Two Kinds of Sovereignty — Economic Model

An interactive companion to “Two Kinds of Sovereignty.” This tool lets you explore the economic model behind the essay’s argument: that Europe must shift resources from securing today’s technology toward building tomorrow’s.

The essay argues that sovereignty comes in two forms. Present sovereignty means controlling and securing the technology you already depend on — keeping the lights on. Future sovereignty means investing in new technological domains before the window of opportunity closes. The central question is how to split limited resources between these two goals.

This model makes that tradeoff precise. Use the three tabs below to explore different layers of the argument, from the big-picture allocation problem down to what happens at the level of individual firms. The full formal specification is available as a PDF.

Download formal model specification (PDF)

The Allocation Problem

Imagine you are a European policymaker with a fixed R&D budget. You must decide: how much goes to shoring up today’s systems (cloud resilience, regulatory capacity, domesticating existing technology) versus investing in the next paradigm (scientific AI, quantum computing, fusion energy)?

This view shows what happens over 30 years under different choices. The chart tracks three things simultaneously:

Present sovereignty — your control over today’s tech stack
Future sovereignty — your capacity in emerging domains
Dependency — how locked-in you are to foreign providers (right axis, 0–100%)
0.50
0 = everything to future, 1 = everything to present. Default 0.67 reflects Europe’s current tilt.
2.0
The essay’s “virtual export restriction.” Mild pressure spurs innovation; too much destroys it.
0.67
Europe starts at ~67% (US hyperscaler cloud share). Drag lower to see a less dependent starting point.
0.10
Higher = windows close faster, making delayed investment more costly.
Overall Outcome Score
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How to read the score
A positive score means the strategy builds more sovereignty than it loses to dependency. A negative score means dependency costs outweigh the gains. Try dragging the first slider to see how different allocations change the outcome.
The chart updates in real time as you move the sliders. Watch how shifting resources toward future sovereignty (lower first slider) causes a short-term dip in present sovereignty but builds long-term capability — while dependency gradually falls.

The “Sweet Spot” of Designed Pressure

The essay argues that not all constraint is equal. Broad sanctions tend to destroy innovation. But carefully designed pressure — like requiring R&D teams to develop alternatives to foreign inputs — can actually increase the productivity of exploration. This is the “induced innovation” effect.

The curve below shows this relationship. There is a sweet spot (marked by the dashed line at your current setting) where constraint intensity maximises innovation productivity. Too little pressure and nothing changes. Too much and the system breaks down.

The peak of this curve is the optimal level of designed constraint. The dashed line shows your current setting. Notice that even very high constraint still produces some innovation — but far less than the optimal level.

What Happens to Individual Firms?

The first tab treats the economy as a single decision-maker. But in reality, economies are made up of hundreds of firms with different capabilities, different levels of dependency on foreign technology, and different capacities to innovate.

This simulation populates a virtual economy with firms and lets them evolve under different constraint regimes. Each firm can pursue exploitation (leveraging existing foreign technology for incremental gains) or exploration (developing novel alternatives). The constraint regime affects which strategy pays off.

What to look for
Compare the three default scenarios: No pressure (firms drift toward dependency), Designed pressure (capability dips then compounds as firms redirect), and Excessive pressure (most firms cannot adapt, capability degrades). The chart shows total innovation capacity of the economy over time.
0 = no constraint, 2 = designed, 15 = excessive. Enter any values separated by commas.
200
More firms = more realistic but slower to compute.
Each line represents the total innovation capacity of the economy under a different constraint regime. Under designed pressure (green), expect an initial dip — some firms struggle — followed by recovery as capable firms develop alternative pathways. This is the “dip then compound” pattern the essay describes.
Key insight
Designed pressure only works when firms have sufficient “absorptive capacity” — enough existing capability to redirect rather than simply fail. This is why the essay insists that programme design must account for the capability distribution, not just set a constraint level and hope for the best.

What Should Europe Actually Do?

This view translates the model’s results into policy-relevant comparisons. It answers three questions:

1. How do different strategies compare? The chart below shows 30-year trajectories under three regimes: the status quo (keep spending mostly on present sovereignty, no designed constraint), the model’s recommended approach (rebalance toward exploration with designed constraint), and an overreaction scenario (excessive constraint, too little exploitation).

Three Strategies, Three Futures

Status Quo — heavy exploitation, no constraint (presentism)
Designed Pressure — optimal allocation + strategic constraint
Overreaction — too much constraint, too little exploitation
Solid lines = present sovereignty (control over today’s tech). Dashed lines = future sovereignty (capacity in emerging domains). The designed pressure regime sacrifices some present sovereignty but builds far more future capability — and is the only strategy with a positive overall score.

2. What Does Delay Cost?

The essay argues that opportunity windows are closing. This chart quantifies the cost: if Europe waits 1 year, 5 years, or 10 years before shifting resources toward exploration, how much worse is the outcome? The curve accelerates because windows close exponentially — each year of inaction costs more than the last.

The shaded area shows cumulative lost value from waiting. The steep acceleration after year 5 reflects paradigm windows closing: once standards lock in and incumbency advantages compound, the opportunity to build alternatives narrows sharply.

3. Where Should Europe Invest?

Not all domains are equally promising. The model scores each by three factors: how open the opportunity window still is, how strong Europe’s existing capability is in that area, and how strategically valuable the domain would be if Europe established a leading position. The overall score weights these 40/30/30.

Reading the scores
Fusion energy scores highest because its window opened recently (more time remaining) and its strategic value is very high. Scientific AI and quantum computing are close, but with different profiles: quantum benefits from stronger existing European research capacity, while scientific AI has a wider remaining window. The essay argues that these are domains “where the game is not yet rigged by incumbency.”