The recently released ‘The future of European competitiveness: A competitiveness strategy for Europe’ authored by Mario Draghi, former European Central Bank President, presents a comprehensive roadmap for revitalizing the European Union’s global competitiveness. While the report’s ambitious vision for European renewal has garnered significant attention, its potential implications for the Global South deserve careful scrutiny. particularly regarding resource extraction and digital trade dynamics. This piece aims to bridge this gap by examining the potential impacts on the Global South, with a focus on resource extraction and digital trade dynamics. It draws on insights from secondary literature and interviews with key stakeholders to provide a comprehensive analysis.
Background
The President of the European Commission Ursula von der Leyen commissioned the report in September 2023 amidst growing concerns about the EU’s declining productivity growth and its ability to achieve its strategic ambitions, particularly in sustainability and technological innovation. The report is structured into ten chapters focusing on sectoral policies and five chapters on horizontal policies, endorsing a new industrial strategy centered on three pillars: bridging the innovation gap with the US and China; capitalizing on global decarbonization opportunities; and securing strategic supply chains. Recommendations in the report cover areas such as innovation, governance, sustainability, advanced technology, artificial intelligence, and regulation, and critical raw material.
The report must be viewed within the frame of the EU’s digital ambitions, which underscores the necessity of securing global technology value chains and advocates for a more aggressive industrial policy to avoid falling into the middle-tech trap.
The report must be viewed within the frame of the EU’s digital ambitions, which underscores the necessity of securing global technology value chains and advocates for a more aggressive industrial policy to avoid falling into the middle-tech trap. Additionally, it calls for stricter regulations on foreign actors while promoting a more favorable environment for EU-based firms.
Roadblocks to Implementation
The report envisions massive public investment, which would require debt issuance to achieve its objectives, particularly for the innovation gap. It also aims to leverage domestic policies, such as competition law and trade policy, to build European “super platforms” capable of competing with the giants inChina and Silicon Valley, while simultaneously cracking down on the latter. However, as research and our interviews indicate, there are serious political and structural hurdles to doing this.
One major issue is the leadership vacuum in key EU member states. French influence has waned following President Macron’s political setbacks, and Germany’s coalition government has struggled with internal discord and weak electoral outcomes. The rise of radical right-wing parties across Europe further diminishes the appetite for treaty reforms or deeper integration. Financially, the report calls for bold measures such as new debt issuance by EU member states to fund strategic investments—an approach traditionally opposed by fiscally conservative nations like Germany and the Netherlands.
The rise of radical right-wing parties across Europe further diminishes the appetite for treaty reforms or deeper integration.
Moreover, the re-election of Donald Trump in the US may create impediments to the EU’s ability to execute its strategic agenda. In particular, measures promoting domestic Big Tech through regulation or trade may raise alarms with the Trump administration 2.0 which is now much closer to Silicon Valley.
Domestic Green Growth and Extractivism
The report places decarbonization goals at its core. It emphasizes a marriage of decarbonization and competitiveness. It underscores that Europe should deploy smart and technology-specific green industrial policies tailored to the circumstances of each industrial sector to balance the trade-offs between decarbonization, competitiveness, and security.
The report places decarbonization goals at its core. It emphasizes a marriage of decarbonization and competitiveness.
Trade is recognized as a key instrument in achieving this goal. The report recommends critical raw materials resource diplomacy to secure supply and promote diversification of supply chains. It encourages the EU to collaborate strategically with “like-minded” countries that have access to low-cost renewable energy sources and raw materials, leveraging its clean tech leadership by investing in other countries, including supporting near-zero emissions processes for material production. Behind the veneer of strategic partnerships and mutually beneficial relationships lies a deeply extractivist agenda.
With limited scrutiny, it becomes clear that the resource-rich countries envisioned in the report are predominantly in the Global South, particularly Africa. This focus implies a greater emphasis on two areas: first, the mining and procurement of critical minerals for export, and second, the creation of infrastructure for clean energy or the use of clean technology in raw material production. The latter may serve as a form of greenwashing to offset the environmental costs of mining, while the former could drive further raw material extraction to serve European strategic interests. This approach remains myopic to the global challenge of climate change and reinforces existing patterns of core-periphery extractivism.
This approach remains myopic to the global challenge of climate change and reinforces existing patterns of core-periphery extractivism.
This analysis of the report is supported by examining the broader push for critical mineral diplomacy within the EU in recent years. As González and Verbeek note, in its pursuit of becoming “climate-neutral,” the EU “has joined the global scramble for raw materials with a neocolonial slant.” Instead of addressing its own overconsumption and production rates, it is accessing transition minerals like nickel and lithium by “exploiting unequal trade agreements with resource-rich countries in the Global South.” Analysts have explained how the trade relations promoted by the EU could lead to structural economic deficiencies in the global economy, with many countries in the Global South remaining at the bottom of the global value chain due to their excessive reliance on extractive industries and low-value-added manufacturing.
The report advocates for a strategic realignment of the EU Multiannual Financial Framework (the long-term budget), emphasizing the prioritization of EU’s strategic interests. These recommendations could potentially reshape international financial assistance, particularly concerning the Global South. For example, proposed changes may impact the Neighbourhood, Development, and International Cooperation Instrument (NDICI), which caters to the African and Latin American regions. While NDICI traditionally supports broad objectives such as democratic development, human rights, sustainable development, and conflict resolution, it may be restructured with a more restricted focus on the decarbonization agenda.
Digital Trade and Imperialism
In the context of competition and innovation, the primary focus is on fostering domestic digital technology superstars capable of competing with the US and China in key sectors. Both regulation and trade are recognized as key pillars for this objective. Draghi supports moving away from a one-size-fits-all approach to trade policy in favor of a more flexible, pragmatic, and individualized approach to EU trade policy. The report focuses on how trade policy could be used to protect and promote the internal market, but it does not explore or offer recommendations related to how this policy could be used to advance the cause of these domestic tech superstars in the foreign market.
The EU may rely on strategic investments in international development projects and trade agreements to push for beneficial terms for its private sector and gain market access, similar to the approaches taken by the US and China in Global South markets.
However, for these domestic superstars to compete with the US and Chinese firms at scale, they would need to expand and exert influence in non-EU markets, particularly in the Global South countries. The EU may rely on strategic investments in international development projects and trade agreements to push for beneficial terms for its private sector and gain market access, similar to the approaches taken by the US and China in Global South markets. This would align with the EU’s approach to digital trade, where especially in the last decade, it has pushed for an agenda that allows its companies to operate freely and maximize their profits in the digital economy while restricting the ability of host states to regulate the sector, redistribute profits, or pursue local technological development strategies to ensure domestic competitiveness. This structure has been termed colonial and extractive, fostering what some argue is a “deliberate structural underdevelopment” of low-income countries. Similarly, infrastructural development processes like the Global Gateway have been criticized for their expansive economic and consumption logic, techno-solutionist orientation, privatization and financialization of development policy, and for exacerbating the North-South dependency.
Given this context, at best, the trade and foreign policy tools that may be used to promote domestic tech champions would maintain the current status quo; at worst, they usher into a more expansive and aggressive strategy, deepening data colonialism and entrenching neoliberal exploitation in Global South markets.
South-South cooperation emerges as a powerful counter-strategy, enabling developing countries to collectively negotiate, create alternative digital ecosystems, and resist exploitative digital trade practices. With dedicated effort and unity, the Global South can chart a more equitable digital future.
In response to these systemic challenges, Global South countries must recognize the critical importance of collective resistance and strategic collaboration. Countering extractivist and neo-colonial strategies is only possible through concerted efforts from these nations. South-South cooperation emerges as a powerful counter-strategy, enabling developing countries to collectively negotiate, create alternative digital ecosystems, and resist exploitative digital trade practices. With dedicated effort and unity, the Global South can chart a more equitable digital future.
Conclusion
Whilst the Draghi report presents itself as a comprehensive vision for revitalizing EU competitiveness, there are serious question marks regarding Europe’s capacity to genuinely crack down on the power of Big Tech in today’s political circumstances. Given this, the danger is for the EU’s digital and industrial ambitions to find their own only outlet in entrenching extractivist practices and digital imperialism in the Global South. Such strategies could exacerbate dependencies, reinforce structural underdevelopment, and replicate historical colonial dynamics.
Given this, the danger is for the EU’s digital and industrial ambitions to find their own only outlet in entrenching extractivist practices and digital imperialism in the Global South.
However, there is perhaps a potential for fostering a fair, and mutually beneficial collaboration between the EU and the Global South. Shared interests, such as promoting technological sovereignty, domestic industry, and service sector growth provide a foundation for such an alignment. By focusing on enhancing technological capacity through the transfer of technical knowledge, ensuring equitable profit-sharing, establishing fairer trade, investment, and intellectual property terms, and respecting policy space for digital sector regulation, the EU could position itself as a credible alternative to the US and China. But, given the current distribution of military loyalties and alliances—particularly NATO’s role in binding the EU to the American bloc—there is a major structural impediment to even conceiving such a path forward. Thus, perhaps a more free, and just digital justice sphere will require us to navigate the complexities of today’s volatile, and war-ridden geopolitical environment. Without these efforts, the EU risks perpetuating global inequality under the pretense of green transitions and digital innovation.
