Fortune publishes the list of the 500 largest companies in the world by revenue every year, the Fortune 500. The United States leads with 138 companies, followed by China (124) and Japan (38). Portugal continues without any on the list, but the group of European countries has about 120 (24% of the total).
Analyzing these European giants in detail, we see that most are centennial companies, founded in the 19th or early 20th century (such as Volkswagen, Shell, or Santander, the latter in 1857). In the latest lists, only one European company was created from scratch in the last 50 years, Inditex, owner of Zara! In comparison, California (a ‘mere’ American state) has more than 20 Fortune 500 companies, many founded since 1975, such as Apple, Alphabet (Google), or Oracle. While large European companies dominate traditional sectors (automotive, energy, banking), innovative companies in technology, medicine, etc., are mostly American or Asian.
There are several reasons why Europe does not generate as many successful innovative companies as the US: investment in Research & Development (R&D); investment in education; access to funding for startups; and economies of scale.
Research & Development. To launch disruptive products, it is essential to invest in R&D. Companies, universities, and the US government spend 3.4% of GDP (about 800 billion dollars), compared to 2.3% in the EU. To catch up, Europe would need an additional €200 billion annually in R&D – a gap that perpetuates dependence on imported innovations.
Education. Business success requires skilled talent in engineering, AI, and management. The US invests twice as much per student in higher education (US$37,000 per student vs. the OECD average of US$18,000), fostering close ties between universities and businesses, as is the case with Stanford University and the Silicon Valley technology cluster in California.
Business financing. Every entrepreneur knows that a start-up requires available capital. In Europe, banks hesitate to invest in high-risk companies, and support from the European Union tends to be slow and bureaucratic. In the US, venture capital firms injected $209 billion into companies in 2024, while in Europe only $60 billion was channelled – a gap that hinders rapid growth. This is how companies like Google and Facebook grew.
Economies of scale. The US is a single market of 330 million people, a single language, and harmonized rules, which is ideal for rapid growth. In Europe, despite the "single market," there are multiple languages, different taxation, and disparate national regulations, making it more costly to serve the entire market.
In Europe, and in Portugal, this lack of innovation and reduced economies of scale are a chronic problem for the economy. This is even more glaring in the Algarve region, where Value Added is dominated by tourism, with strong seasonality, vulnerable to external crises, and where low-productivity SMEs with little technology predominate. However, there are beginning to be positive aspects: the Algarve has the highest number of companies since 2008 (94,000) and is tripling the number of medium to high-tech companies it creates every year, which is a great step towards diversification.
Without diversification in cutting-edge technology sectors (for example, in renewable energy, Artificial Intelligence, or Biotech), the region risks falling behind in a new phase of technological growth. Today, using Artificial Intelligence, a new successful company can be created anywhere in the world, and this is a golden opportunity that cannot be wasted. Greater investment in regional R&D, more business accelerators, incentives to attract venture capital, and more investment and support for entrepreneurship are needed to capture this opportunity.
European and Portuguese governments facilitate the creation of companies (in Portugal, a company can be created online in minutes). Let's hope there is more investment in technology and entrepreneurship so that the next innovations come not only from San Francisco or Shanghai, but also from Lisbon, Porto, or Faro!
This article was originally published in the newspaper ‘Eco’ on January 19, 2026. The content expresses only the opinion of its author, not representing the position of the entities with which it collaborates.
Joaquim Nascimento is CEO of Kapisci, Invited Assistant Professor at the Faculty of Economics of the University of Algarve and President of the Algarve Evolution association. He holds a Bachelor's degree in Economics from ISEG and an MBA from Manchester Metropolitan University.