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Sweden is the most competitive economy as measured by the European Union’s (EU) own Lisbon criteria, followed by Denmark, Finland and the Netherlands, according to the World Economic Forum’s The Lisbon Review 2008 released today, ahead of the World Economic Forum on Europe and Central Asia (Istanbul, Turkey, 30 October - 1 November 2008).

The World Economic Forum’s review is the fourth in a biennial series that assesses the progress made by the EU member countries in the far-reaching goals of the EU’s Lisbon Strategy of economic and structural reforms, the last of which was published in 2006.

In addition to assessing the performance of the 27 existing EU members, it also measures the competitive performance of the EU candidates and potential candidate countries. In addition, this year the Review takes an enlarged approach, going beyond the likely future accession countries to encompass the Commonwealth of Independent States (CIS), also including those from Central Asia.

This is because economic development in these countries is of critical importance for the stability of the EU’s economic neighbourhood.

“In 2000 the EU set for itself an ambitious action and development plan with the Lisbon Agenda. With The Lisbon Review we aim to measure Europe’s progress towards meeting its own criteria. What differentiates this study from many others is that much of the data used comes from a survey among CEOs and top executives in each of the countries under analysis. This means that the results can be interpreted in large part as the business community’s perspective on how well these countries are meeting the Lisbon goals,” said Jennifer Blanke, Senior Economist at the World Economic Forum’s Global Competitiveness Network.

The Nordic countries are the strongest European performers in the area of innovation, attributable to their companies’ aggressiveness in adopting new technologies and their level of spending on R&D, and the high degree of collaboration between universities and the private sector in research.

And, indeed, in terms of innovation “output”, they register among the highest rates of patenting per capita internationally. The Nordics have also achieved a high level of social inclusion, with low unemployment (especially in Denmark, pioneer of the “flexicurity” system), and the strong participation of women in the workforce (especially in Finland and Sweden).

These countries also ensure a high level of skills and skills upgrading through top-notch educational systems and strong on-the-job training programmes.

Among the other countries in the top 10, performance is more mixed, with some notable strength in specific areas. For example, the Netherlands is ranked first for the extent of liberalization in the country, second for its achievements in fostering an information society, and third for the quality of financial services in the country.

Germany and France rank first and third, respectively, for their network industries, particularly due to their excellent infrastructure, although the enterprise environment is a comparative weakness for both countries, respectively ranked 15th and 13th in this area.

Austria is ranked second for liberalization, while Ireland and Luxembourg are ranked second and third, respectively, for the quality of their enterprise environments.

A striking deterioration since the last assessment relates to the decline in the United Kingdom’s financial services assessment, ranked first in the last Lisbon Review and now at 11th place.

This can be traced to a weakening across the board, most notably in the access to capital and concerns about the soundness of the banking sector, linked to turmoil in the financial sector which has hit the United Kingdom particularly hard, given the economy’s strong dependence on the financial services sector.

According to the study, several 2004 accession countries are ranked ahead of many longer-standing EU members, including Estonia, Slovenia and the Czech Republic. This implies that a number of these recent members are already closer to meeting the Lisbon goals than many of the original EU 15 members.

Among potential future members, Croatia, Montenegro and Turkey do better in many of the different dimensions, and in the overall ranking, than Poland and Bulgaria, two EU members.

“The assessment indicates that EU attention should be focused on three areas in order to get closer to the Lisbon goal of becoming ‘the most competitive and dynamic knowledge-based economy in the world’: improving the environment for innovation and R&D, developing a stronger information society, and creating an enterprise environment that is more conducive for private sector economic activity,” said Thierry Geiger, Economist at the World Economic Forum’s Global Competitiveness Network.

The eight dimensions measured by The Lisbon Review 2008 are:

1. Creating an information society for all

2. Developing a European area for innovation and R&D

3. Liberalization (completing the single market; state aid and competition policy)

4. Building network industries

5. Creating efficient and integrated financial services

6. Improving the enterprise environment

7. Increasing social inclusion

8. Enhancing sustainable development

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