Developed Economies Remain Best Places to Do Business

For all the talk about the potential of emerging markets, developed economies in North America, Western Europe and Asia remain the best places to do business, according to The Economist Intelligence Unit’s latest Business Environment Rankings (BER).

Singapore looks set to remain the world’s most investor-friendly location in 2014-18, retaining its number-one spot from the 2009-13 period. Switzerland and Hong Kong also defend their second and third place position. The remainder of the top ten is comprised of North America, Scandinavia and other developed Asian economies.

Asia is a diverse region, and there are large differences between the overall scores and global rankings of its top four countries and its poorest performers (Bangladesh and Pakistan, in 69th and 74th place respectively, out of the 82 countries ranked). The gap reflects the widely varying levels of economic development and political stability between these countries, alongside sharp differences in the underlying structure shaping laws and regulations of foreign investment.

Asia’s best performers have several factors in common: a favourable policy environment – particularly for finance and foreign investment – with competition policies that encompass international best practice. Especially in East Asia, competition between cities to become hubs for international finance, manufacturing and logistics has driven improvements in the business environment.

Despite tensions in some countries over immigration from poorer neighbours, migration of skilled labour within Asia will remain relatively unimpeded and overall labour market conditions will continue to compare extremely favourably  to other regions, with companies able to expand or reduce their  workforce with ease, as well as benefitting from freedom to set wages and hire foreign nationals.

Infrastructure remains a relative weak point for Asia, with only Singapore ranking among the world’s top 10 in this category (compared with other areas of the business environment, faring relatively poorly, in 7th place). Australia, Japan and New Zealand trail in joint 14th place, with Hong Kong coming in at 18th. While some of the region’s infrastructure is excellent, particularly in telecoms and air transport, other areas require investment to improve distribution networks and utilities provision, as well as lower office rents.

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