European countries top list for business location
economies according to this year's assessment by the World Economic
Forum (WEF) of the best places to do business.
The need to grow profits, coupled with relatively less barriers to trade are the sparks of theongoing globalisation in the food industry. As such the rankings and analysis from the highlyrespected organisation provides a ready guide to which countries have cut the red tape and might beprime locations for setting up manufacturing plants.
Switzerland, Finland and Sweden ousted the US from the top of the competitiveness league tablecompiled by the WEF, a Switzerland-based business think-tank. Their growing competitiveness point tothe growing importance of higher education and training in maintaining a fertile environment forattracting businessess.
" Business activity in these countries benefits from a well-developed institutional framework,characterized by the rule of law, an efficient judicial system and high levels of transparency and accountability within publicinstitutions," the WEF stated. " Excellent infrastructure is an additional positive feature ofthe business environment. Our indicators point to the rapidly growing importance of higher education and training as engines of productivity growth."
Denmark, Singapore, the US, Japan, Germany, the Netherlands and the UK complete the WEF's top tenlist. The US fell from to sixth from first compared to its ranking in the previous report by thenon-profit business organisation, which is at the forefront of the globalisation movement.
"Countries that, like the Nordics, are investing heavily in education are likely to see rising levels of income per capita, growing success in reducing poverty and anincreasing ability to establish a presence in the global economy," stated Augusto Lopez-Claros,the WEF's chief economist.
Switzerland rise to number one on the list reflects the country's sound institutional environment, excellent infrastructure, efficient markets and high levels of technological innovation, Lopez-Claros said.
"The country has a well developed infrastructure for scientific research, companies spend generously on R&D, intellectual property protection is strong and the country's publicinstitutions are transparent and stable," he said.
Finland, Sweden, and Denmark's high position is due to the low levels of public indebtedness on averagethan the rest of Europe. Prudent fiscal policies have enabled governments to invest heavily in education,infrastructure and the maintenance of a broad array of social services, the WEF stated.
Finland, Denmark and Iceland are rated as haing the best institutions in the world. Together with Sweden and Norway, they also are in the top ten leagues for health and primary education.
Germany and the UK were cited for having a high degree of protection for property rights andjudicial systems that rank among the top.
By contrast, both countries score poorly for their macroeconomic environments, though Germany doesless well. Germany is faulted for high public sector deficits, rising levels of public indebtednessand the strengthening of its currency in 2005.
The UK excels in market efficiency, enjoying the most sophisticated financial markets in the world. Its flexiblelabour market and low levels of unemployment stand in sharp contrast to Germany, whose business communityis burdened by what the WEF labels as "sclerotic" labour regulations.
"But Germany does somewhat better than the UK in innovation indicators and the sophistication of its business community ispeerless," the WEF conceeded.
Meanwhile Italy is on the downswing, dropping four places to 42 in this year's report.
Italy's underlying macroeconomic environment is poor due to having run budget deficits without interruption for the past 20years, the WEF stated. The country's fiscal situation has deteriorated sharply since 2000 and public debt levels are well over100 per cent of GDP, among the highest in the world.
"The poor state of Italy's public finances may itself reflect more deep-seated institutional problems, which are shown in low rankings for variables such as the efficiency ofgovernment spending, the burden of government regulation and, more generally, the quality of public sectorinstitutions," the WEF stated.
As in previous years, Poland remains the worst performer among the EU economies, with a rank of 48, rightbehind Greece (47) and behind Estonia (25), the Czech Republic (29) and Slovenia (33), which remaincentral and eastern Europe's top performers.
"Particular weaknesses in Poland stem from the highly protected and rigid labour markets, particularly harmful in a country where unemployment is close to18 per cent," the WEF stated. "As in many transition economies, businesses have to deal with uncertainties stemming from weak institutions, corruption andcrime, favouritism, an easily influenced judiciary and a weak property rights regime."
Among the EU candidate countries, Turkey and Croatia both benefited from the "EU bonus", movingup in the rankings by 12 places each, to positions 59 and 51, respectively.
Russia has fallen from its 53rd rank in 2005 to 62nd in 2006 due to the private sector's distrustof the independence of the judiciary and the administration of justice.
Leading within Asia are Singapore and Japan, ranked fifth and seventh respectively, closely followed by HongKong (11) and Taiwan (13).
The WEF compiles its rankings using a combination of publicly available statistics and a surveyof business executives. About 11,000 business leaders were polled in 125 economies worldwide.
A report by the World Bank and the International Finance Corp. (IFC), published last month, ranked Singapore first in the world on the ease of doing business. New Zealand moved to second place after two years at the top spot. The report ranks Georgia as the top reformer this year.
The fledgling economy improved its ranking in six of 10 areas the report studied. The result was business registrations rose by 20 per cent between 2005 and 2006.
