U.S slides again as denmark tops forbes best countries for business

The U.S. is the world’s undisputed economic superpower with a GDP of $16.7 trillion last year, nearly a quarter of the global total. It is the financial capital of the world and has largely recovered from the Great Recession. The economy recently posted its best six-month performance in more than a decade and unemployment stands at 5.9%, down from its 2009 peak of 10%.

Yet for all of its financial might, the U.S. lags behind many other developed nations when it comes to its business climate, and the gap is growing. The U.S. ranks 18th in Forbes’ ninth annual ranking of the Best Countries for Business, down four spots from last year. It marks the fifth straight year of declines since 2009, when the U.S. ranked second.

Blame an expanded government, as well as expensive new regulations in finance and health care. The U.S. is the only country to record a loss of economic freedom seven straight years in the Heritage Foundation’s Index of Economic Freedom. More than 130 major new federal regulations on starting a business have been added since 2009 at an annual cost of $60 billion, according to the Heritage Foundation. The U.S. ranks 81stout of 146 countries for monetary freedom, according to Heritage, with only the U.K. and Turkey faring worse among OECD nations.

The U.S. also gets knocked for its corporate tax climate, which ranks 43rd (out of 146 we ranked countries) in the World Bank’s Doing Business report. The statutory corporate rates in the U.S. are the highest in the world among developed countries and the complexity of the code keeps an army of accountants busy. Companies get a break on their taxes thanks to numerous deductions, but the reality of having the highest published rates in the world makes for bad PR.

Best Countries For Business 2014

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Deejpilot/Getty Images

#1 Denmark

GDP: $324 B

Tax Burden rank: 12

Innovation rank: 11

Monetary Freedom rank: 25

Red Tape rank: 23

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The best country for business this year is Denmark, which ranked No. 1 three straight years between 2008 and 2010. Denmark’s economy has struggled in recent years along with the rest of the European Union. Last week Denmark’s government cut its growth forecasts for this year and next, as the $324 billion economy struggles to recover from the collapse of the housing bubble, as well as a weak export market. “Denmark relies on the core of Europe for their export demand and they are struggling to fill that void right now,” says John Weis, an economist at Moody’s Analytics with an expertise on the Danish economy.