European Central Bank: Corporate scale could close EU productivity gap

Research from the European Central Bank indicates that the European Union could close approximately one-third of its productivity gap with the United States if its corporate structure mirrored the American distribution of company sizes. Currently, EU labor productivity is roughly 20 percent lower than that of the U.S.

The ECB findings suggest that Europe lacks a sufficient number of large-scale enterprises. While micro-enterprises account for twice the share of employment in the EU compared to the U.S., large EU firms generate roughly twice as much value added per worker due to economies of scale, higher R&D spending, and better integration into international markets.

Economic analysis further highlights Europe’s struggle to compete in the digital sector, noting that only two of the world’s 100 most valuable high-tech companies are headquartered in the EU. While policy recommendations, such as those from Mario Draghi’s report on competitiveness, have begun to be implemented, critics argue that regulatory barriers, tax policies, and red tape continue to impede the growth of a vibrant startup ecosystem similar to that of the United States.