What Countries Are Best For Business?

February 2, 2009

[First published November 29, 2005] The World Bank, which sometimes does good things, has published on the net a ranking of 155 countries as to the ease of doing business in each for 2006 (go here). From this page, you can also download the index and its subindicies in pdf or Excel.

The data that has now become available on the net is amazing. I still remember having to squeeze it out of reports from the UN, World Bank, and Department of the Treasury in a dusty government documents room of the library, various yearbooks, and encyclopedias. I spent over a year just going through the The New York Times Index. And now to have all these data ready made for analysis in Excel . . . . With all these data around, including on conflict, war, political systems, and a variety of related variables, I sometimes wish I were at the beginning of my scientific career so that I could exploit them all.

For those of you who are students, take some statistics courses so that you can use such data to answer your own questions. You will never regret it.

Anyway, on the doing business index, you would find that the best in rank order are New Zealand, Singapore, U.S., Canada, Norway, Australia, Hong Kong, Denmark, U.K., and Japan. At the bottom are nine African countries, and Laos. Taiwan is 35th, China is 91st, and South Korea is 27th. Germany is 19th, and way ahead of France, which is 44th. Iraq is 114th, while Syria is 121st and Iran 108th. Israel, a democratic country with a mixed free market-socialist economy, is 29th. Sweden, another one, is 14th. Even those democracies that tend toward socialism, like Norway and Denmark in the top ten, and Germany, Sweden, and Israel not too far below, are better for business than most of the nondemocracies. It ultimately comes down to democratic peoples knowing on which side their bread is buttered.

I can’t do this right now, but I have a little project for someone. What is the correlation between a countries political freedom, economic freedom, and how well one can do business there. The data are easily available. Those for political freedom are here, and for economic freedom they are here.

I would bet my house that the three correlations will all be high, i.e., >.75.

Another plus for the democratic peace.