Sweden remains the most competitive economy as measured by the European Union’s (EU) own competition benchmark, the Lisbon criteria, followed by Finland, Denmark and the Netherlands, according to the World Economic Forum’s Lisbon Review 2010 released ahead of the upcoming World Economic Forum on Europe. Download the full report here.

The World Economic Forum’s study is the fifth and final review in a biennial series that assesses the progress made by EU Member countries in the far-reaching goals of the EU’s Lisbon Strategy of economic and structural reforms. In addition to assessing the performance of 27 existing EU Members, it also measures the competitive performance of EU candidates and potential candidate countries.

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. Indeed, in terms of innovation “output”, they register among the highest rates of patenting per capita internationally.

The Nordic countries have also achieved a high level of social inclusion, with low unemployment (especially in Denmark, pioneer of the “flexicurity” system) and strong participation of women in the workforce (especially in Finland and Sweden). These countries also have developed highly-skilled workforces 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 2nd both for its information society and for the extent of liberalization. Germany and France have particularly strong network industries (ranked 1st and 3rd, respectively).

Watch a four-minute interview with the author of the report, Jennifer Blanke, Senior Economist at the World Economic Forum below.