By Holly A. Bell
By now we have all accepted that we live in a global community. Globalization means we have to think about competition in all areas on a global basis including education, tax structures, and legal environments. Businesses are competing globally for locations, employees, and customers. While there has been a lot of discussion about who is emerging in the developing world, my question is: Which developed country is going to come out on top as the global economy recovers? While I can’t offer you a specific country, I can at least provide my thoughts on what that country might look like. I suggest the following characteristics of the most economically successful, post-recession developed country:
- A high quality and affordable education system. The education system will be rigorous, have standards, opportunities for advanced study, and will seek to make the majority of students ready for work regardless of their ability.
- A highly skilled workforce. The developed world has always had a more highly trained workforce, in part because our workers can at least read and write. Yet, literacy rates are improving around the world so our workforce is going to need to develop higher-level basic skills like problem analysis and problem solving skills, innovative and critical thinking, computer and technical skills, working in self-managed teams, math and science skills, and exceptional customer service.
- Favorable immigration policies for skilled workers. In industries where specialized skills are needed like engineering, the sciences, and even education, the strongest developed country will allow foreign workers to fill positions where there is a shortage in the domestic workforce. Knowledge workers are one way developed countries differentiate themselves from the developing world and the country that thinks globally and seeks to bring the best and brightest from around the world together will have a distinct advantage.
- Low corporate and personal income taxes (with stability). Employees want to live and work where personal taxes are not oppressive and corporations will take their companies and their money to wherever they can minimize their tax burden. Don’t believe me? Just check out the accounting technique known as the “Double Irish With a Dutch Sandwich”, originated by Apple, and practiced by hundreds of companies today. Globalization means tax rates are just one more area in which countries can compete. Companies will not only look at low tax rates, but also their stability. They won’t relocate to a country that has perpetually fluctuating corporate or personal tax rates.
- Intellectual property protection & legal protection from frivolous lawsuits. In a society of knowledge and knowledge workers, protecting intellectual property is critical. Especially in industries where expensive research and development is involved. Companies also need protection from frivolous lawsuits that drain resources and time.
- Reasonable and limited regulation. It is impossible to regulate away all risk and companies (including banks and investment firms) who are feeling over-regulated will do their business (and trading) elsewhere. So in reality when a country over-regulates they just transfer the same risk outside the country’s boarders. No, I’m not advocating for anything goes (so hold the hate mail). The most successful country will find the right mix of regulation that is both minimally intrusive to operations while at the same time making the playing field as level as possible and protecting consumers.
How does your country measure up in a post-recession world?
Holly A. Bell is a business professor, author, analyst, and blogger who lives in the Mat-Su Valley of Alaska. You can visit her website at www.thetollingbell.com.