China Law Blog

I don't actually call the scores on this one, but if anyone wants to know the details behind the China rank I'm happy to provide the details.
From a quick glance China scores poorly on political environment, policy towards private enterprise and financing. Infrastructure is also quite a low ranking from what looks like a combination of the less developed hinterland dragging down the national score and bottlenecks in fields like rail. It is ranked first globally for market opportunities.

Looking at the questions and the list, there is a definite bias for developed countries. The Economist likes to think of itself as a prudent guide, and they seem much more willing to make mistakes in politics (which they apologize for) than in business. It seems to be more of a guide to suggest what country would be best for a long-term project to develop into a strong global competitor. Based on the questions, China's position makes sense. The political environment of China makes many of the questions impossible to answer, such as about the regular transfer of power between governments.

Duncan,

Any idea of the success rate of these predictions five years out?

Will Lewis,

Confession time: I put so little stock in predictions and rankings that I have not even analyzed this one, nor am I likely to do so. I like them only because they are fun and make for great cocktail conversation. In fact, we are hosting a three family Thanksgiving this year and I will have to at some point drop some line about Canada's bright future.

I recall one of my economics classes was taught by a professor from New Zealand. Usually, New Zealand tends to be pretty high on a lot of these kinds of rankings, which he pointed out. When showing a graph to show the benefits of trade, he gave an example of America and New Zealand trading with each other. So, he asked us to start naming exports of both countries. For America:cars, financial products, high-tech equipment, coal, agriculture, etc. When he asked us to name some New Zealand exports: sheep, lambs, goats, larger sheep, Lord of the Rings movie sets, small sheep. He was not impressed. But he never did give us better examples.

New Zealand is also marketed as a great real estate market for those with modest means wanting a nice vacation home.

CLB,

Ah yes, the Great White Slumbering Giant to the North. Conquering the world with courtesy and cleanliness. (Really. Canada is nice.)

Chip,

Yeah, I was never that into Lord of the Rings either.

nh,

Are you mellowing?

Will Lewis,

I love Vancouver, Montreal, and Toronto. For years, I used to push for Vancouver as the arbitration location in my client's contracts. Did this because it is close to Seattle and because everybody views Canada as fair and neutral and it is pretty easy to get a visa for. Lastly, with the strong US dollar and the weak Canadaian dollar, really good arbitrators were really cheap there. Whoops, no more. Damn.

Given that it's to do with the business environment, I suspect that it's a fairly subjective judgement whether the rating is a "success" or not. In general though, rankings which look at the wider business environment tend to be most useful for driving long term forecast models (and there is a relatively good correlation there). We certainly use a variation to help determine our long term economic forecasts.