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Europe’s quest for global economic relevance: on the productivity paradox and the Draghi report

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  • Capello, Roberta
  • Rodríguez-Pose, Andrés

Abstract

Europe’s existential economic challenge has been laid bare in Mario Draghi’s September 2024 competitiveness report. The continent faces a profound productivity crisis, one that threatens to relegate Europe to the margins of global economic influence. Yet, while the report offers a comprehensive diagnosis and prescribes remedies for Europe’s anaemic productivity growth, it overlooks a crucial dimension: the power of place. This paper examines how this territorial oversight undermines the report’s effectiveness. We argue that Europe’s path to renewed economic vigour lies not in homogeneous continental strategies, but in harnessing its potential and diverse regional capabilities. The continent’s economic renaissance depends on recognising that its apparent weakness – its territorial diversity – may indeed be a great strength. From our perspective, unlocking Europe’s latent potential requires policies tailored to regional specificities. Only by embracing rather than suppressing its endogenous potential, wher-ever it can be found, can Europe hope to reverse its productivity decline. The challenge ahead is not merely technical but fundamentally territorial: Europe must craft a future where productivity growth emerges from its territorial distinctiveness, not in spite of it.

Suggested Citation

  • Capello, Roberta & Rodríguez-Pose, Andrés, 2025. "Europe’s quest for global economic relevance: on the productivity paradox and the Draghi report," LSE Research Online Documents on Economics 127768, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:127768
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    References listed on IDEAS

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    1. Andrés Rodríguez-Pose & Lewis Dijkstra & Hugo Poelman, 2024. "The Geography of EU Discontent and the Regional Development Trap," Economic Geography, Taylor & Francis Journals, vol. 100(3), pages 213-245, May.
    2. Andreas Diemer & Simona Iammarino & Andrés Rodríguez-Pose & Michael Storper, 2022. "The Regional Development Trap in Europe," Economic Geography, Taylor & Francis Journals, vol. 98(5), pages 487-509, October.
    3. Andrés Rodríguez-Pose & Federico Bartalucci, 2024. "The green transition and its potential territorial discontents," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 17(2), pages 339-358.
    4. Simona Iammarino & Andrés Rodriguez-Pose & Michael Storper, 2019. "Regional inequality in Europe: evidence, theory and policy implications," Journal of Economic Geography, Oxford University Press, vol. 19(2), pages 273-298.
    5. Roberta Capello & Camilla Lenzi, 2013. "Territorial Patterns of Innovation and Economic Growth in European Regions," Growth and Change, Wiley Blackwell, vol. 44(2), pages 195-227, June.
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    1. Roberta Capello & Roberto Dellisanti, 2025. "Unveiling Growth in Nearshoring Regions," Growth and Change, Wiley Blackwell, vol. 56(4), December.
    2. Rodríguez-Pose, Andrés & Bartalucci, Federico, 2026. "A Union under siege, or a Union besieging itself? The EU's new budget and the future of European integration," Global Challenges and Regional Science, Elsevier, vol. 7(C).
    3. Rodríguez-Pose, Andrés & Dijkstra, Lewis, 2026. "Playing Europe's hand: competitiveness, place and the high stakes of territorial myopia," LSE Research Online Documents on Economics 141003, London School of Economics and Political Science, LSE Library.

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    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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