Portugal perfectly placed to become a bioeconomy leader
Text and Photos: Chris Graeme
Portugal, with its knowledge, expertise, and geography, is well-placed to become a trailblazer in the bioeconomy that will be one of the key drivers underpinning the technological revolution in the coming decade.
This is according to Deborah L. Wince-Smith, the President of the United States Council on Competitiveness who was a keynote speaker at the 4th Transatlantic Business Summit which took place on Tuesday, 24 September, at the Grand Auditorium of Lisbon’s Gulbenkian Foundation.
With the theme ‘Tomorrow’s Challenges’, the full-day event organised by the American Chamber of Commerce in Portugal (AmCham Portugal), discussed topics such as China and its bid to become the major global hegemon, the emergence of new multi-polar world order, extreme left-wing and right-wing populism, and Europe’s waning competitiveness in a post-industrial world, regulation, and the increasing economic gulf between the US and Europe over competitiveness and innovation in new technologies all topped the agenda.
And there was a chilling warning from “staunch Atlanticist” João Vale de Alameda. Former EU ambassador to the UK, US and UN that the 2020s were looking a lot like the 1920’s as the old order was declining, replaced by increasing power rivalries, the polarisation of civil societies, security instability, protectionism, and a disturbance of trade flows and supply chains.
Opening the conference, the President of AmCham Portugal, António Martins da Costa outlined the challenges facing businesses and societies in today’s changing world, reflecting on the current trend and challenges from offshoring to nearshoring and reshoring, the US presidential elections in November, the world’s ballooning US$97Trn debt, the future sustainability of the welfare state, the importance of the circular economy and mass migration in a world blighted by conflicts in the Middle East, Eastern Europe and South China Sea.
He emphasised the importance of the Trans-Atlantic relationship in a world where the centre of gravity is moving eastwards, namely the Indo-Pacific, and the key moment which will decide how the world is going to be shaped, the US presidential elections in November and the race for a new world order between two competing economic powers: the US and China.
EU-US – a powerhouse of trade and investment
Keynote speaker Douglas A. Koneff, the Minister Councillor at the US Embassy and Consulate in Lisbon reminded that the EU and US we engaged in the biggest economic and trading relationship in the world – a deep economic relationship that was a “tremendous driver for prosperity” on both sides of the Atlantic, accounting for 50% of total and close to one-third of world GDP in terms of purchasing power.
The US$8.7Trn Trans-Atlantic employs 16 million workers on both sides of the Atlantic, while according to the EU AmCham 2024 Trans-Atlantic Economy Report, total stock of US FDI in Europe was US$4Trn in 2022, more than four times the US investment in the Asia-Pacific region and 21 times the FDI stock in China.
Total European investment stock in the US was US$3.4Trn in 2022, accounting for half of all global FDI flows into the US.
In terms of trade, total goods and services trade topped US$1Trn in 2022, 50% more than EU-China trade, and over twice the size of US-China trade.
The multi-trillion-dollar digital economy was also crucially important for the global economy and “we (Europe & US) are its backbone”.
Europe is the global leader in cross border digital connectivity, the Trans-Atlantic data seaway is the biggest in the world with submarine cables in the Atlantic carrying more than twice the traffic of the Trans-Pacific and Asia routes.
In Portugal, a US company, Start Campus, is currently developing the largest data centre in Europe.
As for energy, the US is the largest supplier in Europe of Liquified Natural Gas (LNG), accounting for 50% of European imports, and Europe is the top LNG export market for the US, at over 60% – double the supply to Asia.
“But as robust as this relationship is, we don’t always see eye-to-eye on every issue, and that’s normal in any strong partnership. What is remarkable is that despite these differences, the US and Europe continue to be the most successful regional economic and trade partners in history.”
Koneff also highlighted the Mário Draghi report that states: “Europe’s innovative capacity is declining, compared with other major advanced economies, as is its business dynamism.” ‘The future of European competitiveness’ report also warns that “intensifying state-led Chinese competition, geopolitical tensions and continued reliance on imported energy mean that policy procrastination could lead to permanent stagnation, or worse.”
Prince Henry the Navigator – a model for innovation
Another keynote speaker, Deborah L. Wince-Smith, the President of the United States Council on Competitiveness, also admitted that the US was suffering from a decline in productivity.
She also reminded that every school child in the US learns about the role of Henry the Navigator in circumventing the globe and that this innovative approach to exploration, engaging and being connected in the 15th century is “embedded in the DNA of your nation”.
“Prince Henry was a great precursor and model for what we need to do today in innovation. His beliefs and actions are very related to one of America’s great revolutionary war heroes, John Paul Jones whose famous quote – written in the US passport – was “those who do not risk, will have no rewards” (As the Portuguese say: ‘Quem não arrisca não petisca’.
“Risk-taking and seafaring nations like Portugal and the United States with our partners and allies in Europe, Latin America, and Asia must join forces to explore, discover, to co-create the new worlds that are rapidly emerging at such an ever-accelerating pace and work-speed, a technological change that is disrupting our economies, societies and national securities.”
US productivity in decline in 3 key sectors
Deborah L. Wince-Smith said that the world was on the cusp of the age of innovation and illumination and reminded:
“A nation’s competitiveness depends on its ability to increase its productivity, while delivering and growing an inclusive standard of prosperity for all its citizens and succeeding globally.”
“The issues and the challenges change but the metrics of productivity is still a very important metric for the future.
And according to the report ‘No recovery, the long-term decline of US productivity’ while it is true that in the seven years since the Great Recession, job growth in the US has been steady and unemployment has fallen from 10% to just under 5% and booming tech and professional services sectors should denote a healthy economy and productivity growth, the Gallup analysis identifies fundamental weaknesses in the US economy that have been emerging over decades.
Economic growth has gradually fallen since the 1970s and 1980s, and three large sectors bear primary responsibility for the malaise: healthcare, housing and education. In 1980, healthcare, housing and education claimed 25% of national spending. By 2015, that share had ballooned to 36%. The costs to both national and per capita GDP are enormous.
As the costs of these services rise, the value they generate — in terms of health, learning and shelter — has stagnated or even declined. When the quality-to-cost ratio falls, living standards do as well.
Gallup’s analysis, in collaboration with the U.S. Council on Competitiveness, presents the causes and effects of long-term U.S. declining productivity growth, and makes a case for a new growth strategy.
“These three activity areas have no growth in productivity, ever-increasing costs, and are delivering less value and they will require massive innovation to change that trajectory”, she said.
“It gave us a clarion call that we needed to put together a policy initiative to understand what the drivers will be for the next wave of productivity and what we need to do as a nation to respond to that,” the CEO of the Council on Competitiveness added.
They brought together 60 leaders from academia and industry to deep-dive the issue and discovered they could innovate much faster than they had thought with the digital revolution and made a break-through with the vaccine in just one year bringing everybody in the country together to accomplish that.
The first report from the commission set up by the Council on Competitiveness set out a 10X strategy – 10 times the amount of innovation, 10 times the speed of innovation, and 10 times the number of innovators.
Part of a strategy to revitalise growth is cutting unnecessary laws and regulations that are obstructing mutually beneficial transactions from happening in health, education and housing, any other areas.
This need for a new strategy also ties in with the Chips plus Science Act – a U.S. federal statute enacted by the 117th United States Congress and signed into law by President Joe Biden on August 9, 2022.
The act authorises roughly US$280Bn in new funding to boost domestic research and manufacturing of semiconductors in the United States, for which it appropriates US$52.7 Bn. The act includes US$39Bn in subsidies for chip manufacturing on US soil along with 25% investment tax credits for costs of manufacturing equipment, and US$13Bn for semiconductor research and workforce training, with the dual aim of strengthening American supply chain resilience and countering China.
And as President Xi of China has said “whoever wins these technological races will control the world” and Russian President Vladimir Putin has linked that directly to AI. Xi has also said China will control the global supply chains, making the rest of the world rely on China.
“We have these multiple technology revolutions, and they are converging and colliding – the digital, biotech, genetic, nanotech, big data, quantum, apex technology, and AI, are rewriting our world in digital, genetic, atomic and neural code and have profound effects on our economy with profound implications for national security.”
As for the new bio-economy, a recent study suggests that as much as 60% of physical inputs to the global economy can and will be produced biologically by companies manufacturing products such as bio-enzymes, micro-organisms, proteins, biomass, building materials, electronics, chemicals, consumer products, plastics, food production, mining, pharmaceuticals, and the list goes on….
“Portugal is in a perfect position to capitalise on its expertise and capabilities with Católica University doing a tremendous job of research and industrial partnerships in the blue economy which is a foundation for the bio-economy and I am positive that here in Portugal you should double down on how you can connect all of the dots to be a leader in the emerging bio-economy because this is an opportunity to truly leapfrog from the 20th century legacy industries,” , Deborah L. Wince-Smith emphasised.
Cutting regulation – less reports, more action
Susan Danger, the CEO of AmCham EU brought the Brussels perspective to the challenges facing the US and EU.
AmCham EU represents over 160 US companies committed to investing in Europe with the objectives to build a strong and united Europe and to maintain the strength of the Trans-Atlantic partnership.
“The attractiveness and competitiveness of Europe is under threat, and we’ve been ringing the alarm bells for a couple of years now, it’s not new: dire skills shortages, regulatory burden, fragmentation within the single market which in my opinion is the first thing to address. How can we possibly hope to have a Trans-Atlantic market if we can’t address the EU single market, and many member-states are not doing it.”
The policy makers are finally now sitting up and thinking about it and know that the disparity with the US in terms of GDP has widened from 15% in 2002 to 30% in 2023.
On a capita basis, real disposable income has grown almost twice as much in the US as in the EU since 2000 with the innovation gaps between the EU and China getting larger and larger.
“This will continue to happen until we take urgent action. A report from 2023 from the European Centre for International Political Economy which ranked each of the states in the US and the 27 EU member states together.
When averaged out the US comes in 19th position, the EU average is 60th position, and Portugal is in the 71st position on the list.
“We need to be practical and do things rather than just talk”, said Susan Danger and this Is why AmCham EU has set an Agenda for Action – How to tackle and improve the attractiveness of Europe with three areas of focus: 1) a competitive, sustainable and digital single market with a reduced regulatory burden. 2) A strong and resilient Europe on the international scene (multilateral rules and a rules-based trade system). 3. An equitable and democratic Europe (providing a boost for the underprivileged in education, for example).
“Almost all the EU member states except Luxembourg ranked below the US average with 11 member states with a GDP lower per capita than 60% of US states – the gap is huge.”
The prosperity gap between US and EU citizens by 2035 will be as big as between Europe and India as it stands today if nothing is done.
In the US the wake-up call resulted in the Inflation Reduction Act in 2022 which has kick-started discussions in Europe, as well as the Green Deal Industrial Plan, and the Net Zero Industry Act.
“The focus for us is business and the focus in the EU should be on that regulatory burden because it is the absolute number 1 obstacle to business and we have to change that,” said Susan Danger.
“The EU is known as being the regulator, China as the replicator and the US as the innovator and it’s true, so regulation and competition policy needs to be addressed, financing business, including capital at the CMU and strategic international partnerships.
Finally, the policy makers, the EU does like reports but what we’re nervous about now is if this is going to be another report? We’ve seen so many reports coming out of Europe, but now we need action,” concluded Susan Danger, the CEO of AmCham EU.
Picture: Deborah L. Wince-Smith (Photo: Chris Graeme)
