How is a Competitive Economy Measured?
A competitive economy, also known as a competitive market, is one in which several large economies are in competition with each other to meet consumer demand. Competitive economies can be found all over the world and are measured by the Global Competitiveness Report, which uses 114 factors to determine the competitiveness of a market. These factors are divided into 12 categories: infrastructure, higher education and training, health and primary education, labor market efficiency, innovation, financial market development, institutions, macroeconomic environment, business sophistication, goods market efficiency, market size, and technological readiness. This article focuses on the most competitive economies within Europe.
Top 10 Most Competitive Economies in Europe
The majority of the countries in Europe have almost completely bounced back from the global economic crisis of 2008, with the exception of those nations located in the southern and eastern regions. Consequently, these lower performing economies also rank lower on the Global Competitiveness Report. According to this report, which is based on a scale of 1 to 7, the following countries are the most competitive in Europe:
Not only is Switzerland the number 1 performing economy in Europe, it is also the best performing in the world. This country received a score of 5.76 and was highest in labor market efficiency, business sophistication, and innovation. One of the factors keeping this country from a higher score was its low participation of females in the workforce.
The economy of Germany ranks number 2 in Europe and number 4 in the world. With a score of 5.53, some of its strongest competitive areas include: research and technology, business sophistication, and innovation. This report places Germany in a higher position than it was previously, given its improvement in financial and labor market efficiency and macroeconomic environment.
The Netherlands scored a 5.5 on the Global Competitiveness Report, which places the country at number 3 in Europe and number 5 in the world. This score is a significant improvement from previous years due to its education, innovation, and infrastructure. However, its financial market is still in recovery.
The 4th most competitive market in Europe is in Finland. This country also ranks number 8 in the world and has a score of 5.45. It scored highest in the categories of education, innovation, and institutions. Its weakest area is in labor market efficiency. Additionally, this country is working toward lowering public debt.
With a score of 5.43, Sweden comes in number 5 in Europe and number 8 in the world. It ranks strong in education, innovation, and business sophistication. The inefficient labor market here makes it less desireable for doing business, hindering further economic advancement.
The UK is the 6th most competitive economy in Europe and has a score of 5.43, making it the 10th most competitive in the world. This country scored high in research and technology and is considered an excellent place for a tech company to establish itself. With a public debt that is 9% of the national GDP, the UK scored low in macroeconomic environment.
The 7th most competitive European market is in Norway. This country scored 5.41 and is number 11 in the world. Despite this somewhat lower ranking, Norway scores high in macroeconomic environment, financial market, higher education and training, and labor market efficiency.
Denmark holds 8th place in Europe and 12th place in the world in terms of competitiveness. It scored 5.33, ranking high in labor market efficiency and education. Weaker categories in this country include financial market, goods market, and infrastructure.
Belgium is the 9th most competitive market in Europe and 19th in the world. This ranking represents a significant decline over previous years, primarily due to its macroeconomic environment and labor market efficiency. Belgium does score high in higher education and training as well as health and primary education.
Luxembourg has the same competitive score as Belgium at 5.2. It ranks just under the previous country, however, due to its weak public services, like health and primary education. Its highest scores came from the categories of technological readiness, institutions, and goods market efficiency.