Can the American ARPA model be ‘translated across the Pond’?

Written by: Sanja Terlević, Polityst

In discussions about the European innovation gap, there is often a flawed assumption: that Europe lacks ideas, talent, or public funding. However, the real problem is not the quantity of resources but the rules of the game that determine how those resources are utilized.

This difference is most clearly seen in the current European interest in ARPA models. From the European Innovation Council (EIC), which plans their broader application from 2028, to national initiatives like Germany’s SPRIN-D or Britain’s ARIA, there are increasing attempts to introduce an approach into the European context that has enabled the development of disruptive technologies in the U.S. However, the success of European ARPA instruments will primarily depend on the willingness to change the institutional rules of the game.

Founded in 1958 in response to the technological shock of Sputnik, ARPA has become a symbol of an ambitious approach to high-risk research, with ARPANET, the precursor to the internet, as its most well-known legacy. Instead of funding clearly defined projects with predetermined outcomes, it manages a portfolio of experiments led by program managers with significant autonomy. They independently decide on the initiation and termination of projects, changes in direction, and reallocation of resources as knowledge accumulates.

Two Weaknesses

Its goal is to push the boundaries of the possible, open new technological domains, and create foundations upon which the market can later build. That is precisely why ARPA’s models work best when embedded in a broader ecosystem that includes private capital, industrial partners, and a regulatory framework capable of keeping pace with new technologies.

In the European context, the interest in the ARPA approach reflects the realization that existing instruments struggle to encourage such breakthroughs. However, adopting the logic of this model does not merely mean changing the instrument – it is also a broader institutional challenge for Europe.

ARPA, in fact, reveals deeply rooted institutional barriers that determine whether innovations can be transformed into market and industrial success. From our own experience of close work with European institutions, we can say that two weaknesses are constantly repeated: the difficulty of collaboration between academia and industry and the incomplete single market. The first problem is the institutional design of collaboration between academia and industry.

The ARPA model assumes a constant circulation of people and knowledge between scientific institutions, companies, and the public sector. Researchers can temporarily take on operational roles, participate in technology development, and then return to academia without lasting professional harm. In the European system, however, the rules of funding, evaluation, and career advancement often act as a one-way street: leaving academia is penalized, and returning is made difficult.

Institutional Test

Such an institutional framework has direct consequences. Entrepreneurs struggle to find top researchers willing to take risks, investors face a shortage of teams that combine scientific depth and market experience, and industrial strategies remain fragmented because there is no stable bridge between research and production. Instead of institutions bearing the risk of experimentation, it is shifted to individuals, which long-term narrows the pool of talent willing to engage in high-risk innovations.

The second key test relates to the incomplete single market. The logic of ARPA rests on the assumption that successful innovations can be quickly scaled – regulatory, financially, and commercially. In the U.S., this means one large market, uniform rules, and deep capital markets. In Europe, even when innovation succeeds, it faces regulatory barriers, fragmented markets, and limited access to growing capital.

The fragmented single market acts as a set of implicit tariffs that, as Mario Draghi warned, slow down the flow of capital, knowledge, and innovation with direct consequences for business growth, return on investment, and European industrial ambitions.

In this sense, ARPA in Europe becomes a test of institutions in the broadest sense. It shows whether European policies can simultaneously enable the mobility of knowledge, bear institutional risk, and ensure market conditions for scaling success. In the next two years, the EIC’s pilot program will show whether the ARPA model can truly be ‘translated across the Pond’ or will remain yet another instrument limited by the rules of the game that Europe is not yet ready to change.