Top European Countries for Doing Business
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Entrepreneur
The world bank has published its Doing Business in 2006 report, with interesting results. The conclusion is that the best way out of poverty is starting businesses; starting businesses = low unemployment rate. A view that is not currently shared in some countries; in France the equation is protect workers = low unemployment .
The list of european countries ordered by their world ranking of business friendliness is shown below. Compared to the GDP ranking, European countries are one of the least business friendly environments in the world:
| World Rank | World Rank | |||
|
Norway Denmark United Kingdom Ireland Iceland Finland Sweden Switzerland Belgium Germany |
5 8 9 11 12 13 14 17 18 19 |
Netherlands Spain Austria Portugal France Poland Bulgaria Italy Romania Greece |
24 30 32 42 44 54 62 70 78 80 |
The table shows a distinct north-south divide, same as for GDP and wealth per capita. Continental Europe, specially southern Europe lags behind in the rankings.
What are the Factors
1. Starting a Business:
Procedures, time, cost and minimum capital to open a new business
2. Dealing with licenses
Procedures, time and cost of business inspections and licensing
3. Hiring and firing workers
Difficulty of hiring index, rigidity of hours of index, difficulty of firing
index, hiring cost and firing cost
4. Registering property
Procedures, time and cost to register commercial real estate
5. Getting credit
Strength of legal rights index, depth of credit information index
6. Protecting investors
Indices on the extent of disclosure, extent of director liability and
ease of shareholder suits
7. Paying taxes
Number of taxes paid, hours per year spent preparing tax returns and
total tax payable as share of gross profit
8. Trading across borders
Number of documents, number of signatures and time necessary to
export and import
9. Enforcing contracts
Procedures, time and cost to enforce a debt contract
10. Closing a business
Time and cost to close down a business, and recovery rate
Where is hiring and firing easy—and where not?
One of the biggest factors bearing on startups is the ease of hiring and firing. Also the area hardest to reform. Below is the league table of countries according to hiring and firing difficulty
| Difficulty of | Rigidity working | Difficulty of | Cost of | Cost of | |
| hiring | hours | Firing | Hiring | Firing | |
| Spain | 67 | 80 | 50 | 66 | 32 |
| Greece | 78 | 80 | 40 | 66 | 30 |
| Germany | 80 | 40 | 55 | 21 | 67 |
| France | 80 | 40 | 66 | 47 | 32 |
| Turkey | 44 | 80 | 40 | 55 | 22 |
| Italy | 61 | 80 | 30 | 57 | 33 |
| Austria | 11 | 80 | 40 | 44 | 31 |
| Hungary | 80 | 20 | 37 | 34 | 34 |
| Sweden | 60 | 40 | 43 | 33 | 24 |
| Finland | 60 | 40 | 48 | 22 | 24 |
| Netherlands | 60 | 60 | 49 | 16 | 16 |
| Ireland | 40 | 30 | 33 | 11 | 52 |
| Poland | 60 | 40 | 37 | 26 | 25 |
| Norway | 44 | 40 | 30 | 38 | 14 |
| Belgium | 11 | 40 | 10 | 20 | 55 |
| Iceland | 60 | 0 | 31 | 12 | 13 |
| Switzerland | 40 | 10 | 17 | 14 | 12 |
| Denmark | 11 | 40 | 10 | 20 | 1 |
| UK | 11 | 20 | 10 | 14 | 9 |
| US | 0 | 0 | 10 | 3 | 8 |
Discussing this with my partners, we feel the staff count of the companies we are involved with would rise by 20% if labour laws were more flexible in southern Europe. We recruit in the shadow of potential layoffs far into the future. A far cry from Google's we hire three people a day policy, or Microsoft's 65,000 employees.
Food for thought.
[The report was highlighted by Guy Kawasaki.]
- Quaero, the French Challenger to Google Bites the Dust - Dec 25, 2006
- Why is Entrepreneur a Dirty Word in Europe ? - Oct 31, 2006
- Achilles Heel of Web2.0 and A-List Blogs: Attracting the Mainstream - Jul 20, 2006
Comments
As you said "starting businesses = low unemployment rate. A view that is not currently shared in some countries; in France the equation is protect workers = low unemployment", protecting entrepreneurship or protecting workforce, sounds like the old dialectics, socialism vs capitalism.
Posted by: Alvaro [doocomo.com] | January 11, 2007 11:54 AM
Alvaro, yes it is the old debate, the debate, the problem is not finished. I think, though, all agree radical socialism does not work long term
I personally find it frustrating, specially in the technology sector, how liberal market oriented economies are creating world beating competitors. While the rest of us in Europe are still arguing old dialectics.
Posted by: Paul Elosegui | January 11, 2007 3:37 PM