Search

Begin New Search Topic Economic Competition

1. 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

2. 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

3. 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

4. Reinforcing EU merger control against the risks of acquisitions by big tech

Author:
Mario Mariniello
Publication Date:
03-2025
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Since 2000, online platforms that are now within the scope of the European Union’s Digital Markets Act (DMA), have bought nearly 700 small, promising companies worldwide. However, only 19 of their attempted acquisitions were notified to the European Commission, the authority exercising merger control over deals with a substantive EU connection. In the other cases, the acquired target’s turnover did not meet the conditions for merger notification. These acquisitions have happened in the context of digital markets becoming increasingly concentrated, leading to speculation that concentration levels might have been lower had some of those acquisitions not taken place. The harm that the concentration of market power in a handful of American digital companies may cause is magnified by the current position of the United States, which aims to shield platforms from regulatory enforcement. Acquisitions of small companies may have pro- or anti-competitive effects. Established market players may buy startups to become more competitive or to supply a higher quality product or service, ultimately benefitting final users. Mergers may also incentivise innovation and attract venture capital. However, incumbents might also acquire small companies with strategic, anti-competitive objectives. They might want to stop challengers to their market power from emerging in the future. Or they might acquire small companies to prevent competitors from relying on the target’s supply to complement their competing products. Moreover, competition authorities struggle to make accurate predictions about the evolution of competitive dynamics in new and complex markets, such as digital markets. Authorities thus may be unable to take the correct decision, even if the merger is notified. Responding to these issues hinges on amending the DMA. The European Commission should be empowered to scrutinise any acquisition performed by the large platforms within the DMA scope (currently, the DMA requires these platforms to inform the Commission of any intended concentration, but envisages no other action). Moreover, the burden of proving that the merger is not harmful should be shifted to the large platforms. This would leverage market players’ knowledge to help increase the accuracy of merger decisions in a highly dynamic and uncertain environment.
Topic:
Science and Technology, European Union, Microeconomics, Big Tech, European Commission, and Economic Competition
Political Geography:
Europe

5. South Korea: Caught in the Crosshairs of U.S.−China Competition Over Semiconductors

Author:
Paul Triolo
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper explores how countries with advanced semiconductor industries are caught in the middle of the growing U.S.-China competition in technology that is focused on advanced computing. Among them, South Korea and its national champions, Samsung and SK Hynix, have arguably incurred some of the most significant pressure. This paper explores how those firms have billions of dollars of sunk investment in China-based facilities producing cutting-edge memory, and the future of these facilities remains in doubt after a series of U.S. export control measures unleashed by the U.S. Commerce Department starting in October 2022. South Korean companies are also players in other parts of the global semiconductor supply chain, including semiconductor manufacturing tools, and China remains an important market for both components and electronic devices. This paper argues that each country caught between the United States and China in technology competition faces difficult trade-offs in determining how best to support its leading companies while navigating changing and often what is viewed as arbitrary decisions coming from Washington that have already significantly disrupted global supply chains. Finally, at the same time as U.S. export controls are having a major impact on the ability of South Korean companies to retain business operations and market access in China, major front-end manufacturers, particularly Samsung, are also looking to expand their operations in the United States and benefit from U.S. CHIPS Act funding. This paper argues that all of the above dynamics put South Korea in one of the more complex positions as the industry faces continued restructuring, buffeted by both export controls and industrial policies.
Topic:
Supply Chains, Economic Security, Semiconductors, and Economic Competition
Political Geography:
China, Asia, South Korea, and United States of America

6. Keeping Up with the US: Why Europe’s Productivity Is Falling Behind

Author:
Fredrik Erixon, Oscar Guinea, and Oscar du Roy
Publication Date:
05-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The European Union stands at a crossroads. For decades, the EU’s productivity growth has consistently lagged the United States, leading to slower growth in living standards and decline in global economic power. While short-term factors like the strong US fiscal expansion have widened the gap in nominal GDP growth in recent years, the fact is that Europe has trailed the US economic development for several decades and the root of the problem lies in deeper structural issues within the European economy. Four major forces fuel this productivity divide. Firstly, the EU’s investment in research and development (R&D) pales in comparison to the U.S., leading to fewer patents and a slower pace of technology-fuelled innovation. Secondly, Europe trails America in the stock and growth of intangible capital investments, which are crucial for adopting and diffusing new technologies that drive productivity. Thirdly, the EU market exhibits slower business creation and destruction compared to the US. This rigidity hinders the flow of resources towards the most productive firms. Lastly, despite boasting higher levels of trade openness, the EU attracts less Foreign Direct Investment (FDI) than the US, curbing its access to cutting-edge global technologies and expertise. To close the gap, European policymakers should implement a comprehensive strategy for faster productivity growth. The first step is turning up the dial on R&D spending, targeting 4-5 percent of GDP by 2040. Next, Europe should prioritise investments in intangible assets and lay down the digital infrastructure that will underpin future growth. Revitalising the single market is also crucial: reducing internal and external market barriers for services, the primary vehicle for trading intangible assets. Moreover, the EU should foster a market environment that encourages entrepreneurship and facilitate the entry and exit of firms so resources cascade towards the most productive sectors. By harnessing the strengths of the single market and implementing these recommendations, European policymakers can propel the EU towards a more competitive and prosperous future.
Topic:
Markets, European Union, Productivity, and Economic Competition
Political Geography:
Europe, North America, and United States of America

7. Toward Innovation-driven Growth: Innovation Systems and Policies in EU Member States of Central Eastern Europe

Author:
Alexandra Bykova, Viktrória Döme, Richard Grieveson, Francesca Guadagno, and Doris Hanzl-Weiss
Publication Date:
09-2024
Content Type:
Special Report
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This study builds on our previous analyses of a new growth model for the EU member states of Central and Eastern European (CEE), focusing on fostering innovation-driven development. We aim to explain the types of innovation systems and policies that enhance domestic innovation capabilities, drawing on global best practices. A critical evaluation of the current innovation landscape in EU-CEE countries is conducted, particularly in the context of the green and digital transitions. The study assesses the strengths and weaknesses of both national innovation initiatives and opportunities provided by EU industrial and technology policy frameworks. Based on these insights, we offer actionable policy recommendations to promote innovation-driven growth, enhance productivity, and boost economic convergence over the medium term, taking into account the unique political and historical contexts of the EU-CEE countries. Additionally, we prepare country-specific briefing notes tailored to the individual development needs and opportunities of each nation.
Topic:
Development, International Trade and Finance, Science and Technology, Economic Growth, Innovation, Economic Competition, and Convergence
Political Geography:
Europe, Eastern Europe, and Central Europe

8. Tesla as a Global Competitor: Strategic Control in the EV Transition

Author:
Matt Hopkins and William Lazonick
Publication Date:
09-2024
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
In this paper, we assess the implications of Elon Musk’s strategic control over Tesla, the pioneering company that has become central to the electric vehicle transition. We document how, as Tesla’s CEO for 16 years, Musk has exercised strategic control to direct the transformation of the company from an uncertain startup to a global leader. Now that Tesla is profitable corporate predators (aka hedge-fund activists) may challenge Musk’s strategic control—a possibility of which the CEO is well aware. To retain his control over Tesla as a publicly listed company, Musk depends on holding a sufficient proportion of Tesla’s shares outstanding to possess the voting power to fend off predatory value extractors. In addition to accumulating Tesla shares by investing $291.2 million at early stages of the company’s evolution, Musk has relied upon massive stock-option grants from the Tesla board, under the guise of “compensation”, in 2009, 2012, and 2018, to boost his shareholding and, with it, his voting power. Hence the Delaware Court of Chancery’s decision in January 2024 to rescind Musk’s 2018 stock-option package—by far the largest ever granted to a corporate executive—poses a threat to Musk’s strategic control at Tesla. As the “Technoking” of Tesla strategizes to maintain his control over the company’s decision-making, anyone concerned with the role that Tesla will play in the evolving EV transition should be asking how CEO Musk might use, or abuse, his powerful position.
Topic:
Science and Technology, Economic Competition, Electric Vehicles, Tesla, and Energy Transition
Political Geography:
Global Focus and United States of America

9. Promoting Fair Competition in ASEAN’s Digital Economy: Strengthening Policies for a Level Playing Field

Author:
Mahirah Mahusin and Hilmy Prilliadi
Publication Date:
11-2024
Content Type:
Policy Brief
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
ASEAN’s digital economy is growing rapidly, offering both significant opportunities and challenges. Ensuring a competitive digital market is essential for fostering innovation, reducing costs, and enhancing product quality and choice for consumers and businesses, particularly MSMEs. This policy brief assesses the current digital market competition landscape in ASEAN, emphasising the need for robust competition policies to mitigate anti-competitive behaviours and establish a level playing field. It discusses key initiatives like the ASEAN Competition Action Plan (ACAP) 2025 and the ASEAN Guidelines for Sharing Merger Cases, while examining the complexities of digital markets, including the influence of dominant platforms, algorithmic impacts, and data privacy considerations. Policy recommendations focus on aligning provisions in the ASEAN Digital Economy Framework Agreement (DEFA) with regional standards and international best practices, enhancing regulatory capabilities, fostering regional cooperation, and promoting consumer education and protection.
Topic:
Digital Economy, Innovation, ASEAN, Economic Competition, and Digital Marketplace
Political Geography:
Asia

10. The State of the European Union 2024: Integration vs. Nationalism

Author:
Diego López Garrido
Publication Date:
10-2024
Content Type:
Special Report
Institution:
Fundación Alternativas
Abstract:
In the new institutional cycle, the European Union is facing unprecedented challenges. This report studies and analyses some of the most outstanding aspects such as competitiveness and reindustrialisation in the light of competition from the USA and China; the transition to a decarbonised Europe; the need to defensively strengthen the Union and its foreign action; the migratory issue; the European social pillar or the rule of law. All this comes within a complex geopolitical context that helps to approach structural reforms to renewed institutions such as the European Parliament and the European Commission, where more conservative positions have thrived.
Topic:
Foreign Policy, European Union, Geopolitics, Industrialization, Economic Competition, and Green Transition
Political Geography:
Europe