms and it thrives on partnering with non-EU countries as the number of collaborations with companies outside the EU far exceeds the number of collaborations within the EU.
Topic:
European Union, Digital Economy, Digital Policy, and Quantum Computing
Political Geography:
Europe

63. Cybersecurity at Risk: How the EU’s Digital Markets Act Could Undermine Security across Mobile Operating Systems

Author:
Matthias Bauer and Dyuti Pandya
Publication Date:
02-2025
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The EU’s fight against cybersecurity threats risks being undermined by the over-enforcement of the Digital Markets Act (DMA). Article 5(4) could force mobile operating system providers to allow unregulated external links, bypassing critical security controls and exposing millions of smartphone users to cyber threats. The DMA focuses on market structure, overlooking how differences in operating system design affect security vulnerabilities. A one-size-fits-all approach ignores platform-specific security needs, leaving European users exposed to cyber threats. This risks undermining the EU’s economic security agenda, including initiatives like the Cybersecurity Strategy, Cyber Resilience Act, and NIS2 Directive, which aim to strengthen digital defences. The unintended consequences of this regulatory approach are already evident in Apple’s recent decisions to withhold certain features – such as advanced AI functionalities and enhanced app security tools – from the EU market due to DMA-related concerns. As a result, EU consumers face reduced access to innovative technologies, diminished user experiences, and weaker security protections compared to users in other regions. Now, Android, a widely used open-source system, may also be compromised by DMA enforcement, potentially limiting its flexibility, security, and the broader ecosystem of app developers and device manufacturers that rely on its open architecture.
Topic:
European Union, Cybersecurity, Digital Economy, and Digital Markets Act (DMA)
Political Geography:
Europe

64. The Participation of Foreign Bidders in EU Public Procurement: Too Much or Too Little?

Author:
Lucian Cernat
Publication Date:
02-2025
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
This policy brief examines EU public procurement data from the Tenders Electronic Daily (TED) to evaluate foreign bidders’ participation and success in winning EU public contracts. Despite data coverage limitations, the available information shows an increase in foreign participation in both full and partial contracts, with most activity concentrated in a few countries. Countries like the United States, Japan, and Canada focus on securing full contracts, while nations such as Norway and Turkey often engage through partial contracts. Notably, since Brexit, UK bidders have faced a significant decline in market share, benefiting other countries. The main conclusion is that foreign participation via cross-border procurement (Mode 1) – the only one available in the TED database – is not very high. Although it increased over time, it remains relatively modest, mainly due to low participation rates, rather than discriminatory practices. Between 2016 and 2019, only about 7 percent of EU procurement authorities received foreign bids. This fact alone largely explains the low level of cross-border procurement taking place via Mode 1: put simply, there is no winning without trying. Another important conclusion is that a comprehensive assessment of the participation of foreign bidders in EU procurement would require two new key metrics in the TED data collection process to capture the more important yet missing modes of international procurement. Having reliable and comprehensive data is not just an academic pursuit but a necessity for shaping effective EU policy in the face of rising global protectionism in public procurement.
Topic:
European Union, Contracts, and Public Procurement
Political Geography:
Europe

65. Competitive Harmonisation: A Collaborative Framework for Intra-EU Reform and Competitiveness

Author:
Matthias Bauer
Publication Date:
02-2025
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Persistent legal fragmentation, compounded by the EU’s 24 official languages, increases costs and legal uncertainty, deterring meaningful investments in innovation and preventing businesses from scaling across borders. Without bold, comprehensive legal reforms, Europe will fall further behind in global competition and major global technological developments. The EU’s incremental reform approach has failed to address the deep-rooted legal and institutional challenges threatening Europe’s economic future. Competitive Harmonisation offers a pragmatic yet visionary concept to overcome legal fragmentation, tackle the business scale gap, and unlock Europe’s vast economic potential. By embracing “collaborative governance” through coalitions of willing Member States, aligning with global standards, and prioritising innovation and technology diffusion, European governments can enhance the Single Market and restore Europe’s leadership in lawmaking and industrial competitiveness. Amid growing political risks, such as the threat of tariffs, the responsibility to act decisively rests squarely with Europe. By taking bold, pragmatic steps now, Europeans can not only resolve immediate challenges but also lay the groundwork for sustainable, long-term economic development.
Topic:
Markets, Reform, European Union, Regional Economy, and Economic Competition
Political Geography:
Europe

66. The 8 Percent Approach: A Big Bang in Resources and Capacity for Europe’s Economy and Defence

Author:
Andrea Dugo, Fredrik Erixon, and Ismail Abdi
Publication Date:
03-2025
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Europe has become a region of feeble economic performance and military frailty. Its share of the world economy is rapidly shrinking, and the region is struggling to keep up with economies at the modern technological frontier. Countries in the European Union have for decades talked about the importance of raising Research and Development (R&D) expenditure and allow greater space for an entrepreneurial business sector that is prospering on the back of innovation. However, the results are poor. R&D expenditures as a share of GDP have largely been stagnant, business investment and inward Foreign Direct Investment (FDI) have tanked. Rates of new business formation and growth are paltry, partly as a result of gross overregulation. Productivity growth has continued its decades-long path of deceleration, and the EU is increasingly behind international leaders. Fortunately, Europe is beginning to wake up from its strategic slumber. Defence expenditures are now growing faster than in previous decades – and some countries, like Poland, are becoming serious powers. Yet, the region’s own military capacity remains poor. Europe must rebuild core conventional capacities at a time when defence modernisation requires substantial resources and focus. Russia may be bogged down by its war against Ukraine, but it is rebuilding its capacities fast and is increasingly aided by partnerships with other countries that want to break down what remains of a liberal world order. Many European NATO-members are now hitting the 2-percent spending target but must spend vastly more to acquire sufficient capacities to defend themselves and their interests.
Topic:
Defense Policy, European Union, Regional Economy, and Russia-Ukraine War
Political Geography:
Russia and Europe

67. The Impact of Increased Mass Litigation in Europe

Author:
Fredrik Erixon, Oscar Guinea, Dyuti Pandya, Vanika Sharma, Elena Sisto, Oscar du Roy, Renata Zilli, and Philipp Lamprecht
Publication Date:
03-2025
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The purpose of this study is to better understand the growth of mass litigation in the European Union (EU) and its economic consequences. European authorities have long encouraged consumers to seek redress through private litigation in European competition law and, more recently, they have shifted their focus towards collective actions in a broad range of areas, including data privacy and product liability. Facilitating access to justice through collective actions is not a cost-free option. Unfortunately, there is a lack of economic analysis on the consequences of an increase in collective action cases in the EU. It is crucial to understand the economic consequences of a “mixed regime” – that is, a regime based on both ex-ante public enforcement through regulation and ex-post enforcement through private litigation. The combination of these two enforcement models raises questions about how the system is intended to work together and what the consequences might be for the economy. This study examines the economic implications of these developments in the EU.
Topic:
Law, European Union, Regulation, Regional Economy, and Litigation
Political Geography:
Europe

68. Boosting Efficiency and Quality in EU Public Services: The Need for a European Multi-Cloud-First Strategy

Author:
Matthias Bauer, Andrea Dugo, Dyuti Pandya, Vanika Sharma, and Elena Sito
Publication Date:
03-2025
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
EU governments have an unprecedented opportunity to unlock up to EUR 450 billion in annual fiscal savings by modernising public services through advanced multi-cloud solutions, cloud-based AI, and other deep tech innovations. As estimated in this study, this figure highlights the transformative impact of digitised government services – not only in improving service quality and operational efficiency but also in generating substantial fiscal gains that would enhance Europe’s economic competitiveness. Multi-cloud adoption is not merely an infrastructure choice but a strategic enabler of modern, agile, and citizen-focused public services. To fully capitalise on cloud adoption, EU governments should embrace a multi-cloud strategy that integrates different public cloud providers and, where necessary, also incorporates sovereign or private cloud environments. Cloud services come in many forms, including Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS). Each model offers unique value propositions such as ease of use, rapid security updates, scalability, and the capacity to integrate novel technological features, such as AI applications, seamlessly.
Topic:
European Union, Digital Economy, and Cloud Computing
Political Geography:
Europe

69. EU Export of Regulatory Overreach: The Case of the Digital Markets Act (DMA)

Author:
Matthias Bauer, Dyuti Pandya, and Vanika Sharma
Publication Date:
04-2025
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The EU’s Digital Markets Act (DMA) exemplifies the “Brussels Effect,” extending the EU’s regulatory influence beyond its borders and shaping global digital competition policies. While intended to curb the market power of large technology platforms and promote fair competition, its broad, rigid, and pre-emptive approach risks stifling technological development, deterring investment, and creating legal uncertainty, particularly in emerging markets still building digital infrastructure and seeking to attract foreign investment. Large technology firms play a pivotal role in global economic development, driving innovation, infrastructure upgrading, and consumer welfare. However, increasing regulatory scrutiny, particularly under DMA-like frameworks, could inadvertently harm the very markets they help grow by imposing compliance burdens that hinder business expansion and technology diffusion. Countries with weaker institutions and regulatory capacity – such as India, Brazil, South Africa, and other emerging market and developing economies (EMDEs) like Indonesia – could face greater risks of regulatory capture, corruption, and enforcement challenges if they replicate the EU’s approach without adapting it to their economic realities (Section 2). A key concern with the DMA is the departure from traditional case-by-case enforcement in competition policy, instead relying on broad, pre-emptive obligations based on ambiguous concepts such as fairness and contestability. This shift reduces legal certainty, increases the risk of inconsistent enforcement, and may inhibit dynamic competition, which is essential for innovation-driven sectors like fintech, e-commerce, ICT, and edtech. By prioritising static over dynamic competition, the DMA could impede technological progress, limiting consumer choice and long-term economic benefits (Section 3). The global adoption of DMA-like regulations risks further regulatory fragmentation and may create unintended consequences, particularly in emerging economies where regulatory frameworks, institutional quality, and market structures differ significantly from the EU. Broad prohibitions on business practices, such as self-preferencing and data-sharing, could limit opportunities for local firms to scale internationally, weaken cybersecurity protections, and reduce incentives for large technology firms to invest in these regions (Section 4). To ensure proportionate and effective competition enforcement, governments outside the EU should prioritise regulatory flexibility and case-by-case assessments over broad, static restrictions. OECD best practices on competition policy emphasise clear objectives, legal certainty, and regulatory proportionality, ensuring that competition enforcement supports, rather than stifles, innovation and investment (Section 5). Moreover, the risks of corruption and regulatory overreach in developing countries make broad ex-ante regulations especially problematic. Excessive discretionary power granted to local authorities could increase the risk of politically motivated enforcement, deter foreign investment, and undermine long-term economic growth. A more effective approach would be to strengthen institutional frameworks, enhance transparency, and adopt supply-side policies that support technology neutrality, free trade, and economic freedom.
Topic:
Science and Technology, European Union, Regulation, Digital Markets Act (DMA), and Economic Competition
Political Geography:
Europe

70. Trade in the Great Sea: The Future of EU-Southern Neighbourhood Trade Relations

Author:
Jan A. Micallef
Publication Date:
04-2025
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
This policy brief looks into the future of EU-Southern Mediterranean trade relations. It evaluates the current trade and contractual instruments governing these relations and asks if they are sufficient or if more is needed to exploit trade opportunities and manage trade challenges in the region. The policy brief shows why and how the current trade instruments are no longer sufficient. There are two main reasons for this: first, they do not really tackle areas such as services, investment and non-tariff measures (NTMs), all of which are important to unlock economic value for both sides in today’s economy; and second, new economic and political developments reinforce the need for better agreements. As trade becomes more political and intertwined with other issues such as energy, critical minerals, the environment and industrial policy, it is necessary to improve the agreements and instruments that govern trade. The policy brief lists some of the upgrades in EU-Southern Mediterranean trade agreements that are necessary. However, it also analyses what challenges there are to pursue these upgrades and what can be done to overcome the problems. The policy brief concludes that working towards these aims will be challenging but not impossible if there is the necessary political will on both sides. Both sides should realise that the price of not doing anything might be higher than the effort that is required to bring their trade instruments up to the standards needed.
Topic:
International Relations, Treaties and Agreements, European Union, and Trade
Political Geography:
Africa and Europe