In order to be innovative and compete, we need very flexible working laws, people with a big growth mindset, a less relaxing lifestyle and AMBITIOUS people.
A lot of third world countries are years ahead of the whole EU continent in that aspect. I say this because I live in Europe for the quality of life, come from a third world country, and I see how kids and adults are spoiled here. Much of what they have was just given to them. At least for the strong countries in west EU, lifestyle is very relaxed and any ambitious is frowned upon, it is extremely demotivating, not to mention bureaucracy. Corporations and regulations will just drive your small company out of the market no matter what.
I find for me more likely to save some money, move to my country and create my own business and sell in Europe. People here are too lazy to compete in the fast world we live in, there in my country there is so many skilled people, so little capital, here is the reverse. Good amount of capital and foreigners working in tech. For instance, I live in Berlin and almost all the "working people" from tech companies here are foreigners. Germans are generally the executives and/or management. It is quite rare to find a german software developer on Startups.
I personally think(my opinion, not the ultimate truth)... that Europe is definitely a very interesting market for companies to come here and sell their stuff, but not to make it.
Instead I think Europe should focus on its strengths, which is healthy market regulations, creating a good playing field for companies from above, rather on its weaknesses. It should also figure out a way to keep part of the profits inside the continent to benefits its inhabitants.
More important than competing is to know where and when to compete.