Europe has an investment problem — and it is also a regional one.

In his speech accepting this year’s Charlemagne Prize, economist and former Prime Minister of Italy Mario Draghi pointed out that Europe’s annual investment needs have risen from an estimated €800 billion in additional strategic spending to almost €1.2 trillion, largely because of the new defence commitments of recent years. At the G7 Leaders’ Summit in France in June, the world’s economic imbalances were also high on the agenda, with economic experts advising the French presidency that Europe’s best contribution should be to tackle its persistently low levels of productive investment.

But increasing investment alone will not be enough. Europe also needs to…