A country’s business environment pertains to its conditions and capabilities to encourage business entry, expansion, and global competition. Countries with strong business environments provide both locals and foreigners a stable yet exciting entrepreneurial climate where the pursuit of new ideas and opportunities are supported.
But what makes a country ideal for business expansion and investment? According to the Legatum Institute, an independent UK educational charity which releases the Annual Prosperity Index, the countries with the best business environment score high in the following factors:
● Entrepreneurial environment
This pertains to the conditions that enable or prevent businesses to start and grow. It also assesses the ease or difficulty to run a business in the country.
● Access to credit
This refers to the ease or difficulty faced by individuals and organizations when getting credit or funding at affordable rates to finance their ideas and grow their businesses.
● Business infrastructure
This factor looks into the current and future infrastructures that enable market access for individuals and firms. These include communication, information technology, transport and logistics, and utilities.
● Investor protections
This indicator considers the appropriateness and strength of laws and rules regarding the ownership and rights of business owners. The intellectual property laws and state of insolvency resolution in the country are typically assessed under this factor.
● Labour market flexibility
This refers to the ability of businesses to adapt to new challenges whenever they need to recruit new or additional staff. Countries wherein businesses can quickly hire top talent without being impeded by high fees and strict regulations score high on this factor.
The World’s Most Attractive Business Environments
Below are the top 10 countries with the best business environment in 2018 based on the Legatum Prosperity Index:
1. United States
Although not in the top 10 of last year’s Prosperity Index, the US ranked number one on the business environment pillar in 2018.
The United States ranked high in terms of the entrepreneurial environment and access to credit. This is because this country continues to have an economy that has the resources to support new businesses and investments. As such, it has an environment that is open to both local and foreign entrepreneurs and investors.
The country also has a good anti-monopoly policy which makes it more attractive for entrepreneurs and investors.
The country’s fast-growing industries include home healthcare, computer system design, green energy, and cybersecurity.
2. New Zealand
The country’s journey to being one of the least regulated and free market-based countries in the world helped propel it to the Index’s second spot.
The country’s main industries include pastoral, horticulture, and forestry. It is, in fact, one of the top dairy exporters in the world. The world’s fifth largest dairy company can also be found in New Zealand.
New Zealand is also becoming known for its manufacturing, winemaking, tourism, and technological sectors. These are also investment and business opportunities that interested investors and entrepreneurs should look into.
Canada has the world’s third most inviting and successful business environment.
This North American country also ranks high in terms of entrepreneurial environment and access to credit. Entrepreneurs and investors will find this country highly welcoming since various studies show that setting up a business in Canada takes only a few days. It has the lowest total effective taxes as well.
Canada’s most lucrative industries include agri-food, automotive, biopharmaceuticals, business and financial services, mining, and oil and gas.
4. United Kingdom
Aside from getting high points on country entrepreneurial environment and access to credit, the UK also ranked well in terms of investor protections.
The United Kingdom is also one of the few countries known for the ease and rapidity of establishing a business. It also has a flexible labor market and one of the lowest corporate taxes across Europe.
Hospitality and tourism, food processing, finance and banking, IT and computing, and healthcare are some of the country’s fast-growing industries.
Rounding out the top five countries with the best business environment is Singapore, one of the smallest nations in the world.
Singapore has a free, open economy and, as such, is widely regarded as one of the easiest countries in the world in which to conduct business. It also has favorable tax rates, a skilled and diverse workforce, and modern infrastructures.
Information technology, manufacturing, banking and finance, logistics, healthcare, and tourism are Singapore’s most lucrative industries.
Foreign investors and entrepreneurs will find a warm welcome in Finland. The government’s support of new and existing businesses makes this country one of the best countries for setting up a new venture.
Finland also has a tech-driven and vibrant scene. It also has a highly skilled workforce, one of the most sought-after in the world.
The biggest industries in Finland include electronics, energy, motor, and chemical.
7. Hong Kong
Another Asian country that has long been considered one of the best countries for foreign ventures, Hong Kong has an open business environment. It has a low and simple tax system, one that entrepreneurs will find attractive.
It also has a multicultural talent pool and, thus, contributes to its high ranking in terms of labor market flexibility.
Hong Kong’s top industries are financial services, trading and logistics, tourism, and professional and producer services.
Denmark is also considered by many as one of the European countries where establishing and doing business is quick and easy. This is mainly due to its small open economy and liberal trade policy.
The country also has a flexible and cost-efficient labor market.
At present, its top industries include food, agriculture, maritime, technology, and cleantech.
The country’s consistent economic growth makes it one of the most conducive business environments in the world.
Australia also ranks high in business infrastructures since it has strategically located and well-designed ports, rail, and road transport networks created to meet the needs of various businesses.
It also has a smart, multicultural workforce that can meet the demand of any business.
The fastest growing industries in this country include childcare, healthcare, logistics, and information technology.
Aside from being one of the most beautiful countries in the world, Switzerland also has an attractive business environment.
Its efficient capital markets and reliable, extensive infrastructure makes it an accommodating place for new businesses. Switzerland also offers numerous tax incentives to attract companies to open or expand their operations in their jurisdictions.
Switzerland’s top industries include chemical and pharmaceutical, machine, electrical engineering, metals, tourism, and watchmaking.
For entrepreneurs and investors looking to invest in new markets, the countries listed above may be good places to investigate further.