The location of your business is often the first and most important decision you have to make as a new entrepreneur. Nowadays, you are not limited to starting a company in the city and country where you live. Alliances and organizations like NAFTA or the European Union enable many young entrepreneurs to start a small business in a new country.

From our article, you’ll learn what are the best countries to open a business in 2022, what are the major factors that you should consider when starting your own business abroad and what is the NECI ranking. Read on to learn more about the best places to start a business!

Why start a business abroad?

If you are starting a company abroad, you should know that new companies in particular are very sensitive to the political and social conditions in the country. Social factors can help or hinder a startup's chances of becoming a sustainable business that contributes to the local economy and creates jobs. Factors like a country's GDP, the consumer price index, or a government's strategy to attract foreign investment can cause many businessmen to relocate or open a business abroad.

However, high GDP can be misleading—many countries with heavy industry have very high industrial output, but this doesn’t mean that they’re the best places to start a business. Access to an educated workforce and good health care, a convenient location for transportation to profitable markets, and an industrial base are also important.

Therefore, in addition to factors like a country's GDP or inflation, it is also worth considering the Happiness Index or HDI, which measures how developed a country is. Some of the best countries for international business also boast high HDI. Of course, on the other hand, a highly developed country means that employees have higher demands, and you often have to pay higher taxes.

What indicators to look out for when opening a business abroad

When you're thinking about the best country for business, it's worth analyzing a few key economic indicators:These factors are taken into account in the ranking:

  • Gross Domestic Product (GDP) is a measure of the size and health of the economy. It is calculated as the market value of all services and goods produced in a country over a certain period of time. Businesses do better in countries where GDP is growing and inflation is low. It's also useful to divide GDP by the number of the population—this way you will determine the standard of living.
  • Human Development Index—HDI is a measure that describes the degree of sociopolitical development in a country. In addition to GDP per capita, life expectancy and education factors are added to it. Thus, it can be used to determine whether, for example, countries profiting from raw materials, such as Russia, the UAE, or Norway are investing in the next generation and health care. Only some of these nations can be found among the best countries for international business.
  • Consumer Price Index (CPI) is a common measure for assessing inflation, as it tracks changes in the prices of commonly consumed products and services in a country. A country's cost of investment depends on the value of its currency, which can rise or fall in line with inflation.
  • Manufacturing and services PMI: a simple measure of a country's manufacturing health at a given time. If you know a country's PMI, you will know exactly how well or poorly its companies are growing and why, and you can consider whether to start a business there.
  • Another of the most important indicators to pay attention to is the employment index. The purchasing power of a country is proportional to the average income and output of its population. If the unemployment rate rises, people will have less money to spend, which will have a negative impact on gross domestic product and economic growth prospects.

What is the NECI ranking?

The Global Entrepreneurship Monitor (GEM) publishes an annual comparative assessment of conditions for opening a new company in countries around the world. The ranking ranks countries according to how well they support new business initiatives.

Some of their criteria include government support for start-ups, low taxes, high-quality schools, market freedom and physical infrastructure. They do not take into account some of the above factors: for example, low tax rates can work against a welfare state and result in a poorly educated population. However, wealthy countries have higher NECI scores than developing countries.

Here are the 10 best countries to open a business in 2022 according to the most recent NECI ranking:

  1. United Arab Emirates
  2. Netherlands
  3. Finland
  4. Saudi Arabia
  5. Lithuania
  6. Norway
  7. South Korea
  8. Switzerland
  9. Qatar
  10. Spain

Starting a business in the United Arab Emirates

Foreign business owners and investors often set up stores in the United Arab Emirates. The country's low tax policy and overall ease of doing business have contributed to its growing reputation as a major financial center in the Middle East. No wonder that GEM considers it the best country for business all around the world.

The government also provides incentives and protections for business owners through its laws and regulations. Today, 90 percent of Dubai's population is expats from around the world. Dubai's free zones allow for flexible tax rates for investors—often paying a fee and registering an address is enough to open a business in one day.

Why open a business in Lithuania?

Four of the countries on the list are EU members, while Norway and Switzerland are associated with the EU. The European Union ensures a high standard of living, economic freedom, and transparency in government, and this makes the EU countries some of the best places to start a business, providing high salary for the citizens.

Lithuania combines European living standards, high education, and healthcare with low living costs. There are numerous Free Economic Zones in Klaipeda, Utena, and Kaisiadorys that offer attractive incentives to foreign investors. Pro-business regulations make Lithuania the best country for business in Central and Eastern Europe.

Just opening a company in Lithuania entitles you to a Residence Permit, which allows you free movement in Schengen countries and an unlimited number of days in Lithuania. You can easily start a business in Lithuania and live and work in other European Union countries, especially if you are an EU citizen. However, opening a business in Lithuania is considered a valid reason to obtain a residence permit and a Schengen visa.

Opening a business in Switzerland

This small neutral country has one of the most advanced and competitive economies in the world. Everyone has heard of Swiss banks, so the country's banking policies, expertise, and reliability make investing in Switzerland an attractive option for both foreign companies and individuals.

Although not a member of the European Union, Switzerland has access to the EU market. The country is politically stable, and its legal system is very transparent, making it an attractive location for foreign investors.

However, like many developed countries, it has a regulated economy, and while Switzerland's economy is intertwined with the EU, not all of the country's regulations are in line with EU requirements. High employment and real estate costs must also be taken into account.

There are many other best countries to open a business in 2022—but there are just some examples of developed countries that can offer you stability and standard of living. However, less developed countries also allow access to emerging markets, and many people point to Africa as the next big business hub in the 21st century. Perhaps in a couple of years, the best country to start a business will be Cameroon or Sudan.

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