Best nations to do business in: India beats China

India is the second fastest growing economy in the world, but it fails to be among the best destinations to do business in.

India lags behind several developing countries in terms of doing business, but is ahead of China. It is ranked 77th in the Forbes Best Countries for Business list.

"India is developing into an open-market economy, yet traces of its past autarkic policies remain," said the Forbes magazine placing India ahead of Sri Lanka (83), China (90) and Pakistan (92) in its fifth annual ranking of 128 economies.

The ranking is based on 11 categories, including property rights, technology, corruption, red tape, investor protection and stock market performance.

Click NEXT to read how India scored on various parameters . . .

"Economic liberalisation, including reduced controls on foreign trade and investment, began in the early 1990s and has served to accelerate the India's growth, which has averaged more than 7 per cent per year since 1997," Forbes said.

• GDP growth: 7.4%
• GDP/capita: $3,100
• Trade Freedom: 109
• Red Tape: 123
• Investor protection: 31
• Corruption: 70
• Market performance: 16

. . .

(All economic data for 2009. Market performance for 12 months to August 19. Rankings: 1 = best in category)

Rank 90: China

China is the fastest growing economy in the world but when it comes to doing business, it offers a rigid business environment.

"China's economy during the past 30 years has changed from a centrally planned system that was largely closed to international trade to a more market-oriented economy that has a rapidly growing private sector and is a major player in the global economy," notes Forbes.

• GDP growth: 9.1%
• GDP/capita: $6,600
• Trade freedom: 89
• Red tape: 115
• Investor protection: 74
• Corruption: 66
• Market performance: 65

. . . 

Rank 1: Denmark

Denmark has a high-tech agricultural sector, state-of-the-art industry with world-leading firms in pharmaceuticals, maritime shipping and renewable energy, and a high dependence on foreign trade, states Forbes, ranking Denmark as the world's best destination to do business in.

• GDP growth: -4.7%
• GDP/capita: $36,000
• Red tape: 23
• Corruption: 2
• Investor protection: 26
• Trade freedom: 12
• Market performance: 37

. . . 

Rank 2: Hong Kong

Hong Kong beat the United States to take over the No. 2 spot from No. 9 last year. It scored high in investor protection and both trade and monetary freedom.

"Hong Kong has a free market economy highly dependent on international trade and finance - the value of goods and services trade, including the sizable share of re-exports, is about four times GDP," Forbes said.

• GDP growth: -2.8%
• GDP/capita: $42,800
• Red Tape: 15
• Corruption: 12
• Investor protection: 1
• Trade freedom: 1
• Market performance: 55

. . . 

Rank 3: New Zealand

New Zealand has improved its position as a business friendly nation moving up to rank 3 from 5 last year. According to Forbes, New Zealand has moved from an agrarian economy to a more industrialised free market economy.

• GDP growth: -1.6%
• GDP/capita: $27,400
• Investor protection: 1
• Corruption: 1
• Red Tape: 1
• Trade freedom: 37
• Market performance: 54

. . . 

Rank 4: Canada

Canada is a rich country with a high-tech industrial society that resembles the United States' economic system and affluent living standards, says Forbes.

• GDP growth: -2.5%
• GDP/capita: $38,200
• Trade freedom: 6
• Corruption: 8
• Red tape: 2
• Investor protection: 5
• Market performance: 36

. . . 

Rank 5: Singapore

Singapore has a highly developed and successful free-market economy. It enjoys a remarkably open and corruption-free environment, stable prices, and a per capita GDP higher than that of most developed countries.

• GDP growth: -1.3%
• GDP/capita $52,200
• Trade freedom: 1
• Red tape: 4
• Investor protection: 2
• Corruption: 3
• Market performance: 24

. . . 

Rank 6: Ireland

Ireland has transformed into a modern knowledge economy, focusing on services and high-tech industries and dependent on trade, industry and investment.

• GDP growth: -7.6%
• GDP/capita: $41,000
• Trade freedom: 12
• Red tape: 8
• Investor protection: 5
• Corruption: 14
• Market performance: 68

. . . 

Rank 7: Sweden

Sweden is an export-oriented mixed economy with a modern distribution system, excellent internal and external communications, and a skilled labour force.

• GDP growth: -5.1%
• GDP/capita: $36,600
• Trade freedom: 12
• Red tape: 34
• Investor protection: 43
• Corruption: 3
• Market performance: 34

. . . 

Rank 8: Norway

Norway has a prosperous economy with majority state-ownership in strategic areas of the economy.

• GDP growth: -1.5%
• GDP/Capita: $57,400
• Trade freedom: 4
• Red tape: 29
• Investor protection: 19
• Corruption: 11
• Market performance: 29

. . . 

Rank 9: United States

The United States has fallen to the ninth position from second position last year. The recession-battered economy is finding it difficult to sustain new businesses. The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $46,400, says Forbes.

• GDP growth -2.6%
• GDP/capita $46,000
• Trade freedom: 35
• Red tape: 7
• Corruption: 19
• Investor protection: 5
• Market performance: 44

. . . 

Rank 10: United Kingdom

The sixth largest economy in the world by nominal GDP, the United Kingdom is the also the second largest financial economy in the world, second only to the United States.

• GDP growth: -4.9%
• GDP/capita: $34,800
• Trade freedom: 12
• Red tape: 13
• Investor protection: 10
• Corruption: 17
• Tax Burden: 14
• Market performance: 52