Looking for a land of opportunity? The Old World
beckons. Despite a sluggish economy, Europe dominates the top of FORBES’ annual ranking of the
finest countries for capitalism—with Scandinavia as a particular stand-out.
European countries represent two-thirds of the top 25 with Denmark repeating in
the lead position of the Best Countries for Business.
The picture isn’t as bright for the U.S.,
which slides four spots to No. 22. It continues a six-year descent since 2009
when the U.S. ranked second overall. The U.S. is the financial capital of the
world and its largest economy at $17.4 trillion (China is second at $10.4
trillion), but it scores poorly on monetary freedom and bureaucracy/red tape.
More than 150 new major regulations have been added since 2009 at a cost of $70
billion, according to the Heritage Foundation.
The drop this year by the U.S. can be
blamed on a couple of factors. Its rating fell relative to other countries on
the World Bank’s measure of investor protection, which is part of the
international financial institution’s annual “Doing Business”study. Blame poor scores on the “extent of shareholder
governance.” The U.S. also got dinged on the World Banks’ tax component, as
well as technological readiness per the World Economic Forum’s “Global Competiveness Report.”
Denmark has ranked first in six of
the 10 annual editions of FORBES’ Best Countries list. The country has
been in the news in the U.S. lately thanks to Democratic presidential
candidate Bernie Sanders, who holds up the nation of 5.6 million people as a
model socialist utopia. The country does have one of the highest
individual tax burdens in the world in exchange for its wide-ranging services,
but it is very much a market-based economy.
Denmark ranked in the top 20 in all but one of the 11
metrics we used to gauge the Best Countries for Business (it ranked 28th for
red tape). It scored particularly well for freedom (personal and monetary) and
low corruption. The regulatory climate is one of the world’s “most transparent
and efficient,” according to the Heritage Foundation.
The $341 billion Danish economy has been
listless of late, growing only 1.1% last year and likely not much better in
2015 when the books are closed. A drop in export revenue has been the main
culprit, but the foundation is in place for strong economic activity ahead. The
Danish stock market is enthusiastic about the country’s prospects. It is up 34%
over the past 12 months.
We gauged the Best Countries for Business
by grading 144 nations on 11 different factors: property rights, innovation,
taxes, technology, corruption, freedom (personal, trade and monetary), red
tape, investor protection and stock market performance. Each category was
equally weighted. The data came from published reports from the following
organizations: Freedom House, Heritage Foundation, Property Rights Alliance,
Transparency International, World Bank Group and World Economic Forum (click here for
more details on the methodology).
New Zealand moves up one spot to No. 2 (it ranked
first in 2012). The $201 billion economy is the smallest of our top 10
countries, but it has performed well, up 3.3% last year. The country offers a
transparent and stable business climate that encourages entrepreneurship. The
economy is closely tied to Australia’s. New Zealand gets high marks property
rights, monetary freedom, investor protection and low corruption.
Rounding out the top five are Norway,
Ireland and Sweden.
While the U.S. fell in
our ranking, the world’s next four biggest economies all improved their
overall standing. The United Kingdom and Japan both moved up three spots to No.
10 and No. 23 respectively. Germany improved two places to No. 18. China rose
from No. 97 to No. 94. The communist nation’s poor ranking can be attributed to
low scores on personal and monetary freedom, as well as investor protection and
red tape.
The very bottom of the list features a
number of emerging markets restrained by high levels of corruption and little
freedom. Chad replaces Guinea in last place, a spot Guinea held for three
straight years. Chad scored in the bottom five in five of our 11 criteria. The
landlocked nation in Central Africa relies on oil for more than half of its
exports. Falling energy prices have further hindered Chad, which faces extreme
levels of poverty. The rest of the bottom five includes Guinea, Libya, Haiti
and Myanmar (click here for
more on the worst countries for business).
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