The World Bank’s Ease of Doing Business Index is dead.
Yes, a business-friendliness ranking highly regarded by government officials, economists, and investors has now been discontinued amid findings of “data irregularities.” Well, snap. If country leaders are willing to exert their influence to such an extent—just to rank higher on the Doing Business index—then foreign businesses and investments are clearly in demand. More so than you thought, anyway. Powerful geopolitical players want to be known as one of the best countries to do business in. Question is, how do you choose?
Which countries are at the top of the list? (Hint: The biggest economies don’t necessarily make the cut.) And how do you go about it the right way for long-term profitability? Read on for answers to these questions and more as we go beyond the on-paper analysis to bring you the why, the which, and the how of the best countries to do business in.
The Why: What Makes a Country Business-Friendly?
Despite the World Bank’s recent drama, its business-friendliness ranking criteria still serve as a valuable metric, along with Heritage.org’s Index of Economic Freedom. Here are the top seven factors to consider when you’re shopping for a business-friendly country:
- Open markets: Financial, business, and labor freedom, including freedom of trade and investment.
- Starting a business: Ease of opening a business and hiring employees.
- Business operations: Cross-border trading, paying taxes, tax benefit availability, and access to government contracts.
- Business establishment: Obtaining construction permits, electricity, and property registration.
- Rule of law and government: Government integrity and spending, fiscal health, property rights, tax burdens, and judicial effectiveness.
- Access to finance: International funding, business grants, getting credit, and minority investor protection.
- Regulatory efficiency and business security: Contract enforcement and insolvency resolution.
The best country for foreigners to do business in depends on the above factors, which aren’t always black and white. These fundamental aspects can make or break your global expansion strategy, so having the right expertise and resources is imperative.
The Which: Top 5 Countries for Doing Business
As a hotspot for foreign direct investment and international trade, Europe is home to some of the best countries to do business in.
It’s a multifaceted trading hub with immense buying power and numerous nations that consistently perform well in the above criteria.
The Global Innovation Index 2021 (GII 2021) measures innovation capabilities and results of over 130 world economies based on aspects including:
- Human capital
- Intangible assets
- Research and development
- Knowledge and technology outputs
- Political, business, and regulatory environments
- Credit, investment, trade, diversification, and market scale
It ranks ten European countries in the top twenty alone. Add to that the latest data from USNews, and the best countries to do business in include:
Switzerland is the top-ranking country in the GII 2021. With access to the single EU market, a highly developed infrastructure, and cheap manufacturing costs, it’s a business Utopia.
Its low regulatory burden, favorable corporate tax rates, and market dominance make it one of the best places to start a business or expand an existing one.
Other attractive factors include a highly-educated labor force, business-friendly regulations, and an advanced economy with a GDP of $590 billion.
Sweden is second only to Switzerland in the GII 2021 and second only to Silicon Valley for its number of billion-dollar firms in the region (per capita). Despite its small size, Sweden’s open economy is the largest in the Nordic region. It fosters competition, transparency, and innovation with few barriers to entry. Sweden also has some of the lowest corporate tax rates in the EU. It’s one of the best countries for doing business thanks to budgetary discipline, an export-oriented manufacturing sector, investment in R&D, and a strong job market.
Besides social welfare, Denmark is a leader in innovation, transparency, and nurturing a pro-business environment. It’s famous for its thriving free-market capitalist economy, advanced infrastructure, and extensive R&D initiatives. It’s also a leader in cleantech and renewable energy. Low business operations and employer costs, a talented workforce, and favorable tax rules make Denmark one of the best countries for startups and existing businesses.
Ireland is home to over 1,000 multinational corporations, including Pfizer, Microsoft, Abbott, and Activision, demonstrating its accommodating business climate.
Besides an attractive tax regime, a highly globalized economy, and access to capital makes Ireland arguably the best country for foreigners to do business in.
It boasts a youthful, flexible, and well-educated workforce, affordable manufacturing costs, advanced infrastructure, and a well-established FDI sector.
With one of the world’s strongest economies, a pro-business environment, and a sustainable and free market, Norway is one of the best countries for doing business. Its abundant natural resources, low corruption levels, and skilled, efficient labor force are also attractive aspects, along with its established infrastructure. Norway is a leader in global industries like maritime, seafood, energy, and oil and gas while prioritizing innovation, technology, and R&D. The GII 2021 ranks it 20th. While not an EU member, the country’s EEA and Schengen Agreement allow for free and open trade across Europe.
The How: Global Expansion With Innovation Park
The business opportunities in Europe are wide-ranging, diverse, and unparalleled. As the world’s biggest economic zone, the EU’s single market has a combined GDP of around €15 trillion with over 450 million consumers and 21 million businesses. Starting or expanding your business internationally is more cost-effective and easier in Europe compared to other regions. A single currency, unified regulations, and free movement of trade, services, people, and capital are just a few reasons why. With some of the wealthiest and best countries to do business in, Europe is at the top of ambitious investors’ and entrepreneurs’ lists.
So, how do you establish a foothold and implement successful business expansion in such a powerful (and intimidating) market?
That’s easy—with Innovation Park.
Leave the red tape, visa applications, and finer details to us. We’ll get you up and running in your chosen country with a custom expansion strategy focused on your needs. Our end-to-end support solutions include everything from a tailor-made business strategy and tax optimization to investor support and location-based marketing expertise. Get access to grant opportunities, an exclusive network of partners, and profit-boosting know-how for a successful transition into European markets.
Book a paid consultation with Innovation Park and get your global expansion strategy going.
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Sources: World Bank, Heritage.org, WIPO, USNews.