Europe certainly hasn't given up in innovation or growth. Because there is no Europe. The EU is still, regardless of what right-wing putinist shills say about Brussels' bureaucratic overreach, a relatively loose alliance of sovereign nations.
And that, by the way, is our weakness. The single market is a single market only in the administrative sense: it's wildly heterogenous, diverse, it spans a number of cultures and languages. That is a humongous obstacle in front of, for example, scaling any sort of European company. Whereas an American company immediately has an actual unified single market of 330 million people. Similarly, the US president doesn't have to worry about Texas or Illinois vetoing its foreign policy.
This is not a result of conscious decisions by European leaders who are just psyched by the idea of being irrelevant. It isn't some gross incompetence because it was more or less inevitable. It's a minor miracle that the European Union is still alive, still exerting influence in this deeply, traditionally divided, nationalistic continent. I'd even add that since Brexit, even the hardened Eurosceptics stopped talking about taking their countries out of the EU and instead focus on "reform".
We should integrate further, we should take concrete steps towards federalisation, absolutely - that's the way to avoid being left behind in the dust. But there is very little appetite for that among the European people. We just... aren't there, culturally speaking. There's no European identity, no feeling of community, we don't recognise our shared interests. Politicians working together to come up with some sort of administrative-institutional reform would be, in my view, nothing but a band aid, a desperate attempt to paper over the cracks of the main issue.
(which is also why I believe that further EU enlargement at this point is madness, btw)