Nobel Economists Advocate for Unified EU Capital Market to Address Economic Challenges

Two Nobel Prize-winning economists, Philippe Aghion and Paul Krugman, have recently weighed in on the economic dynamics between the European Union and the United States, highlighting the need for structural reforms in the EU to foster innovation and competitive growth.

Philippe Aghion, awarded the Nobel Prize in Economics in 2025, called for the creation of a single capital market within the European Union as a strategy to boost innovation and productivity. Speaking in an interview on January 11, Aghion criticized the slow economic growth in the eurozone, which stood at just 0.3% in the third quarter compared to the US’s robust 4.3%. He stressed that Europe must invest more in research and education, pointing to the return of prominent researchers like Yann Le Cun as a hopeful sign. Aghion proposed a reform of the EU’s structure by forming a "voluntary coalition" of willing member states to establish this unified capital market, rather than involving all 27 members, which he considers potentially too complex and slow. He also envisions this market supporting a technology ecosystem inspired by the US’s DARPA, to drive innovation.

Meanwhile, Paul Krugman addressed the perception that Europe has been economically lagging behind the US since the late 1990s. Krugman emphasized the fragility of the data that purportedly shows Europe’s economic deficit, acknowledging that US companies have made significant advances in information technology, contributing to faster productivity growth. He highlighted economist Gabriel Zucman’s rebuttal of disparaging remarks by the US Ambassador to the EU, Andrew Puzder, who claimed Europe is as poor as Mississippi. Zucman argued that such comments misrepresent Europe’s economic strength and that the productivity gap is mainly due to the rapid growth of the US technology sector rather than a generalized European failure.

Together, these perspectives underscore the challenges and opportunities faced by the EU. Aghion’s push for a unified capital market aims directly at addressing innovation deficits by increasing research funding and facilitating capital flow, while Krugman’s analysis provides context that tempers pessimism about Europe’s competitive position and suggests the need for nuanced understanding.

This discourse highlights an ongoing debate within economic circles on how to revitalize the European economy and compete on a global scale, with France playing a key role given its leadership in EU economic policy and commitment to innovation investment.