In Forbes’ eighth annual ranking of the Best Countries for Business, Ireland grabbed the top spot for the very first time.
According to Forbes, Ireland scored well across the board when measuring its business friendliness. It is the only nation that ranks among the top 15% of countries in every one of the 11 metrics Forbes examined to gauge the best countries. Ireland ranked near the very top for low tax burden, investor protection and personal freedom.
This year, Ireland moved up from its number six ranking last year on the strength of improved scores on the Heritage Foundation’s measure of monetary freedom, which gauges price stability and assesses price controls. Ireland’s rank also benefitted from an improved stock market – the 44% return for the Irish Stock Exchange Overall Index in the 12 months through November 20th ranks first among the top 30 countries.
“Ireland has continued to attract direct foreign investment despite its problems,” says Melanie Bowler, a Moody’s Analytics’ economist focused on Ireland. Bowler highlights the educated workforce and 12.5% corporate tax rate—one of the lowest in Europe – as big draws for companies, as well as the language factor. “You want to have a common language if you are setting up operations in Europe,” she says.
The American Chamber of Commerce Ireland released a report in October that shows US firms invested $129.5bn in Ireland between 2008 and 2012. It represented a greater total than had been invested in the previous 58 years combined. Ireland was the fourth biggest recipient of US foreign direct investment last year and attracted almost as much US investment as all of developing Asia.
Dublin also serves as the European headquarters for a number of US tech firms including Google, Twitter and Facebook. Twitter opened a new Dublin offices in September where it employs 100 people with plans to double in size over the next 12 months. Facebook established its presence in Dublin in 2009 and is opening new office space in Dublin that will make it the social media company’s largest operation outside of its Menlo Park, California global headquarters.
Ireland’s recent troubles have also made it more attractive for companies moving in. Nominal wages fell 17% between 2008 and 2011, which helped keep labour costs in check. Unemployment remains stubbornly high – a recent 12.8% – providing companies a large labour pool to pick from. There are now more than 1,000 overseas companies with a presence in Ireland and they employ 150,000 of the nation’s 1.9 million workers. “Dublin has already established itself as a location for multinationals, so it has the necessary infrastructure for other companies to easily move into the country and set up shop,” says Bowler.
While Ireland moves up the ranks, the U S continues a four-year slide to number 14 after ranking second in 2009. Only the UK fares worse among the top 50 countries.
Forbes determined the Best Countries for Business by grading 145 nations on 11 different factors: property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance.
Each category was equally weighted. The data came from published reports from the following organisations: Freedom House, Heritage Foundation, Property Rights Alliance, Transparency International, World Bank and World Economic Forum.