Singapore, Finland, Sweden, Israel and Austria have been named as the five most dynamic economies in the world and the UK ranked equal 32 with Vietnam, according to the findings of a new study by Grant Thornton.
The Grant Thornton Global Dynamism Index (GDI) 2012, the second annual GDI survey, ranks 50 of the world's largest economies across 22 indicators of economic "dynamism", examining five key areas: business operating environment; economics and growth; science and technology; labour and human capital; and the financing environment.
The survey of 406 senior executives from a range of countries and industries is said to provide a "true illustration" of the strength of each economy as a location for business investment.
Singapore is top of the index mainly on account of its attractive financing environment and te island state ranks highest in terms of the quality of its financial regulatory system, high level of private sector credit and low corporate tax rates. Corporation tax in Singapore is only 17%.
'Singapore is perfectly placed to act as a gateway between West and East. Business and economic growth prospects are supported by an open, transparent financing environment and a well-educated workforce,' the report states.
Of the top five countries, while Ireland has suffered most from the eurozone crisis, it has to remained an attractive business location due to the government's dogged defence of its low corporation tax, which currently stands at 12.5%.
Despite being some of the world's most heavily taxed economies, the Nordic countries consistently come out ahead of other countries in terms of economic dynamism. This is due mainly to historically high levels of private sector investment in R&D, both through businesses and higher education institutions.
The report concluded that the US, which was ranked 10th, has "solid" business growth fundamentals. However, Congress's inability to deal with fundamental questions of future tax and spending policy is seen as stifling the country's economic growth potential. 'In the United States, growth and job creation remain slow whilst the return of polarising partisan politics is preventing any meaningful discussion of how to tackle the growing mountain of government debt,' the report observes.
The UK was ranked equal 32 along with Vietnam. Despite London being arguably the financial capital of the world, the UK sits above only Indonesia, Venezuela, Russia, Nigeria and Argentina in terms of the dynamism of its financial environment.
Scott Barnes, CEO of Grant Thorton UK said: 'The UK is an open, trade-oriented economy with good global connectivity. However, despite being home to arguably the largest financial centre in the world, much more can be done to foster a financing environment that aids business growth.'
Venezuela, Nigeria and Greece are bottom of the index, while Chile is the best performing country in South America.
The report is available from Grant Thornton
