More Competitiveness and a New Industrial Strategy for Europe: Implementing the Draghi Report

By Jürgen Janger

Policy Recommendations

1. The proposals in the Draghi report for improving European competitiveness, which aim to finally exploit the EU’s economies of scale and create a fair competitive environment for European industries through an active industrial policy, should be implemented quickly.
2. Austria should therefore position itself as a driver of implementation at EU level and, together with other countries, not only push for implementation, but also seek cooperation in accordance with Article 20 TEU and 329 TFEU in order to accelerate important points.
3. A capital markets union and a completed single market, complemented by a separate legal regime for start-ups that allows them to operate immediately in all EU countries, would be by far the most important structural measure that Austria could take to bring about structural change and end the industrial crisis – alongside reducing energy costs through gas market reforms and joint procurement.

1.     Diagnosis of the challenges facing Europe

The report ” begins with a diagnosis of six major challenges:

1. First and foremost is the technological gap, particularly in key digital technologies and industries. Its absence in the EU is the main reason for slower productivity growth compared to the United States of America (USA). An important reason for this is the lack of growth financing for young, fast-growing high-tech companies (“scale-ups“). Thirty per cent of particularly successful companies have migrated to the USA. Technological deficits are accompanied by one-sided dependencies.
2. At the same time, three framework conditions that had promoted positive development in the past are no longer in place:
   – Global trade, formerly the engine of EU growth, is faltering due to US tariff policy and geopolitical developments.
   – In the wake of Russia’s war of aggression in Ukraine, energy costs in the EU have risen.
   – Defence spending in the EU has been significantly reduced relative to gross domestic product (GDP) since the fall of the Iron Curtain. The withdrawal of the US is leading to higher defence spending again.
3. Europe’s strategic autonomy is limited by its dependence on the US for security and the lack of an integrated European defence industry.
4. The EU remains heavily dependent on energy imports, especially fossil fuels. The lack of joint procurement and insufficient investment in energy infrastructure exacerbate structural vulnerability.
5. Fifth, population ageing increases the need for productivity gains in order to maintain living standards.
6. Sixthly, climate change and the decarbonisation of the economy remain key challenges.

One important reason is the lack of growth financing for young, fast-growing high-tech companies (“scale-ups”). 30% of particularly successful companies have migrated to the US.

Mario Draghi and his team recommend three major reform packages to address these challenges, essentially a new European industrial strategy designed to boost competitiveness and thus productivity growth. The situation is serious – if reforms are not implemented, Europe’s way of life and values will be threatened. Below are the main recommendations from three areas, without a detailed analysis of ten sectors due to space constraints.

2.     Recommendations from the Draghi report on strengthening competitiveness

2.1      Closing the innovation gap

In order to catch up with the US and, to some extent, China in terms of innovation performance and, in particular, to improve the growth performance of young innovation-intensive companies in key digital technologies, the report makes the following proposals, which can be grouped into four categories:

1. Reforming research and innovation funding
   – More research funding at European Union (EU) level. Programmes that provide funding across the EU can choose from more and larger projects than programmes that are restricted by national borders. One example would be a larger budget for the European Innovation Council (EIC)[1] , the innovation counterpart to the European Research Council (ERC)[2] , which aims to promote radically new technologies in the early stages of development, similar to the US funding agency Defence Advanced Research Projects Agency (DARPA)[3] . The budget for the EU research funding programme Horizon Europe is to be doubled, but with a focus on fewer priorities and better coordination with member states.
2. Improving the commercialisation of innovation
   – Easier commercialisation of inventions in academic institutions through the development of a model agreement for the sharing of licence revenues and the introduction of the unitary EU patent in all Member States[4].
   – The most pressing challenge is to provide more venture capital and growth financing for young high-tech companies. Draghi proposes several points: tax incentives for business angels and early-stage investors; making European stock exchanges more attractive for initial public offerings (IPOs)[5]; reviewing capital adequacy guidelines in the EU Insurance Supervision Directive Solvency II[6] and guidelines for EU pension plans to facilitate investment in scale-ups; Increase the budget of the European Investment Fund (EIF)[7] (arm of the European Investment Bank, EIB[8]) and improve coordination with EIC; create a separate EU-wide legal form for innovative start-ups (the “28^th  regime”[9] ); create a completed single market, both a single EU product market[10] and a capital market (“capital markets union”[11] ). Young companies are held back by fragmented national regulations, but with digital solutions in particular, it is important to be able to offer solutions very quickly in a large market in order to grow rapidly; a single capital market would greatly facilitate the financing of growth for these companies.
3. Strengthening artificial intelligence and digitalisation in Europe
   – Use the EU’s High Performance Computing (HPC) network for artificial intelligence (AI) applications, e.g. by reserving dedicated capacity.
   – Fragmented national rules, resulting for example from the national adaptation of EU directives (“gold plating”), hinder digital activities. EU-wide data regulation hinders the creation of large data sets for training AI models.
   – There is insufficient broadband infrastructure (5G and fibre optic expansion) because there are too many national mobile or telecoms operators that lack the scale to make the necessary investments, while mergers are sometimes prevented by European competition policy.
4. Strengthening skills and human resources
   – Better use of data to analyse the demand for and supply of skills in order to identify skill gaps. EU-funded initiatives should focus on this and be accompanied by more impact assessments. An EU visa and scholarship programme specifically for STEM students (science, technology, engineering and mathematics) should be established.

The most urgent challenge is to provide more venture capital and growth financing for young high-tech companies.

2.2      Decarbonisation that promotes competitiveness

Decarbonisation must be embedded in an industrial strategy.

The report recommends a “joint plan” for decarbonisation – combating climate change, or green transformation – that does not reduce competitiveness but, on the contrary, opens up new economic opportunities, i.e. an industrial policy-sensitive approach to decarbonisation. Decarbonisation must be embedded in an industrial strategy. Draghi cites the automotive sector as a negative example, where climate policy has not been linked to industrial policy. In general, “asymmetric decarbonisation” is challenging, i.e. ambitious targets for CO(₂₎-intensive industries must always be accompanied by accompanying measures so as not to restrict competitiveness. The report recommends three main groups of proposals:

1. Reducing energy costs
   – Mandatory joint procurement of gas, at least for liquefied petroleum gas.
   – Stricter regulation of gas derivatives trading, similar to that in the US, in order to limit speculation on gas markets.Decoupling gas and electricity prices, e.g. through long-term contract solutions such as power purchase agreements (PPA)[12] or contracts for difference (CfD)[13]; without reforms, gas prices will continue to determine electricity prices for some time to come, despite a sharp increase in electricity production from renewables.
   – Reduce energy taxation.
2. Accelerate decarbonisation through all possible levers in energy production, grids and storage.
   – Increased funding for all relevant technologies (“technology openness”) for decarbonisation, e.g. renewable energies, nuclear power, green hydrogen, bioenergy, _CO₂capture and storage (CCS).
   – Faster approvals for renewable energies, e.g. through the use of the “crisis clause” under Article 122 of the Treaty on the Functioning of the EU (TFEU). Depending on the country in the EU, it takes between three and nine years to build wind turbines and between one and four years to build solar panels. One of the main reasons for this is the varying duration of environmental impact assessments, for example due to a lack of qualified personnel or the lack of use of digital processes.
   – Better electricity grids: i) important cross-border electricity lines (Important Projects of Common European Interest, IPCEI) should fall under a separate EU legal regime (the “28th regime”, similar to that for start-ups); ii) Increase the budget for the Connecting Europe Facility (CEF)[14] in the Union’s next multiannual financial framework; iii) A permanent coordination body at EU level should coordinate the necessary approvals.
   – Creation of a genuine Energy Union – important decisions on cross-border issues should be taken at EU level. In addition, the EU level should be given more powers when electricity projects have cross-border implications.
3. Sectoral industrial policy that keeps competitiveness in mind during decarbonisatio
   – More financial support for energy-intensive industries[15] such as paper, chemicals or metals from the revenues of the EU Emissions Trading System (EU ETS), e.g. for the switch to green hydrogen or the use of CCS; examine whether the Carbon Border Adjustment Mechanism (CBAM)[16] works.
   – Focus EU support for environmental technologies (‘clean tech’), e.g. on strengths or strategically important areas such as batteries. Minimum quotas for the share of local production in public procurement should be set in order to create stable demand for EU environmental technologies. In the case of so-called “infant industries”, public procurement can act as the first customer, enabling companies to start production. Battery production by foreign manufacturers in the EU should be set up as joint ventures with domestic manufacturers to ensure knowledge spillovers, similar to what China has been doing for a long time.
   – Overall, the aim with environmental technologies is to create a level playing field, because in China, for example, significantly higher subsidies are used strategically in conjunction with market foreclosure to achieve technological dominance.
   

2.3      Increasing security by reducing dependencies

Quote: The EU has several unilateral dependencies, both in raw materials […] and in advanced key technologies.

The EU has several unilateral dependencies, both in raw materials (e.g. rare earths) and in advanced key technologies (e.g. high-performance semiconductors). These dependencies can be exploited politically, as is currently evident in the field of rare earths. In the field of defence, the EU is heavily dependent on the US. Reducing these unilateral dependencies could greatly increase the EU’s security. The Draghi report recommends the following measures to this end:

1. Reducing dependence on critical raw materials:
   – Implementation of the Critical Raw Materials Act (CMRA)[17] and supplementation with a comprehensive strategy covering everything from extraction to processing and recycling of raw materials.
   – Strategic foreign trade policy that secures critical raw materials, e.g. through investments in third countries.Joint procurement and EU-wide, coordinated stockpiling of critical raw materials.Exploiting own deposits: exploring marine deposits, developing onshore deposits. As proposed in the CMRA, approval procedures for strategic projects (Important Projects for European Interest, IPCEIs) should be further shortened, e.g. by setting up a pool of specially trained staff.Recycling could cover 50-75% of needs by 2050, but requires a completed internal market, such as a secondary market for critical raw materials, proper waste collection and export controls for waste.
   – Promote research into alternative materials.
2. Reduce dependencies on critical key technologies
   – Implement coordinated EU strategies with research, innovation and investment support, more relevant EU budget to combat fragmentation and speed up procedures (see recommendations on closing the innovation gap).
3. Strengthen the defence industry
   – In the short term, more joint procurement, including more at EU level, as many complex new weapon systems require cooperation between small European countries, for example in the areas of supersonic missiles, drones, defence AI (artificial intelligence), directed energy (lasers), etc. Currently, joint procurement accounts for only 18% of expenditure.
   – In the medium term, develop an EU industrial policy for defence, aimed at developing larger companies and greater interoperability of weapon systems. Currently, the defence industry is highly fragmented at national level, with companies suffering from economies of scale in a capital-intensive sector. A minimum EU share of procurement is to be introduced; currently, a large proportion goes to the US.
   – Increase research intensity: in the US, it accounts for 16% of defence spending, in the EU less than 5%.
4. Strengthen the space industry
   – End the geographical spending principle of the European Space Agency (ESA)[18] and select the best suppliers across the EU.

Reducing these unilateral dependencies could greatly increase the security of the EU.

2.4      Implementation: financing and EU governance

In order to implement these proposals, the Draghi report recommends changes to the EU’s financing and decision-making options.

2.4.1      Financing

According to the Draghi report, public and private financing of the proposals would require an increase in the investment ratio of 5 percentage points, or at least an additional €750 billion per year[19]. To secure this financing, the report proposes the following four points:

1. Public funds for start-up financing: the EU budget is limited, accounting for only 1% of EU GDP, while national budgets account for almost 50%. Nevertheless, it is not focused on strategic priorities, with agricultural subsidies still accounting for 30%. Over 50 support programmes lead to subcritical sizes for large projects. The EIB tends to invest in low-risk projects. Greater priority should therefore be given to strategic projects within the EU budget, e.g. through a separate competitiveness pillar, including for scale-ups. The EU guarantee for InvestEU[20] should be increased so that more high-risk projects and scale-ups can be financed. This implies that the EIB should also finance riskier and larger projects.
2. A new joint financing instrument to fund important European public goods, such as radical innovation or AI infrastructure that benefits everyone, or joint air defence (a Bruegel proposal, not in the Draghi report)^[21], cross-border electricity grids, etc.: It would contribute to the standardisation of financial markets in the EU and lead to a large, liquid financial market that attracts global investors, lowers the cost of capital in the EU and increases the importance of the euro as a reserve currency.
3. Mobilising private capital for investment
   – The creation of a capital markets union is essential. To this end, the European Securities and Markets Authority (ESMA)[22], for example, is to be upgraded from a coordinating body to a single regulatory authority, similar to the corresponding authority in the United States (Securities and Exchange Commission, SEC). Furthermore, uniform insolvency rules and a single settlement platform for securities transactions and a banking union should help, e.g. through a separate set of rules for large European banks with cross-border business. Many problems arise from the fact that EU directives are adapted nationally or applied or interpreted differently.
   – Household savings deposits should be channelled more into productive investments (EU households save significantly more than those in the US). The best thing would be to invest more in long-term savings products, such as pensions. There is too little long-term capital due to underdeveloped pension funds. In the EU, they account for only 32% of GDP, compared with 142% in the US. 62% of EU funds come from three countries – the Netherlands, Denmark and Sweden – where pension funds also invest heavily in venture capital for young companies.
4. Finally, it is essential to implement the reforms themselves, which should lead to increased productivity and thus provide more fiscal leeway.

Public and private financing of the proposals would require […] an increase in the investment ratio of 5 percentage points, or at least an additional €750 billion per year.

2.4.2      Improving EU governance

A new industrial strategy for the EU requires reform of the EU’s decision-making and coordination mechanisms. Currently, there is too little cross-departmental coordination in important policy areas within the European Commission alone, yet industrial policy in particular requires a broad mix. In addition, there are too many delays due to vetoes by individual actors. The average time taken for new legislative measures to come into force is 19 months. The Draghi report recommends three points for change even before any treaty amendment:

1. Refocusing the EU’s work
   – The report recommends a new coordination framework for competitiveness policy and EU-wide priorities. The previous coordination framework, such as the European Semester and the National Climate Action Plans, has been ineffective. The coordination framework should include action plans for each strategic priority, with targets, financing and control mechanisms.
   – The framework should be accompanied by a separate competitiveness pillar in the EU budget, competitiveness IPCEIs for cross-border projects and competitiveness joint undertakings for public-private partnerships between the European Commission, EU Member States and businesses.
   – However, subsidiarity should also be better respected – the report observes that national parliaments are passive in this regard.
2. Acceleration of EU activities
   – The report calls for more decisions to be taken by qualified majority in the European Council instead of unanimity. The so-called “passerelle clause” (Article 48(7) TEU) could be used to extend majority decisions in the Council to all policy areas, but this requires a unanimous decision in advance.
   – The second-best solution is cooperation between at least nine willing EU Member States in accordance with Article 20 TEU and Article 329 TFEU. One example of this would be the aforementioned ‘28th legal regime’, which was also used for the unitary patent.
   – Finally, the lowest common denominator is intergovernmental cooperation.
3. Simplification of rules
   – A new Vice-President for Simplification is to review the EU’s existing rules with a view to simplification and coordinate this process for the European Commission.
   – A uniform method for evaluating the impact of new regulations should be used by the European Commission, the Council and the European Parliament.
   – Reduction of reporting requirements by up to 50%, not only for SMEs (small and medium-sized enterprises), but also for companies with up to 500 employees.

A new industrial strategy for the EU requires a reform of the EU’s decision-making and coordination mechanisms.

2.5      Key levers of the Draghi report: “ending small-state mentality” and implementing an active industrial policy

The Draghi report makes a great many proposals, but some mechanisms recur repeatedly. Put simply, there are two key levers:

Firstly, “ending small-state mentality” and making better use of existing potential economies of scale wherever this is strategically important for increasing competitiveness. “In critical areas, the EU must act less like a confederation of states and more like a federal state”[23] .
Secondly, active sectoral industrial policy instead of just general “horizontal” policy for competitiveness, which uses all relevant levers in a broadly coordinated manner.

Realising economies of scale and deploying policy measures and resources in a coordinated and focused manner for priorities – and doing so more quickly than before – is how Draghi’s proposals could be described in a nutshell.

1. Realising economies of scale
   – Shift more spending to the EU level, as in research and innovation funding, as this allows it to have a greater impact.
   – EU Member States should at least pool their expenditure, as in the case of joint procurement of energy, critical raw materials or defence, or coordinate it, as in the case of IPCEIs, rather than acting uncoordinatedly on their own.A joint financing instrument that would bring many benefits for European competitiveness.
   – Less national fragmentation of markets through uniform European regulation, e.g. by upgrading coordinating EU authorities such as the European Securities and Markets Authority (ESMA) to EU regulatory authorities; or by establishing new EU-wide regulatory regimes, such as the “28th legal regime“.
2. Active sectoral industrial policy
   – This includes, in addition to the sector-specific use of trade, innovation and competition policy, e.g. allowing the consolidation of industries in terms of competition policy – i.e. fewer but larger companies operating across the EU, for example in defence or telecommunications; or, for example, minimum quotas for local production in public procurement to support infant industries and scale-ups.

In many cases, Draghi recommends measures that emerging economies would take – as China has successfully practised (e.g. protecting infant industries until they are competitive, securing spillovers from foreign investment, etc.), thereby acknowledging the EU’s lag in some areas. However, the EU should never practise blind protectionism, but should take an evidence-based approach and differentiate according to the situation, always in line with a rules-based economic order that provides instruments for responding to distortive subsidies abroad, for example.

In many cases, Draghi recommends measures that emerging economies would take – as China has successfully done […], thereby acknowledging the EU’s lag in some areas.

The levers proposed by the Draghi report thus differ significantly in some respects from previous European strategies for competitiveness. The Lisbon Agenda 2000[24] started under very similar circumstances, with a productivity gap compared to the US, and with the goal of making the EU the most dynamic and competitive economic area in the world by 2010. It failed spectacularly, for several reasons. Firstly, it relied heavily on the open method of coordination[25] , which sets common goals but then leaves the implementation of reforms to the member states without any legal obligations or sanctions (see Janger, 2006), which also makes it difficult to coordinate targeted measures across the EU. In addition, there was less prioritisation: the entire economic policy of the member states was under scrutiny, including labour market regulation and fiscal policy. With the Lisbon Agenda, the EU wanted to simplify reform incentives for member states so that their national economies would be in better shape.

The Draghi report has learned from this experience, as it consistently takes an aggregate EU perspective – the EU as a whole must improve, and to do so, it is necessary to strengthen the EU level itself. This includes more powers and spending for the EU level, fewer nationally fragmented markets and the promotion of the best across the EU, which may lead to regional differences. Draghi also calls for a better focus on a few priorities – competitiveness – and more effective coordination for an EU-wide sector-specific active industrial policy. Will Draghi’s proposals therefore work better than the Lisbon Agenda? The pressure and problems are even greater than they were then (see Chapter 1). The rules-based world order itself is at stake. Unlike in 2000, it is no longer just the US (and Japan), but above all China that is strongly committed to sectoral active industrial policy and is putting the EU’s competitiveness to the test, alongside geopolitical crises such as Russia’s war of aggression in Ukraine.

3.     Implementation status one year on

Progress to date has been limited. In a speech marking the first anniversary of his report[26], Draghi critically noted that the challenges described in section 3 have become even greater – due to Donald Trump’s tariff policy and the rise of China. The EU’s trade deficit with China also rose by 20% due to the diversion of Chinese exports from the US to the EU. The EU’s dependencies described above have prevented a stronger response: its dependence on the American protective shield forced the EU to largely accept the tariffs, while its dependence on critical raw materials prevented sharp trade reactions towards China.

Progress to date has been limited.

Draghi is particularly critical of the slow pace of reform, saying that the EU needs to move faster. Although progress has been made in some areas, such as AI with the five “gigafactories”[27] , the overall technological gap remains. Draghi calls for more ambition in several areas.

• Removing obstacles to the scaling up of new technologies.
  The European Commission is moving in the right direction with the “28th regime” for start-ups, but support from member states is uncertain. A public consultation ended on 30 September. Research funding should be concentrated in a few strategically important deep tech initiatives and awarded according to a DARPA-like process by programme managers who are themselves experts in the field.
• Regulatory simplification
  This applies in particular to the General Data Protection Regulation (GDPR), which should be simplified. Draghi also recommends a pause in AI regulation.
• Integration of AI into existing industries
  In industrial automation, EU companies actually have a 50% share of the global market – ideal conditions for the use of AI, but this is still lagging behind.

Draghi is particularly critical of the slow pace of reform, saying that the EU needs to move faster.

Draghi also criticises the still high energy prices, which will also slow down the digital transformation. None of the proposed reforms have been implemented yet, such as a reorganisation of the gas market, joint procurement of US liquefied natural gas or more investment in the expansion of the electricity grid. There are not even any investment plans for half of the cross-border network capacity that would be needed by 2030.

Little has been done in the area of e-mobility and the transformation of the European automotive industry. A coherent strategy is needed that combines regulation, charging infrastructure and supply chains. In his speech, Draghi also addressed criticism of sectoral active industrial policy (e.g. too protectionist or not rule-based). In his opinion, the past year has shown that countries are using all the levers at their disposal to assert their interests. The European response to this has been either uncoordinated national action or blind faith in the workings of market forces. The former never leads to sufficient scale, while the latter does not work when other countries pursue market-distorting policies.

Instead of uncoordinated national policies, Draghi proposes a reformed IPCEI model that spreads funds less widely across many companies or research institutions and concentrates them more, following the Japanese Rapidus model for the production of high-performance chips. Spending on national aid alone amounted to €190 billion in 2023, five times more than the cumulative expenditure on IPCEIs since 2018.

Too little has been done to make greater use of public procurement – 14% of EU GDP – for example, by introducing minimum quotas for EU shares; the same applies to competition policy that allows for greater size rather than national champions, a common capital market or a common financing instrument. In addition to the well-known proposals for speeding up decisions, Draghi recommends, above all, specifying concrete milestones, outputs and responsible parties in order to drive projects and reforms forward, as would have worked with the euro. New, well-intentioned strategies with announcements alone are not enough.

An analysis of progress in the form of the Draghi Observatory’s[28] and Implementation Index concludes that only 11% of the 383 recommendations have been fully implemented to date.[29] 20% have been partially implemented, 46% are in progress and 23% have not yet been tackled. Most progress has been made in the area of critical raw materials, with more than a third of recommendations implemented, and least in the area of energy.

An analysis of progress in the form of the Draghi Observatory and Implementation Index concludes that only 11% of the 383 recommendations have been fully implemented to date.

Overall, after one year, it is still too early to assess implementation, even though time is pressing. Some points are being addressed, and the European Commission has begun to focus on the reform proposals in the Draghi report with its Competitiveness Compass. There is a new internal market strategy[30] and efforts to create a savings and investment union[31] , which is intended to channel savings more effectively into productive investment. Progress is being made in establishing a single EU financial market regulator, which is important for the capital markets union, now that Germany is also keen to push ahead with this.[32]

One Achilles heel is the high financing requirements given the tight budgetary situation in many large countries such as France, Italy and Spain. Without a common financing instrument, EU member states have only limited capacity to invest. The focus should therefore be on low-cost regulatory reforms, such as the capital markets union or the “28th regime” for corporate legal forms, or on measures that increase the impact of existing expenditure, such as joint procurement or greater coordination. Such progress could be supported by cooperation between at least nine member states, which would agree on new measures that could then be adopted by others at a later date. And, in general, the success of the Draghi report will depend on the political will of the EU member states.

4.     Conclusions – Implications for Austria

The Draghi report aims to outline a new industrial strategy for Europe. It makes important proposals for improving European competitiveness, which are aimed at finally exploiting the EU’s economies of scale and creating a fair competitive environment for European industries through active industrial policy. Unlike previous strategies, Draghi recommends focusing on a few key priorities.

As a small, export-oriented country with limited fiscal leeway, Austria could benefit greatly from the implementation of Draghi’s proposals. Start-ups in Austria suffer particularly from a lack of venture capital and a small domestic market. A capital markets union and a completed single market, as well as a separate legal regime for start-ups that would allow them to start operating immediately in all EU countries, would be by far the most important structural measure that Austria could take to bring about structural change and end the industrial crisis. A completedsingle market would also help smaller companies in particular to compensate for lost international sales markets. A common European financing instrument could create fiscal leeway for future investments, given the very tight public finances. Gas market reforms and joint procurement could significantly reduce the high energy costs in Austria.

As a small, export-oriented country with limited fiscal leeway, Austria could benefit particularly from the implementation of Draghi’s proposals.

The implementation of Draghi’s proposals would therefore be in Austria’s own best interests, particularly given the current extremely challenging economic situation, with sluggish growth, high inflation and budget consolidation. Austria should therefore position itself as a driver of implementation at EU level and, together with other countries, not only push for implementation, but also seek cooperation under Article 20 TEU and 329 TFEU in order to accelerate important points.

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References

Draghi, M. (2024). The future of European competitiveness – A competitiveness strategy for Europe | European Commission.
Janger, J. (2006). National Lisbon reform programmes: Ideas for Austrian economic policy. Monetary Policy & Economy Q, 2, 49–71.

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Footnotes

[1] EU funding instrument for breakthrough innovations and scale-ups, also part of Horizon Europe. https://eic.ec.europa.eu/index_en
[2] EU funding programme to support excellent basic research, part of Horizon Europe. https://erc.europa.eu/homepage
[3] US research agency of the Department of Defence, responsible for high-risk innovation projects (e.g. the internet, GPS). https://www.darpa.mil/
[4] Currently, 18 member countries participate. See: https://www.epo.org/en/applying/european/unitary/unitary-patent
[5] First-time listing of a company on the stock exchange (initial public offering). https://en.wikipedia.org/wiki/Initial_public_offering
[6] EU directive on capital and risk supervision for insurance companies. See: https://www.fma.gv.at/versicherungen/solvency-ii/
[7] Subsidiary of the EIB; specialises in venture capital and financing for SMEs and start-ups. https://www.eif.org/index.htm
[8] The European Investment Bank; it finances projects in the EU, including innovation, infrastructure and climate protection. https://www.eib.org/de/index
[9] For details, see, for example, the campaign at https://www.eu-inc.org/.
[10] https://www.ihk.de/duesseldorf/aussenwirtschaft/rechtsfragen/eu-kommission-binnenmarktstrategie-6571762
[11] https://www.bmf.gv.at/themen/finanzmarkt/finanzmaerkte-kapitalmaerkte-eu/kapitalmarktunion.html
[12] https://www.acer.europa.eu/electricity/market-monitoring/ppas
[13] https://www.eurelectric.org/in-detail/cfds_explainer/
[14] https://cinea.ec.europa.eu/programmes/connecting-europe-facility_en
[15] https://www.klimaschutz-industrie.de/themen/branchen/
[16] https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en
[17] https://single-market-economy.ec.europa.eu/sectors/raw-materials/areas-specific-interest/critical-raw-materials/critical-raw-materials-act_en?prefLang=de
[18] https://www.esa.int/; ESA carries out procurement in line with the countries’ funding shares.
[19] For detailed calculations, see https://www.ecb.europa.eu/press/blog/date/2025/html/ecb.blog20250725~f26b4ef0f3.en.html
[20] https://investeu.europa.eu/investeu-programme/investeu-fund/about-investeu-fund_en
[21] https://www.bruegel.org/policy-brief/financing-european-air-defence-through-european-union-debt
[22] https://european-union.europa.eu/institutions-law-budget/institutions-and-bodies/search-all-eu-institutions-and-bodies/european-securities-and-markets-authority-esma_de
[23] Draghi speech on the one-year review, p. 9, https://commission.europa.eu/document/download/0951a4ff-cd1a-4ea3-bc1d-f603decc1ed9_en?filename=Draghi_Speech_High_Level_Conference_One_Year_After.pdf
[24] https://de.wikipedia.org/wiki/Lissabon-Strategie
[25] https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Glossary:Open_method_of_coordination_ (OMC)/en
[26] https://commission.europa.eu/document/download/0951a4ff-cd1a-4ea3-bc1d-f603decc1ed9_en?filename=Draghi_Speech_High_Level_Conference_One_Year_After.pdf; see alsohttps://www.ft.com/content/1b214891-54cb-4dd3-889b-5720bb7c105d
[27] Elon Musk coined the term “Gigafactory” in 2013 when he was planning a new, particularly large Tesla factory in Nevada to replace the factory in Fremont, which had become too small.
[28] https://thinkepic.eu/the-draghi-observatory/
[29] https://thinkepic.eu/draghi-observatory-implementation-index-only-1-in-10-measures-implemented/
[30] https://www.ihk.de/duesseldorf/aussenwirtschaft/rechtsfragen/eu-kommission-binnenmarktstrategie-6571762
[31] https://finance.ec.europa.eu/regulation-and-supervision/savings-and-investments-union/factsheet-savings-and-investments-union_en?prefLang=de&etrans=en
[32] https://on.ft.com/4q2JjUV

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Glossary

TERM	DEFINITION / EXPLANATION
Active sectoral industrial policy	Industrial policy that specifically promotes certain industries or key technologies (e.g. energy, defence, AI) in order to reduce strategic dependencies and secure technological leadership.
Article 20 TEU / Article 329 TFEU	Provisions allowing a group of at least nine EU Member States to engage in enhanced cooperation in certain policy areas.
Bruegel Institute	European think tank focusing on economic policy.
Business angels	Experienced individuals who provide financial support to start-ups and also contribute their expertise, networks and mentoring to promote the success of young companies.
Capital Markets Union	Planned single European market for capital to facilitate investment and venture capital across national borders.
Carbon Border Adjustment Mechanism (CBAM)	EU instrument that imposes a CO₂ price on imports of CO₂-intensive products in order to avoid distortions of competition.
Carbon Capture and Storage (CCS)	Technology for capturing and storing CO₂ emissions from industrial processes.
Clean tech (clean technologies/environmental technologies)	Technologies, products or processes that reduce environmental impact and use resources more efficiently, e.g. renewable energies, energy efficiency, recycling, hydrogen or battery technologies.
Competitiveness Joint Undertakings	EU-funded partnerships between companies, research institutions and organisations that work together on technological developments or innovations to strengthen Europe’s competitiveness in specific industries.
Connecting Europe Facility (CEF)	EU financing instrument for the expansion of energy, transport and digital infrastructure.
Contracts for Difference (CfD)	EU financing instrument for the expansion of energy, transport and digital infrastructure.
Critical Raw Materials Act (CRMA)	EU law to secure access to critical raw materials by promoting extraction, recycling and strategic storage.
DARPA model	Funding approach with clear, ambitious goals, expert-led programmes and a focus on rapid implementation – Draghi recommends an EU counterpart.
Deep tech	Technologies with a high research component (e.g. AI, quantum computing, biotech), often the basis for disruptive innovations.
Defence Advanced Research Projects Agency (DARPA)	US funding agency that develops groundbreaking technologies of strategic importance (primarily military); serves as a model for EU funding structures.
Energy Union	Concept for a more integrated European energy policy, particularly with regard to electricity grids and gas procurement.
ESMA (European Securities and Markets Authority)	EU authority for securities supervision; according to the Draghi report, it is to be expanded into a central EU financial supervisory authority.
European Innovation Council (EIC)	EU programme to promote radical innovation and support start-ups and scale-ups.
European Research Council (ERC)	EU funding institution for excellent basic research.
European Semester	EU process for coordinating the economic and fiscal policies of member states.
European Union Emissions Trading System (EU ETS)	European emissions trading system; central mechanism for pricing CO₂ emissions.
Gold plating	The process whereby EU requirements, directives or laws are tightened or extended by Member States or organisations beyond the minimum requirements, often at higher cost or with additional effort, without this being legally necessary.
High Performance Computing (HPC)	High-performance computers used for complex calculations, AI models and scientific simulations.
Important Projects of Common European Interest (IPCEI)	EU mechanism for promoting strategically important cross-border industrial projects.
Infant Industry Protection	Temporary protection for new, emerging industries to enable them to enter the market and grow.
InvestEU	An EU financing programme that supports investment in strategic projects to promote economic growth, innovation, jobs and sustainable development in the EU.
Level playing field	Term for fair competitive conditions in which no region or company is systematically disadvantaged or favoured.
Lisbon Agenda (2000)	Former EU strategy with the aim of making the EU the “most competitive economic area in the world” by 2010 – largely unsuccessful.
Open method of coordination (OMC)	EU coordination procedure based on voluntary cooperation without legally binding obligations.
Passerelle clause (Art. 48(7) TEU)	EU treaty clause that allows a transition from unanimity to majority voting in certain areas.
Power Purchase Agreements (PPA)	Langfristige Stromabnahmeverträge zwischen Energieproduzenten und -verbrauchern, häufig im Bereich erneuerbare Energien.
28th Regime	Planned uniform European legal regime that allows companies to register and operate in all EU countries simultaneously (especially for start-ups).
Scale-ups	Young, fast-growing companies that are already successful on the market but need capital and market size for further growth.
Scaling up	The process of systematically expanding a company or project to reach new markets, achieve higher sales or have a greater impact without losing efficiency or quality.
Securities and Exchange Commission (SEC)	US financial supervisory authority; serves as a model for strengthening ESMA
Solvency II	EU directive regulating insurance, including requirements for capital adequacy.
Spillover	An effect whereby activities or innovations in one area have unintended positive or negative effects on other areas or actors.

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About the article

ISSN 2305-2635
The views expressed in this publication are those of the author and not necessarily those of the Austrian Society of European Politics or the organisation for which the author is working.

Keywords
Draghi report, EU competitiveness, industrial strategy, artificial intelligence

Citation
Janger, J. (2025). More Competitiveness and a New Industrial Strategy for Europe: Implementing the Draghi Report. Vienna, ÖGfE Policy Brief, 07a/2025.

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