Health as Wealth: Unlocking Europe's Economic Potential Through Innovation and Prevention
- Prof Francesco Moscone
- Mar 17
- 5 min read
Over the past years, I have had the privilege of discussing Europe’s socio-economic challenges at various forums, emphasising the urgency of addressing the continent’s competitiveness and internal inequalities. Mario Draghi’s recent report on Europe’s economic landscape highlights the need for bold, innovative solutions to sustain growth in an increasingly competitive global environment.
Europe faces two critical challenges: lagging productivity compared to global competitors like China and the United States, and growing disparities within its member states. As illustrated by a recent report by Draghi (2024)[1], the EU experienced rapid catch-up growth fueled by rising productivity and population growth. However, these drivers have slowed. EU labor productivity rose from 22% of the US level in 1945 to 95% in 1995 but has since declined to below 80% of the US level, with slower growth than in the US (see Figure 1).
These issues are compounded by an aging population and resistance to migration in some regions, creating long-term economic vulnerabilities. To remain competitive, the European Union must adopt a holistic approach that prioritises innovation, improves public health, and addresses structural challenges.
Health as an Economic Lever
An often overlooked aspect of Europe’s competitiveness is the burden of non-communicable diseases (NCDs) such as cancer, cardiovascular conditions, and chronic respiratory illnesses. NCDs now account for 80% of the disease burden in the EU, disproportionately affecting aging populations and reducing workforce productivity.
Moreover, these diseases are largely preventable, stemming from unhealthy lifestyles, poor diet, smoking, excessive alcohol consumption, and physical inactivity.
Addressing NCDs would not only improve public health but also enhance economic resilience. The financial costs are staggering, with NCDs costing the EU an estimated €700 billion annually. Unhealthy lifestyles also reduce labor productivity, strain healthcare systems, and deepen social inequalities, creating a vicious cycle of reduced economic output and higher public spending. Tackling NCDs through targeted policies can break this cycle, leading to a healthier, more productive workforce and a more competitive Europe.
Policy Recommendations: A Comprehensive Strategy
To avoid falling behind, both Brussels and EU member states must step up their efforts and exploit all available levers to boost innovation and economic resilience. A health-focused strategy must align with broader initiatives to mobilise investment, increase market size, and remove regulatory barriers.
1. Mobilizing Investment
Public and private investments must be scaled up, even amidst political constraints. While public funds are critical, private investment can be mobilised by creating a conducive environment for high-growth sectors. Policymakers should prioritise disruptive innovations, focusing on those industries capable of building European resilience and growth, and positively challenging other players in the international arena. Companies interested in bringing industrial capabilities back to the EU, or to insist in investing in it, should be incentivized.
Investments in digital healthcare solutions, preventive medicine, and consumer health innovations could mitigate the costs of aging populations while creating new growth opportunities. Public funding should also focus on upskilling workers affected by innovation, ensuring that economic transformation does not exacerbate inequality. Doing so together with the corporate world in a sort of public-private partnership, would likely increase the efficiency of this intervention, improving public outcomes.
2. Removing Regulatory Barriers
As is the norm everywhere in the world, the speed of innovation is higher than the one of regulation. Not accepting such a reality means creating bottlenecks that stifle progress in the impossible race of specifically regulating something that is always changing. Regulatory regimes must intelligently evolve to balance risk and opportunity, particularly in transversal technologies and system-critical sectors. Current approaches, such as the precautionary principle, often emphasise risks while completely neglecting the opportunity costs of not innovating.
Instead, the EU should adopt a dynamic regulatory framework that enables innovation under controlled conditions, such as sandboxes, where emerging technologies can be tested, refined, and scaled. For healthcare, this means streamlining market entry for innovative products like low-risk medical devices or digital health tools. Accelerating approval processes would incentivise companies to shift their portfolios toward preventive and less risky alternatives, encouraging healthier consumer behaviors.
3. Increasing Market Size
Fragmented markets in the EU hinder start-ups and innovative businesses from scaling. Removing regulatory and bureaucratic barriers would create a unified market, increasing demand for investment and fostering innovation. A larger, more integrated market would also reduce costs for consumers and expand access to life-improving technologies and services, particularly in healthcare.
4. Managing the Impact of Innovation
Policymakers must address the socio-economic consequences of innovation, especially in industries undergoing rapid transformation. In healthcare, this involves adopting a long-term perspective that prioritises prevention over treatment. Adjacent sectors, such as consumer goods, should be viewed as allies in this effort, as they can play a pivotal role in promoting healthy lifestyles.
For example, EU regulation should encourage companies to produce healthier consumer goods by lowering barriers to market entry for innovative products and nudging producers to adjust their behaviors. By integrating prevention into healthcare policy, the EU can reduce long-term costs while improving population health.
Behavioural and Economic Strategies for Health
The EU’s “Europe’s Beating Cancer Plan” already acknowledges the preventable nature of NCDs, emphasising targets such as a 10% reduction in harmful alcohol consumption and a 30% reduction in smoking by 2025. However, these initiatives must go further. Behavioral economics offers tools to guide healthier choices without infringing on personal freedoms. For instance:
- Taxation and Incentives: Progressive growth on taxes for cigarettes, alcohol, and unhealthy foods can discourage consumption, while lower tax rates for healthier alternatives incentivise the consumption shift toward better alternatives.
- Education and Awareness:Public health campaigns should emphasise the long-term benefits of healthy behaviors, countering psychological barriers like hyperbolic discounting.
- Support for Transition Products: Policies encouraging the use of less harmful alternatives, such as low-alcohol beverages, can reduce risks while preserving the freedom of choice.
Conclusion: A Unified Effort for Competitiveness
To secure Europe’s future competitiveness, Brussels and member states must implement a cohesive strategy that integrates health-focused initiatives with broader economic reforms. Mobilising investment, removing regulatory barriers, and fostering innovation in high-growth sectors are essential steps. However, these efforts must go hand in hand, as regulatory simplification facilitates market integration, enabling start-ups to scale and attracting investment.
A health-focused strategy, centered on preventing NCDs and promoting innovation in healthcare, can strengthen human capital, reduce social inequalities, and enhance economic resilience. By leveraging behavioral economics and dynamic regulation, the EU can drive healthier behaviors while maintaining personal freedoms.
Ultimately, a healthier population is the foundation of a more competitive and prosperous Europe. Reducing the prevalence of NCDs will unlock economic potential, boost productivity, and position the EU as a global leader in innovation and well-being. By acting decisively, Europe can turn its challenges into opportunities and secure its place on the global stage.
References for Further Reading