EIU Index 2024: Serbia and Romania with a notable improvement of business environment
According to the EIU index from “Economist Intelligence”, the business environment in Vietnam, Serbia and Romania has improved the most over the last twenty years. For almost three decades, the index has been evaluating company locations and aims to show how attractive the respective country is for investors. The following countries made it into the top ten ranking.
Eastern Europe, the Middle East and North Africa in the fast lane
The EIU Index is a long-term study that measures the attractiveness of the business environment in 82 countries and territories. It examines 91 indicators from 11 different categories: political environment, macroeconomic environment, market opportunities, free enterprise and competition policies, foreign investment policies, foreign trade and exchange controls, taxes, financing, labor market, infrastructure and technological readiness.
Vietnam is moving westward
The country that has made the biggest jump in the ranking is Vietnam. The reasons given for this are the introduction of a liberal trade policy, falling operating costs for foreign companies and extensive public investment in human and physical capital. Vietnam is also said to have benefited greatly from the China+1 policy. This involves diversifying global supply chains – away from China. Relations with the West have also been deepened, which has had a positive impact on economic relations with the important export markets of the USA and the EU.
Over the next five years, Vietnam’s economic environment will improve compared to competitors such as Indonesia and Thailand thanks to free trade agreements, low wages and large market opportunities. However, Vietnam will continue to lag behind these countries in terms of government institutional efficiency. This means bureaucratic hurdles for businesses, despite ongoing efforts to combat corruption.
Serbia: Infrastructure has improved significantly
Serbia came in second in the ranking. The rating of its indicators was originally relatively low, as the economy was severely damaged by the Yugoslavian war and the associated sanctions. Since the beginning of the 2000s, however, Serbia has been able to break free from its international isolation and the economic sanctions imposed. This has resulted in increased trade with the European Union. Today, Serbia is a candidate for EU accession and has benefited from fairly generous financial resources from the EU and China. The financial resources are used for the country’s economic and infrastructural development. According to the EIU index, Serbia’s infrastructure has improved and will continue to be expanded until 2028.
Romania, Croatia and Poland benefit from EU accession
Romania’s economic environment has also improved since its EU membership in 2007. The national legal framework has strengthened, according to Economist Intelligence, as the government is obliged to implement EU legislation into national law. Likewise, Croatia’s EU accession in 2013 and the introduction of the euro in 2023 have contributed to the economic upturn.
Poland has been part of the EU since 2004, is the largest net recipient of EU funds and has seen “massive improvements in the business environment” in recent years – again mainly as a result of its accession to the EU. The funds received are subject to EU conditionality and, according to the Economist Intelligence, have led to positive institutional change, a reduction in corruption, and greater bureaucratic efficiency. Other decisive factors here were Poland’s large and diversified economy, a large number of skilled workers, and its excellent geographical location in Central Europe.
Türkiye: Improving the global supply chain
Turkey is also one of the top ten climbers in the Business Environment Ranking. It is now much better integrated into global supply chains thanks to the customs union with the EU (excluding Cyprus) and several free trade agreements. The quality of the Turkish labor market is said to have improved over the past 20 years thanks to educational reforms. At the same time, technological readiness has increased, as can be seen in increasing internet usage, the adoption of laws, institutional regulations to better regulate the digital space, and international cooperation to combat cybercrime.
Morocco benefited from the economic restructuring program
Morocco owes its fourth place in the ranking to the economic restructuring program that the government has been pursuing since the early 2000s. Since then, the program has aimed to raise living standards, reduce unemployment and stimulate economic growth. In recent years, the country has made efforts to attract foreign investors. To this end, the following measures have been taken: reducing bureaucracy and corruption, modernizing the financial system and telecommunications, and privatizing water and electricity supplies.
Saudi Arabia pursues investment strategy “Vision 2030”
Since the late 2010s, the country has been trying to adapt its historically and legally weak corporate regulatory climate to international standards. In August 2024, a new investment law was passed, which is set to come into force in 2025. Its aim is to modernize the legal framework for investments in the kingdom. The law is an important part of Saudi Arabia’s “Vision 2030” strategy, which aims to improve the investment climate and attract foreign investors.
Israel: popular with investors due to strong high-tech sector
The Israeli business environment has been strengthened by macroeconomic improvements and (tax) reforms since the 2000s. The result is a growing high-tech industry and an increase in the exports of goods and services. In addition, foreign direct investment has increased, which in turn has brought high tax revenues. However, political changes and the risk of a protracted war could threaten economic growth and investor confidence, especially in the high-tech sector.
Peru: Mining, Infrastructure and Agriculture
Peru is the only Latin American top performer in the EIU index. Over the past ten years, consistent orthodox policies and a market-friendly economy are said to have strengthened the business environment. The result, according to the index, is that legal and administrative requirements for companies have been simplified and bureaucracy has been reduced. All Peruvian governments are said to have continuously supported the private sector and foreign investment, particularly in the mining, infrastructure and agricultural sectors. Despite ongoing political instability and ineffectiveness, Economist Intelligence expects the Peruvian business environment to remain attractive for investors.
