Last year, the Netherlands ranked fourth globally and first in Europe, according to the World Economic Forum’s (WEF) Global Competitiveness Report. This year, however, the Netherlands has fallen out of the top 5 and ended up at sixth place.

2018 Global Competitiveness Index

This year’s edition of the Global Competitiveness Report marks an important milestone, as the report series has now been published for 40 years. This edition sees the Global Competitiveness Index (GCI) 4.0 introduced.

The 2018 Global Competitiveness Report ranked 140 economies according to 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.

How did the Netherlands do?

The Netherlands fell to sixth place in the 2018 Global Competitiveness Report. The drop in rank on the GCI 4.0 is in part due to the new way in which economies are measured. It uses 98 indicators to score economies, only 34 of which have been retained from the previous methodology. The 2018 report draws more on hard data and also at new important concepts, such as to what extent businesses embrace disruptive technologies, entrepreneurial culture and social trust.

This, however, is not the only reason why the Netherlands has dropped two places. The drop also has to do with the country’s scores on a few of the pillars and factors within them. In particular, the Netherlands only places at a shared 19th place when it comes to expenditure on research and development. The country spending relatively the most on research is Israel. To improve this score, investments would need to be made in new technologies, like AI, big data and robotics.

The lowest score that the Netherlands receives is for the flexibility of wage determination, coming in at 122nd place out of 140. The country also scores low when it comes to the complexity of tariffs, at 112th place.

Despite a few low scores, the Netherlands does rather well overall and takes shared first place in macroeconomic stability, along with third place in business dynamism and 4th places in infrastructure and institutions. It is also the third-most competitive economy in Europe.

Global top 10 most competitive economies

The following countries took the top 10 spots on this year’s GCI 4.0.

1. United States
2. Singapore
3. Germany
4. Switzerland
5. Japan
6. The Netherlands
7. Hong Kong SAR
8. United Kingdom
9. Sweden
10. Denmark