Donald Trump swept into office last month behind a groundswell of support from Americans captivated by his promises to “take America back” and “make America great again.” Whatever the chances are that he can deliver -- economists are skeptical of Trump’s economic plans -- it certainly has been several years since the United States was “great” in Forbes’ annual list of the Best Countries for Business.
This year is no different as the U.S. falls one spot to 23rd place, continuing a decade-long slide from its No. 1 ranking in 2006. Falling scores on trade and monetary freedom, along with rising levels of red tape and bureaucracy are behind the decline for the world's largest economy. The Heritage Foundation cites more than 180 new federal regulations imposed on businesses since 2009 with annual costs of $80 billion following the bailouts of the auto and financial industries amid the Great Recession, along with increased government intervention in the housing and health insurance markets. Trump's potential plans to impose tariffs on foreign imports is not a recipe for improving the U.S. ranking.
Stockholm, Sweden (photo: Getty Images/Flickr RF)
One country headed in the opposite direction is Sweden, which moves up four spots to the top of the charts for the first time (Sweden ranked No. 17 in 2006). Over the past two decades the country has undergone a transformation built on deregulation and budget self-restraint with cuts to Sweden’s welfare state.
Sweden’s government shrank jobless and disability benefits to encourage employment. The lower benefits allowed for tax cuts. The inheritance tax was scrapped in 2005 and the wealth tax was canned two years later. Taxes are still high relative to the rest of the developed world, but taxes paid as a percent of profit are down eight percentage points over the past decade and the country’s tax burden rank in the World Bank’s Ease of Doing Business has improved 11 spots during the time.
Sweden’s $493 billion economy grew 4.2% last year with only Ireland and Luxembourg faring better among countries that placed in the top 25 in our ranking. The Scandinavian nation has a low level of public debt relative to other European Union countries, and it benefits from its free-trade policies. The trade balance surplus was 5.2% of GDP last year. Sweden ranked among the top 10 countries in seven of the 11 categories we measured.