Draghi's investment question is a governance question

Mario Draghi's report on European competitiveness, released in September, has refocused attention on investment, productivity and the conditions for economic renewal. [1] The debate will naturally gravitate towards the scale of the financing challenge. Europe also needs to confront a prior question: who can choose and complete projects whose benefits cross national borders?

A large investment ambition is not an implementation system. Money can remain unused, be spent on projects that do not address the binding constraint or support several incompatible national plans. The report's strategic significance will depend on whether Europe can build a more credible process for turning common priorities into delivered capabilities.

A project without an owner

Take a cross-border infrastructure investment whose benefits are spread among several countries. Each government supports the idea, but each would prefer another to finance a larger share. Domestic budget processes evaluate national returns, while the project's strongest justification is European. Agreement on its importance can coexist with years of delay.

The same mismatch can appear in research infrastructure, energy networks and industrial systems. It is not resolved merely by making a larger pool of money available. A project needs an accountable owner, an agreed distribution of cost and a procedure for settling disagreements about design and timing.

Europe should therefore identify the functions for which fragmented decision-making is itself a major obstacle. Those functions may justify stronger common institutions or a lead authority with a clear mandate. Other investments may be better managed nationally or locally. The argument is for a fit between the geography of the benefit and the geography of the decision.

Put money through a project test

A useful investment framework begins with a problem, not an instrument. What constraint is preventing productive activity? Why is private investment insufficient? What would the project change, and how would that change be measured? These questions help distinguish strategic investment from a collection of desirable expenditures.

Only then should officials choose financing: a grant, loan, guarantee, procurement commitment or regulatory change. Each addresses different risks. A grant cannot fix every uncertainty about demand; a guarantee cannot make an unnecessary project useful. Starting with a preferred financing vehicle can encourage proposals designed to fit the vehicle rather than solve the problem.

The public balance sheet should also show contingent obligations. Guarantees and commitments may appear cheaper than immediate spending but still create exposure. A credible investment strategy should explain the circumstances under which that exposure becomes a cost and who is responsible for managing it.

Additionality is uncomfortable

Governments tend to favour projects that can be announced quickly. Yet a project already likely to proceed may offer limited additional benefit from European support. Funding it can produce a visible result while diverting resources from a more difficult investment that would not otherwise happen.

Evaluation should therefore ask what changes because of the support. Does it accelerate delivery, increase useful scale, reduce a shared dependency or provide access that the market would not supply? A positive answer should be demonstrated through a plausible comparison, not asserted through a strategic label.

That comparison will involve uncertainty. The response should present ranges and transparent assumptions rather than abandoning the exercise. Without a test of additionality, programmes can become rewards for well-prepared applicants instead of instruments for resolving Europe's most important constraints.

The single market as investment policy

Not every barrier requires public spending. Differences in procedures, uncertainty about cross-border activity and fragmented markets can reduce the expected return to investment. Removing an unnecessary obstacle may create more capacity than compensating firms for operating around it.

This is not an argument that regulation is generally undesirable. Rules can create trust, protect users and make markets possible. The task is to identify duplication or inconsistency that creates cost without delivering a corresponding public benefit. Simplification should be judged by usefulness rather than the number of requirements deleted.

A firm considering expansion across several countries needs predictable conditions. If each additional market requires a substantially different administrative process, scale becomes harder to achieve. Europe should treat the practical usability of its market as part of competitiveness, alongside infrastructure and finance.

Stopping is part of accountability

Large programmes acquire constituencies. Once spending begins, cancellation becomes politically costly even when evidence weakens the original case. A delivery system that can approve projects but cannot revise or end them will accumulate obligations faster than useful results.

Milestones should therefore connect funding to progress and provide explicit decision points. A missed milestone should trigger an examination of cause: an external shock, a weak assumption or poor execution require different responses. Automatic continuation is no more rational than automatic cancellation.

Independent oversight should be able to compare projects and recommend reallocation. Its role is not to remove democratic choice. It is to make the consequences of that choice more visible. Governments may decide to continue a costly programme for a legitimate purpose, but they should explain that purpose in light of the evidence.

The case against centralisation

Critics can argue that common investment programmes are slow, remote and vulnerable to political compromise. National or local authorities often know more about implementation conditions. A European process might add another layer rather than solve fragmentation.

That objection argues for selective common action and clear delegation. Europe should not manage every useful project from the centre. It should concentrate on problems whose cross-border benefits or dependencies cannot be handled well through separate decisions, while giving delivery authorities sufficient autonomy to act.

Common financing should also avoid a rule that every participant must receive an identical visible share. Such a rule can undermine the very efficiency the project is supposed to achieve. Fairness may be better secured through a portfolio of benefits and transparent access than through the geographic division of every contract.

Skills are capital

Investment plans often assume that the necessary engineers, planners, procurement specialists and skilled workers will appear once funding is approved. In practice, simultaneous programmes can compete for a limited pool of expertise. More money can then increase prices and delays rather than output.

A serious plan should assess delivery capacity alongside finance. Shared technical teams, standardised procurement documents and predictable training demand can help. Smaller municipalities and institutions may particularly benefit from expertise they cannot maintain alone.

The same principle applies to public administration. A complex application process can favour regions with strong existing capacity, leaving weaker areas further behind. Support for project preparation can therefore be an investment in participation, provided it is linked to credible needs rather than the production of applications for their own sake.

The bargain about opportunity cost

Citizens should be told what a major investment programme is expected to achieve and what alternatives it displaces. Describing spending as strategic does not remove the need to justify it against other public priorities. An honest account of trade-offs can strengthen consent more than a promise that every objective can be achieved simultaneously without cost.

Distribution matters as well. A project may produce large aggregate gains while imposing local disruption or exposing some workers to adjustment. Compensation and participation should be designed early. They are not merely measures to secure approval; they can improve the project and make its benefits more durable.

Europe should also define the information it will publish after completion. Costs, delivery times, access and actual use deserve comparison with the original proposal. A completed asset can still underperform, and a useful evaluation must continue beyond the ribbon-cutting ceremony.

Keep a decision ledger

A major European project should maintain a concise record of its purpose, the alternatives rejected, the responsible authorities and the conditions that would trigger revision. This would help later reviewers distinguish a deliberate trade-off from an accidental omission. It would also reduce the tendency to rewrite a project's original purpose after difficulties emerge.

The ledger should include dependencies on other investments and the dates by which they are needed. If a connection, approval or training programme is delayed, the responsible parties would then know which downstream decisions must be reconsidered. This is more useful than a progress report that describes each workstream independently.

Public versions can protect sensitive commercial information while showing the institutional commitments. The objective is not another document for its own sake. It is a shared account of decisions that survives changes in personnel and political leadership, allowing accountability to follow the project through its full delivery cycle.

A common project should publish its expected operating costs as well as construction costs. Otherwise the financing bargain may appear settled while the institutions responsible for maintaining the asset inherit an obligation they have not planned to meet.

The competitiveness debate should therefore lead to an institutional bargain as well as a financial one. Common projects need common decisions where necessary, delegated delivery where appropriate and the capacity to change course when evidence demands it. Draghi's investment question is ultimately about whether Europe can govern interdependence well enough to make its resources productive. A larger target without that capability would be ambition on paper; a stronger delivery system could make even existing resources work harder.