The best country for business? Canada, of course!

Canada ranks No.1 in the Forbes annual look at the Best Countries for Business. While the U.S. is paralyzed by fears of a double-dip recession and Europe struggles with sovereign debt issues, Canada’s economy has held up better than most. The $1.6 trillion economy is the ninth biggest in the world and grew 3.1% last year. It is expected to expand 2.4% in 2011, according to the Royal Bank of Canada.

 

In its rankings, Forbes looked at 11 areas in 134 countries, including property rights, innovation, taxes, tech, corruption, personal, trade and monetary freedoms, red tape, investor protection and the performance of stocks.

 

Canada moves up from No.4 in last year’s ranking thanks to its improved tax standing. It ranks ninth overall for tax burden compared to No.23 in 2010. Credit a reformed tax structure with a Harmonized Sales Tax introduced in Ontario and British Columbia (well ... not so much anymore!) in 2010. The goal is to make Canadian businesses more competitive. Canada’s tax status also improved thanks to reduced corporate and employee tax rates.

 

It ranks in the top five for both investor protection as well as lack of red tape, which measures how easy it is to start a business.

 

The U.S. ranked No.10, down from No.9 in 2010. The world’s largest economy at $14.7 trillion continues to be one of the most innovative, ranking sixth in patents per capita among all countries (No.7 overall Sweden ranks tops for innovation).

 

What hurts the U.S. is its heavy tax burden. This year it surpassed Japan to have the highest corporate tax rate among developed countries. The U.S. also gets dinged for a poor showing on monetary freedom as measured by the Heritage Foundation. Heritage gauges price stability and price controls and the U.S. ranks No. 50 out of 134 countries.

 

Bringing up the rear are three countries where the economies are smaller than $10 billion. No.132 Burundi, No.133 Zimbabwe and No.134 Chad all fare poorly when it comes to trade and monetary freedom as well as innovation and technology. Chad has the highest GDP per capita of the three at $1,600, but scores last among all countries on both corruption and red tape.

 

The top 10 countries are as follows:

 

1. Canada

2. New Zealand

3. Hong Kong

4. Ireland

5. Denmark

6. Singapore

7. Sweden

8. Norway

9. United Kingdom

10. United States

 

Source: Forbes