Which countries are best prepared to benefit from globalisation?

Germany landed atop a new ranking of 27 countries’ abilities to take advantage of future trade globalisation.

The US was near the bottom of the list, tied for 25th with Italy. The UK was tied for third with the Netherlands and New Zealand.

International accounting and consultancy network UHY Advisors produced the rankings after polling its taxation and business advisory professionals on the economies where they work. The ranking considered factors such as negotiating favourable tax arrangements with trading partners; growth in exports; the importance trade already plays in an economy; taxes on companies repatriating overseas profits; labour costs; and ratings in the World Bank’s “Ease of Doing Business” survey.

Slovakia ranked second behind Germany. Six of the top seven nations in the rankings were from Europe. India was tied for eighth, Russia was tied for 15th, and China was tied for 17th. Japan was the bottom nation in the ranking.

Germany, which held the top position, found its economic policies questioned in October in a US Treasury report to Congress on international economic and exchange rate policies. The report said Germany’s “anemic” domestic demand growth and dependence on exports hampered rebalancing in the euro area, resulting in a deflationary bias for the euro area and the world economy.

But German Finance Minister Wolfgang Schauble said in a speech in November that Germany has become an anchor of stability and a growth engine in Europe as it emerges from the financial crisis.

The scores for China and the US were lowered by the high taxes their governments impose on companies that repatriate overseas profits, according to UHY. The US has the highest repatriated tax rate in the study. Just under half of the countries in the study imposed no tax on repatriated dividends, UHY said.

“American firms are often household names around the world, but actually our taxation system is very poorly geared towards encouraging US companies [to grow] overseas,” UHY Advisors’ COO Richard David, CPA, CGMA, said in a news release.

—Ken Tysiac (ktysiac@aicpa.org) is a CGMA Magazine senior editor.