LONDON -- The Netherlands and the United States will boast the world's best business environments over the next five years, according to Global Outlook, a new report released by the London-based Economist Intelligence Unit (EIU at www.eiu.com).
        Those nations also led the study's two top-ranked regional business climates for 2001-05: No. 1 North America and No. 2 Western Europe.

        While the global economic slowdown has dominated many analysts' comments, the EIU study's outlook was decidedly upbeat.
        "All regions are expected to improve their absolute operating environment over the next five years," the report said. "We expect deregulation, liberalization and globalization to continue in most countries, and believe this to be beneficial both for growth and the business environment."
        The Global Outlook report rates "the quality or attractiveness of the business environment" in the world's 60 largest countries. The study's methodological model "considers 70 factors which affect the opportunities for, and hindrances to, the conduct of business in each country," according to the report's authors. "The model is used to generate scores and rankings for the past five years, and also for the next five years, using EIU economic forecasts and assessments of likely business and political developments."
        Here's a more in-depth look at the study's findings.

North American nations took two of the top four spots for 2001-05 (see accompanying charts), with the USA at No. 2 and Canada at No. 4. Mexico ranked considerably lower at No. 31, but that was a jump up from its No. 34 ranking for 1996-2000. The "qualitative assessment" for Mexico's projected business environment for 2001-05 also improved, ranking as "good" after Global Outlook's "moderate" assessment for 1996-2000.

        "North America sees the smallest improvement," the report said. That, however, did not signal a deterioration in the continent's business climate, it added: "However, this has little to do with the region's current economic difficulties - its simply reflects the difficulty of further enhancing an already excellent business environment."
        The composite U.S. score for 2001-05, in fact, was 1 percent higher than its 1996-2000 score, while Canada's 2001-05 score was 2 percent higher. Mexico, made North America's most dramatic improvement, with a 2001-05 score 15 percent higher than its 1996-2000 tally.

13 of Top 20 Nations from Western Europe

Western Europe accounted for two of the top three spots for 2001-05 and 13 of the 20 top.
        "Most EU countries move up the league table in 2001-05, improving their position relative to other countries," the study said. "This reflects improved macroeconomic stability, particularly a better fiscal position and inflation performance as part of the move to economic and monetary union and a broad move towards deregulation. . . . Improved competition policy, the beneficial impact of the single market and continued technological change are all making Europe a better place to do business."
        The Netherlands jumped past to the USA to No. 1 in Global Outlook's 2001-05 rankings. "The Netherlands scores particularly highly for its political environment, its policy towards foreign investment, its liberal foreign trade and exchange regime, and the availability of finance," the study explained. The UK ranked No. 3, as the report gave it high marks for "good policies towards private enterprise and foreign investment, and readily available financing."
        Other top 20 Western European nations included No. 5 Switzerland, No. 6 Ireland, No. 7 Finland, No. 9 Sweden, No. 11 Germany, No. 12 Denmark, No. 13 Belgium, No. 15 France, No. 17 Norway, No. 19 Austria and No. 20 Spain. Just missing the top 20 were Italy at No. 22 and Portugal at No. 23.
        Spain made Western Europe's largest proportional gain, with a projected 2001-05 score 8 percent higher than its 1996-2000 total. Germany also recorded a substantial increase, recording a 2001-05 score 7 percent higher than its 1996-2000 tally.

Hong Kong Drops to No. 10

With five representatives, Asia and the Pacific Rim accounted for the rest of Global Outlook's top 20 nations for 2001-05.
        Singapore at No. 8 topped the region, joined in the top 20 by No. 10 Hong Kong, No. 14 Australia, No. 16 New Zealand and No. 18 Taiwan. Hong Kong's score, however, marked a sharp drop from its No. 3 ranking for 1996-2000.
        "Hong Kong . . . is . . . the only country where the business environment is expected to deteriorate in absolute as well as relative terms," according to Global Outlook. "Some of the deterioration is due to regulatory and political changes, but the mismatch between the skills of the work force and the demands of an economy increasingly focusing on high-value-added sectors is also important."
        Dropping even further was Malaysia, which fell 10 spots to a No. 34 ranking for 2001-05.
        Bulgaria registered the biggest ranking gain for 2000-05, finishing at No. 47 after 1996-2000's No. 56 slot. "The biggest improvement will be seen in Eastern Europe, although this partly reflects the enormous scope for improvement from such a weak starting position," the EIU study noted.
        The rash of violent anti-globalization protests that peaked at the G7 Genoa meeting "may slow the pace of some aspects of globalization," but is "not expected to reverse this process," the report noted. "Clearly, there will be isolated incidents of policy reversal - already Malaysia and Russia have gone down this route. But we do not expect this to become a more general trend."

Methodological note; Qualitative grades are assigned according to the following scale - "very good," score more than 8; "good," 6.5-8; "moderate," 5.5-6.4; "poor," 5-5.4; "very poor," less than 5.