According to World Bank rankings, the easiest countries to conduct business in aren’t always the global giants like Brazil, China or even India. In fact, none of these three even make the top 10. China, for example, which has the second largest economy in the world, is at 90th in terms of the ease of conducting business, and has failed to significantly improve its status over the last several years. The report ranks countries based on 10 key indicators that are conducive to effective business dealings. The foremost criteria include ease of starting a business, ease of obtaining construction permits, access to electrical utilities, ease of registering property, availability of credit, protection for minority investors, tax rates and collection methods, capacity for trade to occur across borders, and ease of enforcing contracts and declaring insolvency. Labor market regulation is also considered in compiling these rankings. The highest ranking (lowest numeric value) means that the above indicators are conducive to business operations. Below is a list of 10 countries where it’s easiest to do business, and a brief explanation of why the World Bank’s Doing Business Report ranked them at the top of the list.
Due to the innovative ideas and competitive vigor of the Finnish people, this gentle giant from Scandinavia is reported to be the leading country in the world for those desiring to start a business. It is ranked at the top by the World Bank report when it comes to insolvency filings as well. Although its overall score on the index was slightly higher in previous years, its one place drop will unlikely deter the Flying Finns of Finance and the foreign investors allured by its promise.
Norway has managed to successfully combine a strong technology sector and energetic workforce with a strong safety net of social programs to its citizens, which makes a force to be reckoned with in the global business arena. Furthermore, Norway has one of the most efficient systems on the globe to handle insolvency filings. The business start-up procedure in Norway usually takes only four days, and the relative cost to launch a venture is quite low (only 0.90% of annual per capita income).
High standards of living combined with one of the world’s most skilled labor forces are among the many factors that make Sweden an excellent country within which to carry out commerce. Its strong infrastructure and well-developed social programs are strong incentives as well.
8. United States
Although the U.S corporate tax rates are relatively steep, the country is able to make up for it by having some of the lowest costs related to operating businesses. This means lower costs for supplies, offices, and logistics, just to name a few. Despite ranking seventh among the ‘World’s Best Places to Start a Business’ it lags behind other developed countries when it comes to having an attractive business environment, and seems to be losing it hold as such at increasing rates.
7. United Kingdom
The U.K. ranks sixth in ease of starting a business, up from eighth place in last year’s rankings. According to the World Bank report, the low costs associated with setting up a business there, combined with increased levels of entrepreneurial optimism, have contributed to the high ranking. According to the report, 88% of Britons believe that working hard can get you ahead of life, compared to 84% last year and 78% in the year 2010.The start-up cost for businesses in the UK is £ 81 ($121.50 US), which is in the low end in comparison to global norms.
6. Hong Kong
The report shows that, although starting a business is becoming more difficult in Hong Kong because of increased registration fees, there is a great deal of protection for minority investors there. The DTF score for Hong Kong was 84.97, and Hong Kong ranked number five in terms of ease of starting a business. Hong Kong also received a high ranking due to the simplicity of obtaining construction permits there and conducting trade across the border.
5. South Korea
The Republic of Korea earned a DTF score of 83.40 and the ‘Doing Business’ ranking of 4th globally. The DTF is the measure of the Distance an economy is To the Frontier. An economy’s DTF is indicated on the scale of 0-100 where 100 is the highest performance in terms of innovative development and penetration of new technologies. South Korea ranked towards the top due to strong results when it comes to obtaining electricity, trading across borders, and enforcing contracts.
The World Bank Doing Business Report pointed out that Denmark’s effective digitization process is one of the prime factors contributing to its third place rank. The digitization process allows quick and easy registration of new businesses, the acquisition of a ‘NemID’ signature, and employee insurance registration. These procedures can be done in just one day, and the fee for starting a company can cost as little as 670 Kroner ($98 USD). Trading across the border in Denmark is easy, since it has a ‘free border’ and documentary compliance on exports and imports. According to the same report, the Danish government is the front runner in enforcing regulations that facilitate market interaction without hindering the private sector.
3. New Zealand
In New Zealand, starting a business need take only a few hours of an entrepreneur’s time thanks to a simple online procedure. In the past few decades, New Zealand has been transformed from an agrarian economy, largely dependent upon the British market, into a world-leader among industrialized, free-market economies. Since the country emerged from a recession in 2009, it has achieved a 2-3% annual growth rate in the time since. The World Bank report indicates that New Zealand is the best country when it comes to protecting minority investors, as well as the best for starting a business. Its free trade agreements, pro-competition regulations, efficient tax codes, and an open political system are all contributors to its high ranking.
The report indicated that Singapore continues to be the economy with the most business-friendly and secure environment. For example, resolving commercial disputes in Singapore’s court system on average takes around 150 days, which is the shortest time in the whole world. The cost of the same is 26% of the claim’s value, which is significantly low compared to the fellow Asian country of Myanmar, ranked 167 out of 189 economies, where it takes three years to resolve a dispute and the fees run more than 50% of the disputed value. In the U.S, it takes 420 days to resolve such a dispute, and the cost is more than 31% of the claim as indicated by the same report.
Entrepreneurs play an important part of any economy, and having a business environment that conducive to their success is important for any country desiring to encourage investor confidence and growth. The more conducive a nation’s business climate is for generating successful results, the more their tax base expands and the more foreign investments are attracted. Both of these key factors will improves a country overall economic well-being, and capacity to improve social welfare and infrastructure. While a country can’t make foreigners invest within its border, what it does have the power to do is introduce efficient and impartial regulations that promote the allure of the business environment therein and, ultimately, the continual improvement of the state of its people.