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1. Benchmarking Quantum Technology Performance: Governments, Industry, Academia and their Role in Shaping our Technological Future

Author:
Fredrik Erixon, Andrea Dugo, Dyuti Pandya, and Oscar du Roy
Publication Date:
03-2025
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
In this study on the transformative potential of quantum technology in reshaping economies, we present results and evidence drawing on a unique and innovative quantum dataset compiled by ECIPE. This data offers new insights into the current state of quantum advancements. This comprehensive database sheds light on the roles of various actors – governments, industry, and academia – showcasing their contributions to the development of quantum technologies. By grounding the analysis in real data, we provide a clearer understanding of the dynamics at play, enabling stakeholders to assess the sustainability of quantum technology progress and foster an ecosystem that supports both public and private sector involvement.
Topic:
Science and Technology, Digital Economy, Private Sector, Industry, and Quantum Computing
Political Geography:
Global Focus

2. India and the World Economy: Policy Options at a Time of Geopolitical Drama, Technological Shifts, and Rising Protectionism

Author:
Fredrik Erixon, Dyuti Pandya, and Vanika Sharma
Publication Date:
03-2025
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
What trade policy should India pursue? Geopolitical drama and a faltering multilateral system have made choices of trade policy harder for many countries. Rising protectionism, economic nationalism, and growing scepticism towards globalisation eat into most trade relations. Technology-driven innovation and rapid changes in the composition of trade have added additional layers of complexity, forcing governments to develop new policies for cross-border economic integration. This is the inflection point for India’s trade policy: its traditional approach is increasingly unable to respond to new economic and political realities, and new approaches may be needed to deliver better economic outcomes. Using India’s external trade strategy as a starting point, this policy brief presents three strategic options for India, each reflecting varying degrees of trade openness as a means to drive economic development. Using categories from the world of soft drinks, we call them “Trade Zero”, Diet Trade” and “Trade Regular”. First, the Trade Zero approach allows India to maintain its defensive stance on trade, focusing primarily on the growth of its domestic market and demand. Trade only serves as a means to manage production surpluses. Second, the Diet Trade approach pushes India to softly enhance trade with its already well-established trading partners, ideally by focusing on high-value-added goods and services. The model emphasises deepening diplomatic relations through trade: however, not at the cost of domestic policy priorities. And lastly, the Trade Regular approach encourages the adoption of a more ambitious trade strategy with the aim of establishing India as a central hub connecting major global economic regions. This would happen through upgrading existing trade agreements, signing new multilateral trade agreements, as well as adopting significant domestic reforms for further economic liberalisation. India’s trade performance provides the actual context of the realities of India’s trade policy. There are some notable features in India’s trade performance: its trade sector is small (international trade as a share of the GDP); it has a large services export sector compared to the export of goods; exports of high-value added goods and services has increased substantially; there is a consistently large share of big economies such as the United States and the European Union in India’s exports. All these features point to India’s position in global trade as a relatively high-value added economy. India, therefore, not only has an opportunity to leverage its trade capacity to significantly improve economic growth but can also adapt to newer forms of trade and increasingly engage with the global economy. Moreover, given the shifting global context and the increasing trade reciprocity demands from larger economies, India will also need to strengthen its trade relations with a diverse set of partners. In a way, India’s economy has already made the choice of which model that suits it best. Given the key features of the country’s trade sector, India’s real economy is already moving towards a Trade Regular model. However, there is a gap between the actual performance and policy positions, which remain defensive. Future trade growth, however, will likely depend on India becoming more pro-active in its trade policy and better equipped to negotiate trade agreements that respond the ambitions of its outward-oriented companies.
Topic:
Science and Technology, Geopolitics, and Trade Policy
Political Geography:
South Asia and India

3. The Economic Dividend of Competitiveness

Author:
Fredrik Erixon, Oscar Guinea, Philipp Lamprecht, Elena Sisto, and Erik van der Marel
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
In a world of technological and economic rivalry, the EU must devote increased attention to its competitiveness. Higher levels of competitiveness will help the EU build a more prosperous economy which will in turn produce innovation and resources to address the great challenges of our time. ECIPE published a study presenting a competitiveness compass with concrete policy recommendations that will improve EU’s competitiveness. These policy recommendations, once implemented, will bring tangible benefits to the EU economy in the form of higher levels of trade and productivity. This report presents five scenarios in which the EU pursues competitiveness policies that lead to higher economic growth.
Topic:
Economics, Science and Technology, European Union, Economic Growth, and Competition
Political Geography:
Europe

4. When the State Becomes the Only Buyer: Monopsony in China’s Public Procurement of Medical Technology

Author:
Fredrik Erixon, Oscar Guinea, and Anna Guildea
Publication Date:
03-2022
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
China’s centralised state procurement policies are moving the Chinese market of medical technologies in a monopsonistic direction. A monopsony means that a single buyer exerts strong power to move the market to its favour by gradually cutting prices and setting terms for producers that are extortionary. It is equivalent to a monopoly – with the only difference being that in a monopsony, it is the single buyer that acts in a market-predatory manner. Ultimately, a monopsonistic market empowers the buyer to capture most of the financial rewards from a contract. Competition gets undermined because a vibrant market also requires competition between buyers and, over time, fewer firms will be able to supply the procured goods at terms that are set by the single buyer. This shift towards monopsony does not happen overnight, it is a process that builds on a number of steps that tilts the balance of power in favour of the buyer. First, there is a concentration of buyers, sometimes down to a single buyer – such as the state. This concentration of buyers acts to extract value from sellers by creating pressure to reduce and converge prices. Buyers in monopsonistic conditions may also add other objectives to their agenda, using their monopsonistic position to abuse the market. For example, political objectives may be in place, which can include discrimination against foreign companies or corruption. Finally, there is a consolidation of the market, with fewer suppliers overall, and a focus on price rather than innovation. Several characteristics of a market could be indicative of a monopsony. One of these indicators is the price. In the case of the Chinese market for medical technology, price reductions have been sustained across medical devices, with price cuts exceeding 90 percent in some medical products. When the buyer’s primary focus is to reduce prices, the risk is that low-quality products will drive out high-quality products. Another indicator is price convergence: the idea that one price should apply to the whole market. Price convergence can be observed as the distance between the average and maximum price reduction offered by companies. The small differences seen in the Chinese procurement of medical technologies for these two indicators indicates that prices are converging downwards. Forcing a convergence of prices breaks with natural market behaviour and overall leads to a market with fewer participants. In a monopsony, the buyer tends to capture the dominant part of the market value of the product, which squeezes the margins of sellers. Over time, this leads to fewer competitors as only a few companies can survive under such conditions. These dynamics have real consequences: the number of winning companies in the procurement of medical technology per one million people in China is substantially lower than in the EU. In addition to a reduced reliance on multiple suppliers, the Chinese centralised state procurement reinforces China’s industrial policy to support Chinese firms growing their domestic market shares to the detriment of non-Chinese companies. These are the consequences of a market that is increasingly taking a monopsonistic form. Public procurement does not have to follow the Chinese recipe of centralised state procurement. There is a substantial body of evidence, research, and studies that recommend specific procurement policies that tackle the monopsonistic tendencies embedded in public procurement markets. These recommendations emphasize the importance of competition without lowering the number of firms in the market, underlining the need for a long-term view on how the market delivers continuous innovation. The danger for China is that monopsony will collapse the future market by making it less attractive for companies to innovate and compete. Chinese centralised state procurement and the move towards monopsony will not go unnoticed. These policies clearly breach basic principles and norms of international exchange, and how governments should behave to avoid a distortion of competition. First, Chinese centralised state procurement favours the Chinese medical technology industry to the detriment of non-Chinese companies. Second, given the low prices achieved in Chinese centralised state procurements, there is a risk that firm’s margins are severely cut, putting a lid on global spending on R&D. The EU and the US should coordinate their policies to counter the monopsonistic tendencies of the Chinese market of medical technologies. Their markets for medical technologies are significantly larger than the Chinese market and Chinese companies rely on the US and the European market to maintain their growth. The EU-US Trade and Technology Council (TTC) offers a setting to take these discussions forward and agree on policies to counter Chinese market distortions.
Topic:
Science and Technology, Health Care Policy, Public Procurement, and Monopsony
Political Geography:
China and Asia

5. China’s Public Procurement Protectionism and Europe’s Response: The Case of Medical Technology

Author:
Fredrik Erixon, Anna Guildea, Oscar Guinea, and Philipp Lamprecht
Publication Date:
09-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
This paper concerns China’s market for medical technologies and how the Chinese state is assisting its own companies to gain greater sales at the expense of producers from Europe and other advanced manufacturing economies. The medical technology sector captures a variety of products, services and solutions which are essential to the provision of healthcare to citizens. Examples range from fairly simple technologies such as sticking platers, to complex ones, such as coronary stents, orthopaedics and pacemakers. In the last decades, Europe’s exports of medical devices to China have grown robustly. On the back of vibrant innovation, firms from Europe and elsewhere have not just followed the growth of Chinese demand for medical devices – they have also increased their share of Chinese imports. Now, however, this market is at risk of being gradually closed off for European firms as China doubles down on various policies that advantage local firms, while ultimately harming innovation and Chinese patients. China has recently introduced a new element in its industrial policy for its medical technology sector – a policy that builds on its long-term ‘made-in-China’ ambition to have local firms taking up the lion’s share of the market for medical devices by 2030. Beijing and provincial governments are using many different policies to provide support to the domestic industry and are in effect pursuing a policy for import substitution. Accessing the Chinese market for medical devices has never been easy but it has become increasingly challenging in recent years. Direct financial support, tax benefits, R&D support, local content requirements, opaque approval systems and other forms of advantages to domestic MedTech producers are now becoming major sources for the behaviour and development of the Chinese medical device market. China’s Fourteenth Five-Year Plan and the country’s new economic model of ‘dual circulation’ reinforces this trend. The Chinese market is becoming less open. Added to that is centralised state procurement – a new public procurement policy in China that was launched in 2019 for medical devices which has led to a grossly distorted procurement market. While this policy has reduced the price of medical devices in a drastic way, it has also paved the way for Chinese firms to take up a larger market share. This procurement policy is gradually squeezing European firms out of the Chinese market. Competition in China is becoming less fair. These policies follow a pattern. In several sectors, Chinese firms have grown their domestic market share through industrial subsidies and policies that restrict market access for foreign firms – or make it more difficult for foreign firms to compete in China. From their domestic market, these firms have then expanded abroad and taken a more prominent role outside of China. Backed by the Chinese state, these firms can squeeze market opportunities even more for otherwise-competitive European producers. Now this development is happening in the MedTech sector. It is urgent for Europe to respond to China’s procurement protectionism. MedTech manufacturers in Europe are often small and medium-sized enterprises, and they already struggle with getting into the Chinese market. China’s new procurement policy has also had a significant impact on Chinese imports of medical devices: a 1.3 billion euro trade deficit for China in medical technology products in 2019 turned into a 5.2 billion euro surplus in 2020. In Africa, Asia and Latin America, competitive European manufacturers are now confronted with competition from Chinese MedTech companies that have the backing of the Chinese state. The competitive distortions in the Chinese market now spill over to the global market – making European MedTech manufacturers even more disadvantaged. Europe should consider a case at the World Trade Organisation (WTO) against China’s policies which reduce European market presence for medical devices. Once agreed, a new International Procurement Initiative might be a useful instrument to wield pressure against the Chinese government to agree to free and fair competition. Europe can also negotiate with China – for instance in the framework of the Comprehensive Agreement on Investment (CAI) or through the new initiative on trade and health that Europe proposed to the Ottawa Group in 2020. These responses should focus both on remedying China’s current policy for growing its domestic medical technology industry by distorting its market and setting out the core policies and rules that should guide the future market for medical technologies. Fredrik Erixon and Anna Guildea are Director and Research Associate, respectively, at ECIPE. Oscar Guinea and Philipp Lamprecht are Senior Economists at ECIPE. The authors are grateful to a number of experts in the private sector and from the European Commission, the Federal Ministry for Economic Affairs and Energy in Germany, China’s Ministry of Industry and Information Technology that have taken their time to share their knowledge with us.
Topic:
Health, Science and Technology, European Union, and Public Procurement
Political Geography:
China, Europe, and Asia

6. Europe’s Quest for Technology Sovereignty: Opportunities and Pitfalls

Author:
Fredrik Erixon and Matthias Bauer
Publication Date:
05-2020
Content Type:
Research Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Covid-19 and its broader implications have highlighted the importance of Europe’s digital transformation to ensure Europeans’ social and economic well-being. It provides important new learnings about Europe’s quest for “technology sovereignty”. While the debate about technology sovereignty is timely, the precise meaning of sovereignty or autonomy in the realm of technologies remains ambiguous. It should be noted that the political discussions about European technology sovereignty emerged far before the outbreak of the Coronavirus. The European Commission’s recently updated industrial and digital policy strategies “institutionalised” different notions of sovereignty, reflecting perceptions that more EU action is needed to defend perceived European values and to secure Europe’s industrial competitiveness. Often the political rhetoric reflected perceptions that Europe is losing global economic clout and geopolitical influence. It was said that dependency on technological solutions, often originating abroad, would require a European industrial and regulatory response. Against this background, the Corona crisis provides two important lessons for EU technology policymaking. Firstly, during the crisis digital technologies and solutions made European citizens stronger. Technology kept Europe open for business despite the lock-down by enabling Europeans to work from home, receive essential home deliveries, home schooling, online deliveries and to use online payments, etc. In addition, Europe’s citizens became more sovereign with respect to accessing information and data that helped track and contain the spread of the virus. Secondly, the crisis tested Europe’s resilience and perceived dependency on (foreign) technology solutions. Early developments indicate that Member States’ homemade solutions did not fare better than existing European and international solutions. A few national and EU IT solutions failed while existing European and global solutions, from cloud infrastructure to communications, payments to streaming services, all continued to work well. Politically, however, the crisis could be used to justify more EU or national government interference in Europe’s digital transformation. Indeed, for some the debate about European technology sovereignty is largely about designing prescriptive policies, which paradoxically risk reducing Europeans’ access to the innovative technologies, products and services that helped Europe through the crisis. Policies taken into consideration include new subsidies to politically picked companies, or new rules and obligations for certain online business models. Policy-makers advocating for such policies tend to ignore critical insights from the Covid-19 crisis and failed industrial policy initiatives, including sunk public investments and protracted subsidies for industrial laggards. In a time of economic hardship, the EU and national governments should be wary of spending even more taxpayer money to replicate existing world-class technology solutions, that in most cases are used in combination with local technologies, with “Made in EU” services of inferior quality and reliability. Moreover, due to different levels of economic development and differences in regulatory cultures, prescriptive technology policies would exclude many Member States from utilising existing and new opportunities that arise from digitalisation, slowing down economic renewal and convergence. The EU cannot be considered a monolithic block that thrives on a unique set of prescriptive technology policies. Before the Corona pandemic, initiatives towards European technology sovereignty were mainly pushed by France and Germany, fed by concerns over their companies’ industrial strength in times of growing economic and geopolitical competition. Industrial and technology policies favoured by the EU’s two largest countries will have a disproportionately negative impact on Europe’s smaller open economies, whose companies and citizens could be deprived from cutting-edge technologies, new economic opportunities and partnerships on global markets, undermining these economies’ development and international competitiveness. Any EU-imposed technology protectionism along the lines suggested by some policy-makers in large EU Member States would leave the entire EU worse off. It would disproportionately hurt countries in Europe’s northern, eastern and southern countries more than the large countries whose economies are generally more diverse than Europe’s smaller Member States. It would, however, make sense for the EU to agree on a shared definition of “technology sovereignty”. Different interpretations could cause serious policy inconsistencies, undermining the effectiveness of EU and national economic policies. Anchored in technological openness, technology sovereignty can indeed be a useful ambition to let Europe’s highly diverse economies leapfrog by using existing technologies. To become more sovereign in a global economy, Europeans need to focus on becoming global leaders in economic innovation – not just in regulation. If anchored in mercantilist or protectionist ideas, technological sovereignty would make it harder for many Member States to access modern technologies, adopt new business models and attract foreign investment – with adverse implications on future global competitiveness, economic renewal and economic convergence. Policymaking towards a European technology sovereignty that benefits the greatest number of Europeans – not just a few politically selected “winners” – should aim for a regulatory environment in which technology companies and technology adopters can thrive across EU Member States’ national borders. The European Single Market has deteriorated in recent years and significantly during the crisis. The new von der Leyen Commission has now repeatedly called for a strengthening of the Single Market. Becoming a world leader in innovation requires a real Single Market in which companies can scale up, with as few hurdles as possible, and then compete globally. It should be supplemented by pro-competitive policies and incentives for research and investment. Brussels cannot set the global standards in technology policymaking alone. Europe’s policy-makers should aim for closer market integration and regulatory cooperation with trustworthy international partners such as the G7 or the larger group of the OECD countries. It is in the EU’s self-interest to advocate for a rules-based international order with open markets. International cooperation should be extended beyond trade to include cooperation on technology policies, e.g. artificial intelligence. Regulatory cooperation with allies such as the USA is essential to jointly set global standards that are based on shared values. Both the EU and the US have much more to gain if they prioritise such alignment, to advance a shared vision for a revamped open international trading system, in a world increasingly influenced by regimes with fundamentally different views on state intervention and human rights. Anchored in technological openness, the EU and the US can promote technology sovereignty that allows for development and renewal elsewhere in the world.
Topic:
Industrial Policy, International Political Economy, Science and Technology, Sovereignty, European Union, and COVID-19
Political Geography:
United States, Europe, and Global Focus