The world is facing powerful economic headwinds, including the Sino-American rivalry, rapid technological change, population aging, worsening income inequality and deteriorating social mobility, and environmental degradation. Europe can help the world to overcome them. But first, it must clarify which ones, and how.

At last month’s annual World Economic Forum meeting in Davos, Switzerland, European Commission President Ursula von der Leyen proclaimed that Europe needed to be more assertive in the world. That means “stepping up” in some areas. But exactly which areas? To answer that question, the European Union needs to identify – and convincingly articulate – what it has to offer the rest of the world.

This is easier said than done, particularly at a time of rapidly shifting global power dynamics. The night of von der Leyen’s speech, I put the question to a European business leader and to a former senior public official. Neither had a ready answer.

Representatives of the world’s other major powers would not face the same struggle. The United States is a leader in innovation and technology, and boasts deep and broad financial markets. It also possesses the world’s strongest military, virtually guaranteeing America’s global primacy for the foreseeable future.

China, for its part, has established itself as a formidable economic and political counterweight to the US, largely by capturing a critical position in global value chains and, increasingly, as a major source of foreign direct investment. This soft-power offensive, which includes ambitious transnational infrastructure projects like the Belt and Road Initiative, has won China many friends, though it has also raised fears of an inevitable military confrontation with the incumbent hegemon – a dynamic known as the Thucydides Trap.

Yet today’s Europe seems unsure of its global role. The United Kingdom has officially exited the EU. Rising populism is producing polarization, paralysis, and internal pressures so severe that the Union’s very survival no longer seems certain. And investors have noticed: the region’s stock markets have consistently underperformed for two decades, implying a lack of faith in the bloc’s long-term prospects.

But it is far too soon to write off Europe. In my view, there are four key areas where the EU could establish itself as a global player.

The first and most obvious is trade. According to the World Bank, the post-Brexit EU remains home to nearly 450 million people, and boasts an average per capita GDP of roughly $36,000. It thus remains a highly desirable trading partner.

The second area where Europe can lead is in regulation, particularly of Big Tech. In many ways, Europe has already established itself as a regulatory pioneer. For example, the General Data Protection Regulation (GDPR), implemented in 2018, gave EU residents unprecedented control over their personal data, setting a new standard for data-privacy rules. At the national level, France has strict defamation and privacy laws.

To be sure, there are questions about whether robust regulation constrains innovation and economic dynamism. The GDPR, for example, can be viewed as excessively burdensome, and thus as undermining investment and growth, particularly among small and medium-size companies. But, as public suspicion of Big Tech intensifies, European leadership in this area is both critical and warranted.

The third area where Europe can play a vital global role is in the competition between the US and China. The Thucydides Trap – already manifest in the US-China trade and technology war – need not lead to military conflict, particularly if the EU could act as a kind of referee, helping to determine whether and how the two heavyweights engage. To succeed, Europe would need to navigate not only economic matters, such as the ongoing trade war, but also the more fundamental ideological clash between America’s democratic capitalism and China’s state-led model.

In doing so, Europe would have to bring to bear its unique capacity in a fourth area: the defense of Western values, especially individual economic and political freedoms. Already, many countries view the Chinese model – which eschews competitive elections and grants the political class considerable control over the economy – as an alternative route to development. It is up to Europe to highlight the shortcomings of this approach and make the case for liberal-democratic values.

There is reason to hope that the EU will, as von der Leyen urges, “step up.” In fact, her Davos proclamation reflects a consensus that has been emerging among European political leaders – most notably German Chancellor Angela Merkel and French President Emmanuel Macron – for a few years now. For example, Macron pledged to “rejuvenate” the EU in his 2017 inauguration speech, and has been emphasizing the need to recover the spirit of progress ever since.

It is time to transform this rhetoric into action. The world is facing powerful economic headwinds, including the Sino-American rivalry, rapid technological change, population aging in the advanced economies, worsening income inequality and deteriorating social mobility, and environmental degradation. Europe can help the world to overcome them. But first, it must clarify which ones, and how.

Dambisa Moyo, an international economist, is the author of four New York Times bestselling books, including Edge of Chaos: Why Democracy Is Failing to Deliver Economic Growth – and How to Fix It.

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