Gregory Kennedy

The EU risks becoming an open-air museum

Florence, the quintessential Renaissance city, inspires feelings of wonder among tourists visiting its numerous palaces, museums, restaurants, and places of worship. The city’s history is so tangible that it is often referred to as an open-air museum.

Unfortunately, while tourists flock to locations steeped in history, investors take the opposite approach; they flock to locations focused on the future. While preserving history has made the EU dominant in tourism, it’s a different story in other industries.


When investors look at the incumbent EU companies, they see very little change over the past two decades, whereas they see significant change in the US. Economies that are dynamic and innovative are often characterised by change.

Take, for example, the US economy. The top 10 companies ranked by market capitalisation change nearly every decade. Companies such as Google, Apple, Amazon, and Nvidia now dominate the list, but they were not even on it in the early 2000s.

In stark contrast, the economies of France and Germany show little change in the top 10 companies ranked by market capitalisation from one decade to another. Their economies remain stubbornly dominated by the likes of LVMH and Volkswagen.

So why does the US economy change, while the EU’s does not?

It could be blamed on the EU’s market fragmentation, regulatory environment, multiple languages, and other structural issues. While these are most definitely part of the root cause, the real reason could be our different attitude towards innovative entrepreneurship.

Creative destruction

In particular, our differing attitudes towards creative destruction—the process by which new innovations continuously replace outdated industries and economic structures, driving progress and growth. Where the US generally embraces it, the EU resists it.

Certain conditions allow for creative destruction, namely, (a) investor confidence and support, (b) constant adoption and investment in technology, and (c) the embrace of innovative business models. This is what led US companies to revolutionize several industries globally.

Investor confidence

Investor confidence and support allowed Amazon to forgo short-term profits and sustain years of losses. As long as investors saw growth, they were willing to fund its business. EU investors, on the other hand, would be unlikely to do the same.


Whereas the US constantly adopts new technologies like EVs, cloud computing, and AI, the EU takes a much more cautious approach. Stringent EU regulations such as GDPR and the recently adopted AI Act make it much harder to adopt innovative technologies.

Business Models

While Uber’s innovative business model took the US by storm, hugely benefiting US consumers, the EU is more focused on preserving a legacy taxi industry that provides a distinctly costlier and inferior service. Redundant business models survive much longer in the EU.

Embodying the future

Ultimately, during the Renaissance period, Florence adopted innovations in areas such as banking, art, and finance, leading it to become extremely powerful and influential. It embodied the promise of the future, something that the EU has long surrendered to the US.

Europe really does risk becoming an open-air museum.

Gregory Kennedy is a columnist for Investment Officer Luxembourg. His columns appear every other week. He also works as a business development manager at