A great many people, at one time or another, have participated in, or at least have heard discussions about countries around the world, and how they fare economically in a business context. How their business climate and culture compares to others in the global market. Loyalists may always stand by their convictions that the U.S. consistently ranks at the top of business-friendly countries, what with our open trade policies, business relationships with other world economic powerhouses, and so on. But based on economic freedom data provided by Heritage Media, the U.S. doesn’t even rank in the Top 10 globally in 2018 (there are, after all, a lot of roadblocks and considerations in starting a business in the U.S.). Some of the countries that do rank highly, who are exceptional in the listing’s metrics, may just come as a surprise to some people.
Economic Freedom equates to a Business-Friendly Culture
The more economically free a country’s overall climate is, the more prosperity residents and businesses within that climate and culture of that given nation can realize. The more freedom and flexibility businesses have in maintaining, developing, and consequently expanding their operations, the more “business-friendly” that nation emerges as a whole.
Heritage Media’s 2018 Index of Economic Freedom provides comprehensive data covering 12 freedoms citizens have in 186 countries. Readers can evaluate the very latest macroeconomic data and economic freedom scores of these nations individually, as well as detailed cross-country comparisons of two selected nations.
Looking Well Beyond Our Borders to See The World Leaders
Heritage based their rankings on a broad number of criteria, with countries scoring 0-100 overall. These countries were ranked by their total scores, placed into Free (100-80), Mostly Free (79-70), Moderately Free (69-60), Mostly Unfree (59-50), Repressed (49.9-40), and Not Rated classifications.
The top 6 nations, the only ones falling into the “Free” classification, are:
- Hong Kong (90.2)
- Singapore (88.8)
- New Zealand (84.2)
- Switzerland (81.7)
- Australia (80.9)
- Ireland (80.4)
Quite obviously, the metrics used to formulate these rankings are not skewed toward raw monetary earnings, size, or populations of world countries, among the seemingly countless variables and data that can be incorporated into a list. In this list of 2018 country rankings, the U.S. is ranked #18 (75.7).
When looking at the six nations in the Free category, the tiny country of Singapore really seems to stand out as perhaps the biggest surprise of them all. Here again, it’s clearly obvious this ranking list isn’t biased towards the biggest “players” in the world market. But in terms of Economic Freedom (again, equalling a business-friendly environment), the numbers simply don’t lie.
There are many reasons why this tiny city, state, and island country in Southeast Asia is so prosperous on the world stage. At 277 square miles in size (roughly four times the size of Washington D.C.) and with a population of 5.6 million people (New York City alone has a population of over 8.7 million), it’s not the size that matters, but what the country does with what systems they have working for them that does.
With countries that struggle to lower unemployment rates to below 5% (the U.S. being one of them), their unemployment rate is at an astounding 1.8%. And while many of the (seemingly) most prosperous nations in the world take to many, many measures to curb their often spiraling, increasing inflation rates, their inflation (CPI) is at -0.5%.
Many people can relate to these numbers a little better when compared to U.S. figures. So regarding GDP (PPP) 5-year compound annual growth, they are at 3.3%, the U.S. at 2.1%. Singapore’s per capita – GDP (PPP) is $87,855. The U.S. is $57,436.
Why This Nation is Thriving Now
Their prudent monetary and fiscal policies, corruption-free and very open business environment, and a legal framework that is highly transparent lead to the country’s highly developed free-market economy. The government is proactive in implementing active industrial policies, which promote economic diversification and development. Business concerns are addressed through targeted fiscal incentives and significant public investments. Although keep in mind, if you register your business in Singapore, there is a law that demands you employ a Singapore company secretary.
Do Tax Rates and Government Spending Play Key Roles?
The nation’s top corporate tax rate is 17% (U.S.: 35%). Their overall tax burden equals 13.6% of total domestic income (U.S.: 26.4%). Their government spending has resulted in budgetary surpluses of 4.1% of GDP, whereas the U.S. has seen budget deficits averaging 4.0% of GDP.
Clearly, this little Asian powerhouse, with strong numbers in so many leading categories, indicate they are doing great things there to foster growth, development, and prosperity for their businesses, and in turn, their residents. Perhaps countries that are struggling with the economic and government problems they currently have should look to the course of action such prosperous nations take. When it comes to some things in life, bigger isn’t always better.