Business is affected by the policies of a country. Forbes has been conducting a survey from the past eleven years on business friendliness of countries across the globe. It has several parameters including property rights, innovation, red tape, freedom, corruption, technology, taxes, investor protection, stock market performance etc. This year Sweden tops the list followed by New Zealand. The top 10 countries are:
- Sweden
- New Zealand
- Hong Kong
- Ireland
- United kingdom
- Denmark
- Netherlands
- Finland
- Norway
- Canada
A step by step analysis of each country reveals what makes them one of the best countries to set up a business.
Sweden has undergone a transformation over the past two decades. It has self-restrained on the budget whose cuts go to the state’s welfare. To encourage employment the government of Sweden shrank the jobless and disability benefits. This allowed for tax credits. The economy grew by 4.2%.
New Zealand, the second country in line has transformed itself over the past thirty years into a dynamic free market from former highly regulated economy. It is the smallest economy in the top ten countries but its changes are tremendous. It has a GDP of $174 billion which grew by 3.6% in the second quarter of 2016. It is one of the top growth rates in the developed world. All the government controlled in sectors like airlines, insurance, banking and telecommunication are privatized there.
In case of UK, the data was collected before the brexit, hence the scenario of business at this point of time cannot be determined from this survey. Now the atmosphere is completely different and the effect of brexit will take years to realize.
Hong Kong comes in the top 5 countries because of its good investor protection, trade freedom, tax burden and red tape. Even though it’s GDP did not grow much, just 1.4%.
Ireland makes it to the top 5 because of its troubled situation these days. Foreign direct investment has been high. Unemployment has been on a steady rise due to which there is a vast pool of employers. Wages too have fell which kept the labor costs in check. But despite all the problems Ireland has grown because of low tax burden, personal freedom and investor protection. It is the only country to score well in 15% of the 11 metrics considered. It has also benefitted from the fiery stock market boom. It has pro-business environment.
US has fallen down the list because of its stringent policy change. Federal Reserve’s easy money program has hindered in the growth of its business sector. Tax burden is also excessive in US. It has the highest statutory corporate tax rates in the world. To add to it, US have also revised its business policies which are not investor friendly anymore.
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