Three developing countries
Following is a chart that presents the macroeconomic information of the abovementioned variables.
The liberty to conduct a business is relatively well protected in Pakistan under the regulatory environment. It takes almost 24 days to start a business as compared to the 38 days of the world average. The cost related to licensing a business is comparatively high (The Heritage Foundation, 2009).
Czech Republic Financial Freedom
The financial sector of Czech Republic is one of the most advanced setup in Europe. Restrictions on foreign banks are very low and major insurance companies are very competitive which helps in developing the financial sector of the country (The Heritage Foundation, 2009).
South Africa Tourism
Tourism is South Africas most important tool of generating revenues. Tourists from different parts of the world come to South Africa to plan their trip and a major reason for selecting this region is because of its affordability natural beauty and adventure (The Heritage Foundation, 2009).
Key features in ranking index
The key features in ranking index include business freedom, investment freedom and trade freedom.
Business freedom
The methodology that is used to calculate business freedom is a quantitative measure. This indicator takes into account the ability to start a business, operate a business and close a business. It also shows the efficiency of a government towards the regulation of these business processes. The factors on which the ranking is based on includes starting a business in terms of procedures, time, cost, minimum capital, operating a license, number of days to obtain license and finally closing a business. All these factors are kept in mind while preparing a score for that particular country. The score lies between 0-100 where 0 represents the minimum amount of business freedom and 100 represents the most convincing business environment. Each of these factors is considered before providing a final score. All these factors are computed individually after which an average is taken which represents that countrys freedom in business (Doing Business, 2009).
Investment freedom
This factor inspects the policy that particular country has towards the free flow of investment. The investment includes both the foreign investment FDIs as well as the countrys internal capital flow. The investment freedom factor shows impact that investment has over that countrys economics. The things that are examined very closely are the countrys investment laws and procedures, the governments interest towards foreign investments, treatment towards the investors, access to foreign exchange, equitable treatment with the foreign investment against the domestic investors etc. The criterion which is used in this regard also ranges between 0-100 where 100 is the highest point in which the host country treats the foreign investment same as domestic investment and no restrictions are implied over the foreign investor. Similarly the ranking goes down with restrictions getting more intense.
Trade freedom
This function of the economy deals with the factors which affects the imports and exports of goods and services. The two information on which the trade freedom is based on are the trade weighted average tariff rate and the non tariff barrier.
GDP Per Capita
This is one variable which is very important in considering the countrys economy as a whole. The GDP per capita is the value of all the final goods and services produced in a country divided by the average population of that country (CIA, 2009).
This would give us the contribution every individual has made in that economy. We can also say that the GDP per capita is the GDP per person it includes the personal consumption, exports, spending, investments etc (Snippets).
Among the three countries that we have selected for our analysis Czech Republic has the highest GDP per capita which is US 23,700. After Czech Republic comes South Africa with the GDP per capital totaling US 9,500 and last but not the least is Pakistan with a GDP per capita income of US 2,400. The reason why GDP per capita is the most important indicator is because it shows every individuals input in the economy (Snippets).
Pakistan
The above gives a comparison of these three countries as far as their economic condition is concerned. Among the three Pakistan is the largest country as far as population is concerned the internal political disputes low level of foreign investment and a decline in the exports of the country has been a major factor of Pakistans economic turndown. Quickly changing government regimes has also affected the countrys overall economic condition.
High inflation, budget deficit and lack of foreign reserves have also hurt Pakistans economy. But the biggest factor which is affecting Pakistans economy is the war on terror. Currently Pakistan is in a war zone with its army in direct combat with the militants in the western part of the country. The war on terror has caused big to the Pakistans economy and it has not helped their cause. The foreign investment has also not presented and rightly so in this situation of high uncertainty no one is interested in investment programs.
South Africa
South Africa is another emerging market with abundant natural resources. Mostly its famous for its tourism and tourist from all around the world comes to visit this country every year. The FDI figure in the chart above which shows a negative figure indicated that there is a negative cash flow means that people and corporations are not much interested in investing in South Africa. Also their exports have not been that much good which also has affect on its FDI.
Czech Republic
In Czech Republic the private sector accounts for more than85 of the GDP but besides that as well Czech Republics Eastern Europes most stable economy. This can also be seen from the GDP per capita income and the inflation rate in Czech Republic. Comparatively it has a much stable economy but the factors which are behind this stability are different from what the other two countries are facing.
Millennium Development Goals (MDGs)
In the MDGs Pakistan aces three challenges number one is the disparities in the social sector, number two is the rising inflation and the third is the growing deficit. Czech Republic is in pursuit of meeting its target of eradicating poverty and South Africa is eager to improve its social services as their primary objective of the millennium (MDG, 2007).