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Efficiency Index


The top ten countries in terms of economic efficiency for 2013:  



This is the first in a three part series where we identify the most attractive international investment opportunities for the next ten years. We start out by looking at economic efficiency, i.e. the fundamental freedoms and legal framework, which facilitates successful investing.

In doing country analysis for international investments, it is often a first step to look at sovereign bond ratings from Moody's, Fitch or S&P. However, many smaller developing countries get very little if any play at the agencies. CDS spreads, another measure of investor risk only covers 80 countries. Our index covers 127 countries.  To do so, we have looked at business and freedom indexes which assign values to sovereign attributes to gauge risk and assess opportunity. These indices attempt to measure economic freedom and a legal clarity.

There are plenty of indices by many different sources, each one looks at important factors which could influence returns and hurdle rates. But which index do you use? We have looked into four of such indices and compiled an index of indices to measure efficiency.

I have included information on five of such indices and compiled our own index of economic efficiency.  The indices include: 
  • Heritage Foundation: Index of Economic Freedom
  • Fraser Institute: Economic Freedom of the World
  • World Economic Forum: Global Competitiveness Report
  • World Bank:  Doing Business
  • Euromoney Country Risk

Please download our white paper: