Question

Select the three countries that you would do business with based on the ratings and 3 countries you would not and explain why.

The resources for each exercise can be easily located by using the search box at the top of the globalEDGE website:

• Search phrase: Freedom in the World or Freedom House
• Resource Name: Freedom House Surveys
• Website: Freedom House Reports
• globalEDGE Category: Publications

Answer 1

1. Gross Domestic Product: representing the market value of all final services and goods produced within any country in a given period of time, a country’s GDP is important because it tells you about how the economy is performing as well as its size. If a country has a growing GDP and inflation is not particularly an issue, then businesses within that country are generally better for it.
2. Consumer Price Index: measuring changes in the prices of typical consumer services and goods purchased by households in a country, CPI is often used as a gauge for inflation. Inflation can negatively or positively affect a country’s currency, which in turn will determine just how expensive it is for you to invest in said country.
3. PMI Manufacturing and Services: this is simply an indicator of how healthy the manufacturing sector of a country is during a specific period. Knowing the PMI of a country will tell you how well or poorly businesses are doing and why.
4. Employment Indicators: this is perhaps the most important indicator to watch. How productive and wealthy a nation’s citizens are directly determine how much money they have to spend on goods and services. If unemployment rates go up, these citizens will have less disposable income and as such consumer spending will go down which in turn will hurt the GDP as well as overall economic growth prospects of the said country; this is bad for business.

Best Country to do Business

UNITED KINGDOM

GDP: $2.6 Trillion as of December 2017

A Quick Glance

• GDP Growth: 1.8%
• Per-Capita GDP: $39,000
• Public Debt/GDP: 89%
• Population: 66M
• Unemployment: 4.9%
• Trade Balance/GDP: -4.4%
• Inflation: 0.7%

This country topped Forbes’ 2018 list of top countries to do business in. And with good reason!

They say numbers do not lie and as things stand, the United Kingdom, despite all that Brexit uncertainty, remains one of the best countries in which to start a business.

But apart from the beautiful economic indicator figures, other factors come into play; factors that propel the United Kingdom to the top. These include:

• Ease of incorporating a company: In the UK, this can be done within an hour and will cost you £14 or about $20.
• Tax benefits: The British government offers various tax-related benefits for founders, investors, and even employees that make the country quite attractive from a financial point of view.

Additionally, the UK has one of the lowest corporate tax rates among the G20 countries and as such is quite attractive to business investors.

SINGAPORE

GDP: $313 Billion as of December 2017

A Quick Glance

• GDP Growth: 2%
• Per-Capita GDP: $56,000
• Public Debt/GDP: 113%
• Population: 5.6M
• Unemployment: 2.1%
• Trade Balance/GDP: 19%
• Inflation: -0.5%

According to the World Bank, Singapore presents one of the healthiest environments to start a business. Apart from the excellent economic indicator figures shared above, the country also has the following going for it:

• It is politically stable
• It is one of the wealthiest in the world meaning the populace has a lot of disposable income
• It has a strong labor force
• It does not impose any dividend or capital gains taxes
• It has many free trade agreements that open up huge markets
• You can easily register and start your business online

Singapore also offers affordable airfare to her neighboring countries. This means that, as a business owner, you will have affordable access to other exploratory markets such as Thailand, Indonesia, Philippines, and Malaysia.

NORWAY

GDP: $399 Billion as of December 2017

A Quick Glance

• GDP Growth: 1.1%
• Per-Capita GDP: $75,000
• Public Debt/GDP: 36%
• Population: 5.3M
• Unemployment: 4.7%
• Trade Balance/GDP: 5%
• Inflation: 3.6%

One of the best things about Norway is that communication with the government can reliably be done online. You can easily register a company, and you will also find that complying with tax laws in this country is a rather straightforward process.

Another added advantage of starting a business in Norway is the fact that they are a highly technologically advanced nation with a majority of Norwegians very willing to adapt, as well as pay, for new technology.

This means that you will easily find highly skilled labor especially in the fields of IT, design, finance and music technology.

Other things that make this nation one of the best for doing business include:

• The populace is generally wealthy meaning they have a lot of disposable income
• It is politically very stable
• It has a well-developed communication and transport infrastructure
• It is a big player in the EU and has long-standing trade ties with other EU nations

Norway is a very transparent country and has minimal levels of corruption. For these reasons, Norway makes a very attractive option for any straightforward business investor looking to build an honest business.

Worst Countries to do Business

CHAD

GDP: $9.9 Billion as of December 2017

A Quick Glance

• GDP Growth: -6.4%
• Per-Capita GDP: $660
• Public Debt/GDP: 59%
• Population: 15M
• Unemployment: 5.9%
• Trade Balance/GDP: -9.2%
• Inflation: -1.1%

The problem with Chad is that it is landlocked and almost everything has to be imported thus resulting in excessive costs of transportation and an unhealthy dependency on neighbors. Another major issue is that, although oil is one of their biggest commercial commodities, almost the entire country is serviced by one refinery which often breaks down and results in shortages and frequent business stoppages.

The available labor force, although affordable to the point of being cheap, is unskilled and largely uneducated. Apart from the above highlighted abysmal economic indicator numbers, other issues are plaguing Chad, making it one of the worst countries in the world to start a business. These issues include:

• Limited communication and transport infrastructure
• Elevated levels of corruption even in government positions
• Extensive government bureaucracy

It remains a high debt risk country with extremely elevated levels of corruption, very little skilled labor and inadequate infrastructure. Starting a business here, although possible, will be frustrating at best.

HAITI

GDP: $8.5 Billion as of December 2017

A Quick Glance

• GDP Growth: 1.4%
• Per-Capita GDP: $770
• Public Debt/GDP: 34%
• Population: 11M
• Unemployment: 40.6%
• Trade Balance/GDP: -0.9%
• Inflation: 13.4%

There was a time when Haiti stood for warm ocean water and beaches. But ever since the 7.0 magnitude earthquake of 2010, Haiti has become something of an emergency state. This is not to say that its economy was that good before, but the earthquake made things much worse.

Although this is a free market region, there are certain aspects of its governance and its population that make it difficult for investors to do business here. These include:

• High levels of government corruption
• Political uncertainty and instability
• High levels of poverty
• Low levels of education
• Vulnerability to natural disasters such as earthquakes and tsunamis

Haiti is currently the poorest country in the western hemisphere. About 60% of its population lives below the poverty line which means they do not have the disposable income to buy your products.

Even though the country enjoys tariff-free exports to the United States for almost all of its exports, it is the lack of skilled labor and vulnerability to natural disasters that make this a terrible place to build a business. Plus, it has almost no transport and communication infrastructure set-up thanks to the 2010 earthquake.

LIBYA

GDP: $50 Billion as of December 2017 (although GDP has been fluctuating wildly for the last decade)

A Quick Glance

• GDP Growth: -3%
• Per-Capita GDP: $7,800
• Public Debt/GDP: 7%
• Population: 6.4M
• Unemployment: 30%
• Trade Balance/GDP: -22.4%
• Inflation: 27.1%

Libya used to be an African powerhouse. But ever since the Arab Spring that burned through most Islamic nations in Africa and the Middle East back in 2014, Libya has been reduced to little more than just rubble.

The country is almost entirely depended on oil and gas exports, but since 2015, rival forces looking to control the largest oil terminals in the country has led to armed conflict which has, in turn, greatly impeded the country’s crude oil production.

It is due to that very armed conflict between rivaling factions that makes this country uninhabitable for business. The lack of infrastructure, the lack of food and security for the people and the lack of a stable labor force all make Libya not conducive to business investments at the moment.