International Monetary Fund:F&D Magazine

 

Europe’s Innovators Are Waking Up JUNE 2025  (Credit: John Hersey) “The US innovates, China replicates, Europe regulates” is how critics summarize the continent’s approach to innovation. Exhibit A of the European Union’s regulatory overreach is the now infamous Artificial Intelligence Act, which governs AI—even though the region has not yet produced a single major player.   Productivity in US technology firms has surged nearly 40 percent since 2005 while stagnating among European companies. US research and development spending as a share of sales is more than double what it is in Europe. No European company ranks among the 10 largest tech companies by market share.   Yet reality, as usual, is more nuanced, according to Alessandro Merli, an associate fellow at the Johns Hopkins University School of Advanced International Studies Europe, writing in F&D.   Europe’s innovation scene holds life in various shapes and sizes. Many of its tech companies are now global household names: Spotify and the buy now, pay later fintech Klarna, from Sweden, and the British digital bank Revolut. Skype, which owner Microsoft recently retired, was founded in London by four Estonians, a Dane, and a Swede. One of its first employees, Estonian Taavet Hinrikus, cofounded Wise, a money transfer company.   “For the first time, the EU Commission has a commissioner dedicated only to start-ups, research, and innovation,” says Francesco Cerruti, director general of Italian Tech Alliance. “But there is a need for translating words into action. And fast.” Read more Europe: From Adversity to Advantage (Credit: Brian Stauffer) Europe’s Integration Imperative | The case for closer economic union has become more compelling as external challenges multiply | Alfred Kammer   Europe’s Elusive Savings and Investment Union| An integrated capital market must be accompanied by regulatory reforms to attract substantial investment | Ravi Balakrishnan and Mahmood Pradhan   Making Germany Grow Again| Long-term, future-focused investment can rescue Europe’s largest economy from stagnation | Ulrike Malmendier and Claudia Schaffranka   Plus, government ministers from three of Europe’s fastest-growing economies share their perspectives on how to revive growth: Poland’s economic transformation can inspire Europe today, writes Andrzej Domański Greece’s strong reforms have turned it into one of Europe’s fastest-growing economies, according to Konstantinos Hatzidakis Spain’s new economic model of balanced and sustainable growth is overcoming traditional dilemmas, writes Carlos Cuerpo “The European Union must unite to shape today’s global economy, rather than be shaped by it.”— F&D editor-in-chief Gita Bhatt Read more Point of View (Credit: Chantal Jahchan) Reclaiming a Policy Role for Economists | Acknowledging missteps, listening well, defending data, and avoiding jargon will help the profession engage | Karen Dynan   Europe’s Future Hinges on Greater Unity | But first the EU must overcome distrust between its member states and in its institutions | Simon Nixon   We Need a New Growth Compact | Innovation and integration can revive growth amid sweeping geopolitical change | Pierre-Olivier Gourinchas Also Featured (Credit: IMF Photo/Ryan Rayburn) Stanley Fischer (1944–2025)| His storied career at the IMF, at central banks, and at universities shaped the study of macroeconomics and the next generation of macroeconomists | James Boughton   The Debate over Falling Fertility | A decline in global population later this century may threaten human progress, or it may lead to better lives | David E. Bloom, Michael Kuhn, and Klaus Prettner   The Longevity Dividend | Aging populations should be embraced, not feared | Andrew Scott and Peter Piot   Sustaining Growth in an Aging World | Older populations need not lead to slumping economic growth and mounting fiscal pressures | Bertrand Gruss and Diaa Noureldin   A Moving History | Migration has propelled human progress for hundreds of thousands of years | Ian Goldin   Machine Intelligence and Human Judgment | AI could reverse the widening inequality driven by technology, or aggravate it | Ajay Agrawal, Joshua Gans, and Avi Goldfarb Our Regular Departments (Credit: Sonia Pulido) When controlled by a select few, tech innovation can be self-serving and undermine the institutions that make it possible, Simon Johnson says in Café Economics.   Andreas Adriano profiles Agustín Carstens, finance minister, head of the BIS, and central banker with a start-up mentality, for People in Economics.   Kevin Fletcher explains why productivity, not competitiveness, is the better path to prosperity for Back to Basics.   Picture This shows how stalled trade and rising tariffs are testing global economic resilience.   For books, Mouhamadou Sy reviews Our Dollar, Your Problem: An Insider’s View of Seven Turbulent Decades of Global Finance, and the Road Ahead by Kenneth Rogoff.   Volker Wieland reviews Crisis Cycle: Challenges, Evolution, and Future of the Euro by John H. Cochrane, Luis Garicano, and Klaus Masuch.   And Vivek Arora reviews Entropy Economics: The Living Basis of Value and Production by James K. Galbraith and Jing Chen   For Currency Notes, Salsa Mazlan tells how Macao SAR’s unique history has yielded different yet equally elegant versions of the same banknote.   Nick Owen  Managing Editor | Finance & Development   nowen@IMF.org Stay connected with the International Monetary Fund: