The Netherlands has surpassed Switzerland and Germany as the most competitive economy in Europe, according to a comparison of the World Economic Forum (WEF). Worldwide only Singapore, the United States and Hong Kong are more competitive.
According to the researchers, the Dutch economy has become much more agile due to "an entrepreneurial culture, flat organizations and growth of innovative companies".
"There are more and more innovative companies in the Netherlands that realize growth and embrace disruptive technologies and new business models," says Henk Volberda, professor of strategic management at the University of Amsterdam.
"Dutch companies have also become much less hierarchical and can more easily adapt to economic dynamics."
Yet not enough is being innovated. The Netherlands is in tenth place worldwide when it comes to innovation. Germany, the US and Switzerland occupy the top three. According to Volberda, both the government and the business community are not investing enough in research.
The report also discusses the difficulty that companies have in finding qualified staff. There is, however, an increasing mismatch between labor supply and demand in the Netherlands, says Volberda. This inhibits economic growth.
Monetary policy has finished
Furthermore, the most developed economies have benefited from generous monetary policy in the last decade. In the euro zone, the European Central Bank has pushed interest rates further down to stimulate the economy, but this policy seems to have reached its limit.
Meanwhile, productivity growth is stagnating. The World Economic Forum therefore recommends investing in both human and physical capital through structural reforms and fiscal policy. The WEF warns that this only works if investments are also made in the development of talent and a well-functioning labor market.