Book section: This chapter tries to identify the sources and the nature of the European technology gap relative to its competitors, in particular the US. In the first part, taxonomies based on disaggregated sectoral data allow an assessment of the strengths and weaknesses of the European industries according first to the intensity of their production or their usage of ICT and second to Pavitt's classification relative to the nature of the innovative regimes. The second part examines how the characteristics of industrial dynamics, at the heart of the creative destruction process, differ on the two sides of the Atlantic. Comparisons are made by using longitudinal firm-level data. Finally, in the third part of the chapter structural policy questions are examined.