The Netherlands crowned the most competitive economy in Europe
The Netherlands has been crowned the most competitive economy in Europe by the World Economic Forum’s 2019 Global Competitiveness Index (GCI). This is huge, as last year, the country fell out of the top five globally, achieving only a 6th place globally and 3rd place in Europe.
2019 Global Competitiveness Index
This year, the Global Competitiveness Report ranked 141 economies, accounting for 99 percent of the world’s GDP, according to 103 individual factors organised into 12 pillars that were weighted equally. These pillars were: institutions, infrastructure, ICT adoption, macroeconomic stability, health, skills, product market, labour market, financial system, market size, business dynamism and innovation capability.
Last year, the Netherlands dropped a few places in the ranking due to the latest GCI 4.0 methodology. In this edition, as the same methodology has been used, the ranking is directly comparable to last year, meaning the Netherlands has made some mighty steps to go from 3rd place in Europe to 1st.
The Netherlands reclaims the top spot in Europe
The Netherlands surpassed Switzerland and Germany this time round to reclaim the place it was in for Europe on the 2017 ranking, namely no. 1. Globally, the Netherlands scored 4th place for the 2019 Index. Interestingly, the score remains the same as in 2018, when the Netherlands was 6th. The country therefore actually owes its place to the declining performance of Germany and Switzerland.
When we dive deeper into the Netherlands’ results, we see that it performs consistently well across all pillars, even making it into the top 10 for six of them. Where the Netherlands shines is macroeconomic stability, for which it takes first place. It also scores highly on health (94,2/100), earning it the 21st place, and infrastructure quality (94,3/100), scoring 2nd place.
The WEF report lauds the country with praise for its well-developed innovation ecosystem and institutional framework, calling it one of the best in the world. The country indeed scores highly on all factors under the institutions pillar. The state of the innovation ecosystem is due to the highly skilled workforce, vibrant business dynamism and advanced innovation capability; all pillars the Netherlands scores very well on.
Where can the Netherlands improve?
Although the Netherlands does well, there are definite areas it could improve, one being the so-praised innovation capability. For this pillar, the Netherlands scores 10th place globally, with Germany taking 1st place, followed by the United States and Switzerland. To boost innovation, more investment is needed in research and development, from both the government and business community.
One point for concern, according to Henk Volberda, Professor of Strategic Management at the University of Amsterdam, is the mismatch between labour supply and demand, which makes it difficult for companies to find qualified staff and hinders economic growth. The areas the Netherlands scores the lowest on both fall under markets, namely the pillars: product market and market size.
2019 top 10 most competitive economies in the world
This year’s top 10 most competitive economies are as follows:
- United States
- Hong Kong SAR
- United Kingdom
For more information, take a look at the WEF report.