Netherlands has EU's most competitive economy: WEF

The Netherlands surpassed Switzerland and Germany as the most competitive economy in Europe. Worldwide, the Netherlands is in fourth place, after Singapore, the United States and Hong Kong, according to a comparison by the World Economic Forum (WEF).

According to the WEF researchers, "an entrepreneurial culture, flat organizations and growth of innovative companies" have made the Dutch economy much more agile.

"The WEF report states that 'the Dutch economy has become much more dynamic' and that 'our infrastructure, the functioning of the government including economic policy and the increased growth of innovative companies' are world class. These are nice and deserved compliments for our entrepreneurs, their employees and our knowledge institutions", State Secretary Mona Keijzer of Economic Affairs said.

"There are more and more innovative companies in the Netherlands that realize growth and embrace disruptive technologies and new business models", researcher Henk Volberda, professor of strategic management at the University of Amsterdam, explained to NU.nl. "Dutch companies have also become much less hierarchical and can more easily adapt to economic dynamics."

Though there is room for improvement, especially on innovation. The Netherlands is in 10th place worldwide when it comes to innovation, with Germany, the United States and Switzerland occupying the top three spots. According to Volberda, both the government and the business community need to invest more in research and development.

Another point of concern for the Netherlands is the increasing mismatch between labor supply and demand, Volberda said. This makes it difficult for companies to find qualified staff and inhibits economic growth.

The most developed economies have benefited from the generous monetary policy in the last decade, the WEF said. In the eurozone, the European Central Bank pushed interest rates further down to stimulate the economy. But this policy seems to have reached its limit, according to the researchers.

The WEF also noted that productivity growth is stagnating. The World Economic Forum therefore recommends investing in both human and physical capital through structural reforms and fiscal policy, but warns that this will only work if investments are also made in the development of talent and a well-functioning labor market.