BDO International Business Compass 2018: the dominance of OECD countries continues

BDO has just released the International Business Compass 2018 (IBC). It is an annually updated index measuring the attractiveness for businesses of different international locations, published jointly by BDO Germany and the Hamburg Institute of World Economics, for what is now the seventh time.

In the global ranking of economic, politico-legal and socio-cultural framework conditions, Northern America, Oceania and Northern and Western Europe again occupy the top places. These are the results of what is now the seventh edition of the International Business Compass (IBC) produced jointly by BDO AG Wirtschaftsprüfungsgesellschaft (BDO Germany) and the Hamburg Institute of World Economics (HWWI). The object of the IBC is each year to quantify the attractiveness of international locations for businesses in the form of a single, comprehensive index value combining the overall societal and business development status of different countries and regions.

“It is small and medium-sized businesses in particular that are often especially flexible and innovative,” says Parwäz Rafiqpoor, executive board member of BDO Germany. “However, if they wish to expand into international markets, they often lack the necessary resources for obtaining information on potentially suitable sales outlets or production locations. We see the IBC as an orientation guide especially suitable for these types of businesses, to help them strengthen their worldwide competitive standing.”

Asian financial centers

As in previous years, it is the two Asian financial centres, Singapore and Hong Kong, which occupy the top two places in IBC 2018. This is due above all to the outstanding economic framework conditions for business in these two highly developed city states. Elsewhere, there are also few changes. Switzerland and the Netherlands are the leading European countries, taking places three and four, respectively. Ireland jumps up two places to number five, as a result of a fall in its rate of unemployment and its lower national debt ratio.

The Scandinavian countries of Denmark and Norway both go down one place and now lie sixth and seventh, above the slightly improved United Kingdom in eighth place. The rest of the Top 10 is made up of the re-entrants Canada and Australia. Having fallen by, respectively, four and three places, Germany (12th place) and New Zealand (13th place), now feature only among the Top 20 of the 174 countries covered. In these leading places, which continue to be dominated by OECD countries, the absolute differences in index scores among this group are extremely small.

Characterised by their especially catastrophic conditions overall are countries at the very bottom of the All-in-One Index. Here we find the states of Afghanistan, Sudan, Venezuela and North Korea, which are rocked by wars, crises and conflicts.

Future

Commenting on the results, Professor Dr. Henning Vöpel, Director of the HWWI, said: “In a few countries, the situation is such that it is difficult to see how they can recover in the foreseeable future. Elsewhere, however, in many countries it appears to be primarily the politico-legal situation that prevents their entry into the leader positions, despite their otherwise good economic and socio-cultural framework conditions. This is the case of China, for example, which would otherwise be ranked just under the first quartile. As it is, it finds itself in the middle rank. In view of the gigantic strides forward that Chinese business has made in comparison with the classical economic regions, it is precisely here, certainly in the medium to long term, that we should also expect a convergence, at least in terms of laws, with the OECD standard“.

Click here to access the further report.