Top 20 Most Technologically Advanced Countries in Europe

Published on October 5, 2023 at 5:22 pm by Ty Haqqi in Economy, Lists, News

In this article, we will be taking a look at the top 20 most technologically advanced countries in Europe. To skip our detailed analysis, you can go directly to see the top 5 most technologically advanced countries in Europe.

Arguably the most advanced region in the world, there is a reason why European nations dominate the list of the most technologically advanced countries in the world. While the U.S. may be the most technologically advanced country in the world, European nations are continually innovating, especially in tech, while also balancing it with regulations to keep mega corporations in check. According to the State of European Tech, the value of the tech industry in Europe was $0.5 trillion in 2014, and consistent growth over the past decade despite the challenges posed by the Covid-19 pandemic has led to the industry crossing $3 trillion in H1 2023, and the private market has gained significant share in the overall tech ecosystem.

While most European countries exhibit stable, steady growth as is true for most developed nations, its tech industry has far surpassed overall economic growth, making it a very valid investment opportunity. In fact, over both short-term and long-term horizons, European VC returns have equaled the U.S., and over a ten year horizon, has actually bettered the U.S. slightly, with this outperformance indicating the value of investing in European tech companies.

One challenged faced by the most technologically advanced countries in Europe is the fact that funding has started to slow down after a tech boom in recent years, though early stage funding (sub $15 million) has continued to maintain resiliency. When comparing funding to H1 2022, H1 2023 is down by 21% to $8.2 billion, though this decline has been driven majorly by later stage rounds.

Top 20 most technologically advanced countries in europe

A technician configuring a network-attached storage drive. Editorial photo for a financial news article. 8k. –ar 16:9

As we mentioned earlier, the most technologically advanced countries are still somewhat behind the U.S., but the region as a whole is continuing to catch up, and funding for early-stage European companies account for at least 29% of global funding, up from 18% a decade ago, and just 7% behind the U.S. While the current market downturn has impacted the rate of new tech startups even though Europe is on par with the U.S. in this respect too. Around 20% fewer companies have been established compared to the previous year, based on analysis carried out on hundreds of millions of LinkedIn profile but even then, the long-term future looks bright.

The strong standard of living in Europe, which has allowed it to dominate the list of countries with the highest standard of living in 2023, has resulted in a strong market as residents tend to have higher disposable income and hence, can afford high-tech products which enjoy high demand in the region. This is why many of the biggest and most profitable tech companies in the world not only have operations in Europe, but a large percentage of their revenues are derived from the region. Europe also has several tech giants headquartered in the region, including ASML Holding N.V. (NASDAQ:ASML), one of the largest companies in Europe, operating in the increasingly important semiconductor industry. Like ASML Holding N.V. (NASDAQ:ASML), many top European tech companies are listed in the U.S. as well, and ASML Holding N.V. (NASDAQ:ASML) has gained nearly 4% in share price YTD. While calling out the challenges it faces, the company also called out its high performance in its Q2 2023 earnings call, stating “Although certain end markets seem to be reaching the bottom of the cycle, the semiconductor industry is running at very high inventory levels, leading customers to moderate wafer output as the supply chain works to reduce and rebalance inventory levels. In order to limit wafer output, customers continue to run at lower litho tool utilization levels. Customers remain cautious due to the uncertainty around the timing, the shape, and the slope of the recovery. We had an increase in bookings this quarter, resulting in a backlog of around €38 billion exiting the second quarter. In our EUV business, we have seen some shifts in demand timing. The majority of the shifts are due to fab readiness with some element of uncertainty around recovery. Deep UV demand still exceeds supply. While we have seen delays in deep UV demand from some customers, it has been compensated by strong demand for tools at mature and mid-critical nodes, particularly in China. The demand fill rate for our Chinese customers over the last two years was significantly less than 50%, so they now take the opportunity to receive and install systems in their fabs as the supply of tools becomes available.”

Despite a lot of opportunities available for the European tech industry, there are several challenges as well which could negatively shape the industry in the future. One concern especially held by some of the most valuable social media companies in the world as Europe’s rules are significantly more stringent than the U.S., impacting revenue. While tech companies have had a fantastic 2023 so far in terms of share price, European laws have caused some concern as mentioned by Meta Platforms, Inc. (NASDAQ:META), which called out in its Q2 2023 earnings call ” With respect to EU-US data transfers, we saw a positive development with the European Commission’s adoption of a final adequacy decision, which allows us to continue to provide our services in Europe. This is good news. Though broadly speaking, we continue to see increasing legal and regulatory headwinds in the EU and the US that could significantly impact our business and our financial results.” Because of laws that don’t allow social media companies to provide personally targeted advertisements, Meta Platforms, Inc. (NASDAQ:META) is also currently considering implementing a monthly charge on users in the European Union.

McKinsey has also called out a technology gap which could impact the future of Europe’s tech industry, driven by the most technologically advanced countries in Europe. According to McKinsey & Company, Europe still needs to catch up to other major regions in some technological areas, and investment in R&D is lower than that in the U.S., and is currently lagging behind in the information and communications technology sector, one of the most crucial sectors in tech advancements, and could lead to Europe losing out in industries where its traditionally been a leader. For example, while Europe is a giant in automotive manufacturing, it could lag behind other regions in autonomous driving. Unless Europe proactively manages these expectations, it could suffer in the long term.

Methodology

To determine the most technologically advanced countries in the world, we ranked them on multiple criteria, including digital competitiveness, innovation and number of patents granted. We assigned 30% weightage to the first two criteria and 40% to the latter.

20. Portugal

Insider Monkey tech score: 65.0

Lisbon has emerged post-pandemic as one of the leading remote work capitals of the world, particularly facilitating tech entrepreneurs and tech workers. This ties in to Portugal’s larger ambition of emerging as a leading tech hub in Europe, and the government is investing in startup companies in the tech sector.

19. Poland

Insider Monkey tech score: 66.0

Poland has emerged as one of the strongest economies in Central Europe, and will be among the biggest economies in the world in 2030. It is now home to a quietly booming tech sector and is receiving a lot of investment from various multinational companies, and despite the economic downturn, is still continuing to add jobs, presenting a contrast to the worldwide trend.

18. Czech Republic

Insider Monkey tech score: 67.9

Czech Republic recently created a new investment fund especially for startups in the Artificial Intelligence field, with the aim to raise more than 20 million euros.

17. Iceland

Insider Monkey tech score: 69.3

Considered one of the most gender equal countries in the world, women have been making waves in the country’s tech scene, solidifying its placement among the most technologically advanced countries in Europe.

16. Estonia

Insider Monkey tech score: 69.4

The tech start-up in Estonia has led to a boom in the country, and has seen great success, though the downside is that rents are rising fast in the country. While it is considered as one of the most enterprising countries in Europe, it will still not prop up struggling companies.

15. Luxembourg

Insider Monkey tech score: 74.1

Luxembourg is one of the richest nations in the world, and recently agreed to invest in an African tech impact fund along with Ivory Coast, to the tune of over 10 million euros.

14. Spain

Insider Monkey tech score: 74.5

In a bid to boost tech initiatives, the Spain Foodtech Program recently awarded more than 10 million euros to foodtech startups.

13. Italy

Insider Monkey tech score: 75.9

While not as advanced as some of the higher ranked European countries in our list, Italy has still made significant strides in the tech industry in recent years, and one of its wealthiest families, the Agnelli family, is investing heavily in the country’s tech scene.

12. Ireland

Insider Monkey tech score: 76.0

Ireland has attracted many top companies especially from the U.S., to take advantage of lax tax laws in the country, including one of the biggest tech companies in the world in Accenture.

11. Belgium

Insider Monkey tech score: 78.5

Belgium’s growth has led to it being counted among the most technologically advanced countries in Europe, and is becoming a lead IT development, while many major corporations are also establishing R&D hubs in the country to take advantage of the tech wealth there.

10. Norway

Insider Monkey tech score: 80.2

Norway has seen the creation of several tech companies which are now worth over $1 billion and could even result in a new industrial chapter with one of its most recent successes including Dune Analytics. Its recent success in the development of tech companies has seen more companies and investors moving to the country.

9. Austria

Insider Monkey tech score: 83.1

Austria is considered to be a global leader in cybersecurity, with particular praise reserved for the Austrian Institute of Technology. Additionally, Austria has been working to use AI in vehicle tech in a bid to increase bicycle safety in the country, an important development considering how commonly bicycles are used in the country.

8. France

Insider Monkey tech score: 87.0

France is now considered to be the leading tech ecosystem in terms of funding in Europe and the country’s President has called for the country to become the European leader in AI, and cement its place among the most technologically advanced countries in Europe.

7. Finland

Insider Monkey tech score: 88.0

Displaying Finland’s tech prowess is the recent combination of 6G technology and autonomous cars in the country, in a project which is expected to run at least till 2026. Additionally, to drive gains in AI and the metaverse, Business Finland recently teamed up with HCLTech.

6. Denmark

Insider Monkey tech score: 89.1

Denmark is one of the most technologically advanced countries in Europe and is simultaneously looking to curb children data collection by Big Tech companies.

Click to continue reading and see Top 5 Most Technologically Advanced Countries in Europe.