Policy insights
Policy Insights
A sizeable and persistent investment gap in innovative technologies exists between the United States (US) and the European Union (EU) and, within the EU, between the Nordics and the other member states. Boosting investment in innovation is essential not to drift away from the technology frontier. It is however illusory to immediately replace traditional with innovative investments. The transition to a new economic structure takes time, with periods of (at least partial) overlap in which investment in new technologies just add up to more traditional activities. This implies that, as recommended by Mario Draghi in his report on European competitiveness, substantial public and private resources need to be mobilised in the next several years. The depth of financial markets and targeted public incentives are key in facilitating the reallocation of resources and easing the financing constraints, thereby speeding up the substitution between traditional and innovative technologies.
