In this article, we take a look at the 25 most capitalist nations in the world. You can skip our detailed analysis of capitalism around the world and go directly to 5 Most Capitalist Nations in the World.
The end of the cold war accelerated the worldwide adoption of free-market principles and led many countries to open their economies for trade as well as loosen regulations so business could thrive.
Capitalism has done a lot of good for humanity, albeit at great expense of Earth’s resources, ecological balance and climate. In 1820, 94% of the world population lived in extreme poverty. The number fell to 72% in 1950, and it was 44.3% in 1981. From there, it declined sharply and by 2015, only 9.6% people were under the extreme poverty line. These figures were compiled in Johan Norberg’s book titled, Progress.
Apart from taking the majority of people out of poverty, capitalism has also resulted in stunning advancement in many countries. In America’s case, its free market, rule of law and private sector investment has resulted in some of the most advanced tech companies in the world. Notable among these are Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT).
Global investments can be beneficial when investors want to shield their portfolios from local economic effects. In this sense, one of the best ways to invest in other capitalist countries is through professionally managed Exchange-Traded-Funds.
Photo by Ant Rozetsky on Unsplash
Below, we’ve listed 25 most capitalist nations in the world.
Our Methodology
For our list of 25 most capitalist nations in the world, we’ve ranked them based on the 2022 Index of Economic Freedom from The Heritage Foundation. It tracks 12 sub-indicators in its four main indicators, namely, Rule of Law, Government Size, Regulatory Efficiency and Open Markets. It assigns each country a score based on these indicators. The higher the score, the better the country is in terms of business.
So, without further ado, let’s move to the list of 25 most capitalist nations in the world.
25. United States
Economic Freedom Score: 72.1
The United States is the largest economy in the world. It is home to the majority of companies that make up the S&P 500 Index. The country offers substantial corporate independence, although state-by-state laws differ. Its Tax Cuts and Jobs Act of 2017 cut corporate income tax rate from 35% to 21%.
However, America’s economic freedom score has dropped 3.0 points overall since the year 2017 as a result of a substantial decline in its fiscal health. Regardless, it is well above average in terms of the world, and companies like Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) contribute significantly to make it the largest economy in the world.
24. United Kingdom
Economic Freedom Score: 72.7
The United Kingdom is located in Western Europe and is one of the most capitalist countries in the world in terms of business friendliness. Its top corporate tax rate as of 2022 is 19%.
Another business-friendliness indicator in which the UK shines is the rule of law. London is a go-to destination for corporate dispute resolutions. Some of the prominent British corporations are Unilever PLC (NYSE:UL) and Rio Tinto Group (NYSE:RIO).
23. Cyprus
Economic Freedom Score: 72.9
Cyprus is an island country in the Eastern Mediterranean Sea. Its economic-freedom score is 72.9, making it the 23rd most capitalist nation in the world. Cyprus has gained 5 points in economic-freedom score on the whole since 2017. The top corporate tax rate in Cyprus is 12.5% as of 2021. Being an EU member, the country has 46 preferential trade agreements in effect.
22. Austria
Economic Freedom Score: 73.8
Austria is located in the southern part of Central Europe. Its economic freedom score as of 2022, is 73.8, making it one of the top destinations for businesses and investment. It’s especially attractive for agricultural businesses, since the Austrian government subsidizes surplus agricultural exports to maintain high prices for farmers. Austria’s top corporate tax rate is 25%. The rule of law is strong, and helps businesses flourish.
21. Czech Republic
Economic Freedom Score: 74.4
Czech Republic is another country in Central Europe. It has an economic-freedom score of 74.4 and has gained 1.1 points overall since 2017. The rule of law needs more work but is generally good and contracts are secure. The top corporate tax rate in the country is 19%.
20. Chile
Economic Freedom Score: 74.4
Chile is a Latin American country with a business-friendliness score of 74.4 as of 2022. It has a top corporate tax rate of 27% relative to the top individual income tax rate of 40%. The country has 30 preferential trade agreements in effect as of 2022. Chile’s rank in World Bank’s ease of doing business is 59th, out of 130 countries.
19. South Korea
Economic Freedom Score: 74.6
South Korea is located in East Asia. It is home to some of the most cutting-edge technology companies in the world, and has a 6% share in the global output of knowledge and technology-intensive (KTI) industries. Its companies account for 7% of the global R&D into novel technologies.
It is home to such companies as Samsung Electronics Co., Ltd. (KSE:005930.KS). It is all possible through a pro-business environment and small government size in the country when it comes to market regulation. South Korea has 20 preferential trade agreements in effect as of 2022. Its top corporate tax rate is 25%, relative to 45% top income tax rate.
18. Latvia
Economic Freedom Score: 74.8
Latvia is located in Eastern Europe. The country has an economic-freedom score of 74.8 as of 2022. The top corporate tax rate in the country is 20% and the labor costs are low compared to EU standards. The rule of law is strong and the government subsidizes businesses in agriculture, electricity and transportation sectors among a few others. Being a member of the EU, the country has 46 preferential trade agreements.
17. Lithuania
Economic Freedom Score: 75.8
Lithuania is another capitalism-friendly country in Eastern Europe. However, Lithuania’s economic freedom score has remained the same since 2017. Overall, Lithuania is well above average in being one of the most capitalist nations in the world.
Its top corporate tax rate is just 15% and the top income tax rate is also relatively modest at 20%. Wages are low as well, compared to other EU members. However, it is stricter in terms of employment regulations.
16. Germany
Economic Freedom Score: 76.1
Germany is the richest economy in all of Europe and home to some of the biggest corporations in the world like BioNTech SE (NASDAQ:BNTX), CureVac N.V. (NASDAQ:CVAC) and Bechtle AG (XETRA:BC8.DE). High-tech German corporations are collectively known to have 4.1% of global KTI output in scientific research and development.
Germany’s top corporate tax rate is 15.8% but is effectively 30% when other tax expenses are accounted for, but is lower than the top income tax rate by a significant margin, which is nearly at 48%.
15. Canada
Economic Freedom Score: 76.6
Canada is adjacent to the United States. It has an economic freedom score of 76.6. The top corporate tax rate is an attractive 15%. Business-registration processes are comparatively easy and efficient. The country has 15 preferential trade agreements in effect as of 2022. It is home to some of the biggest corporations like Shopify Inc. (NYSE:SHOP).
14. Norway
Economic Freedom Score: 76.9
Norway is a Northern European country and one of the most capitalist nations on Earth. It has gained 3 points in overall economic freedom since 2017. The rule of law is strong. The country has a top corporate tax rate of 22%, less than half of the top income tax rate.
13. Iceland
Economic Freedom Score: 77
Iceland has added 2.6 points in its overall economic-freedom score since 2017. It has a strong rule of law in place, judiciary is independent, and business-regulations laws are transparent and consistent with OECD standards.
12. Australia
Economic Freedom Score: 77.7
Australia is located in Oceania. The country has an economic freedom score of 77.7 as of 2022. It is known for strong rule of law, regulation transparency and enforcement of contracts. The government heavily subsidizes sectors like agriculture, telecommunications and infrastructure. The maximum corporate tax rate in Australia is 30%, and the country has 17 preferential trade agreements.
11. Sweden
Economic Freedom Score: 77.9
Sweden is another country from the Scandinavian region of Northern Europe. It is economically the 8th freest country in Europe. The highest corporate tax rate in the country is 21.4% as of 2022.
Sweden has a well-established culture of innovation and the country is trying to innovate its way out of environmentally unsustainable growth. The government subsidies for businesses that address environmental concerns have increased by 20% since 2020.
10. Denmark
Economic Freedom Score: 78
Denmark has a capitalism score of 78 as of 2022. It has added 3 points to its overall economic-freedom score since 2017. A top corporate tax rate of 22%, transparent government regulations, and an independent judiciary robustly enforcing rule of law, makes Denmark one of the most pro-business countries in the world.
9. Finland
Economic Freedom Score: 78.3
Finland is another Scandinavian country on the list of most capitalist nations in the world. Finland has a capitalist score of 78.3 as of 2022. The country has a strong rule of law enforced by an independent judiciary that creates a thriving business environment, with a government top corporate tax rate of 20%.
8. The Netherlands
Economic Freedom Score: 79.5
The Netherlands is also located in Northern Europe and has a strong pro-business economy. One of its most notable corporations is Airbus SE (OTCMKTS:EADSY). The maximum corporate tax rate in the country is 25%, slightly more than half of its top income tax rate.
7. Estonia
Economic Freedom Score: 80
Estonia, a country located in Eastern Europe, is seventh on the list of most capitalist countries in the world, with an economic-freedom score of 80. It has a top corporate tax rate of 20%.
6. Taiwan
Economic Freedom Score: 80.1
Taiwan has a capitalist score of 80.1. It is considered among the hubs of innovation. Its Taiwan Semiconductor Manufacturing Company Limited (TSMC) is the world’s largest semiconductor manufacturer, and has a global semiconductor market share of a staggering 53%.
Companies like Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) are among TSMC’s customers.
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Disclosure: none. 25 Most Capitalist Nations in the World is originally published on Insider Monkey.
