Economic growth, development, and business environment for APEC region countries

The objective of this research is to calculate and compare the short-term economic prospects of the Asia-Pacific Economic Cooperation (APEC) member countries by calculating an adequacy of the European Regional Economic Growth Index, which is used to guide investments. The question of why some economies grow faster than others has been present in economic literature since the days of classical economists. In the classical perspective, growth was determined by the accumulation of factors of production in an economy; this view ignored other important explanatory aspects that would be integrated into the analysis years later by neoclassical and endogenist researchers. Among these additional determinants are macroeconomic stability, regulatory environment, technology adoption, market structure, and institutional strength. Taking these ideas into account, LaSalle Investment Management proposes an index that takes up macro and microeconomic indicators for the forecasting of short-term economic prospects; this index has been adapted in the present work to be applied to the nations belonging to APEC. This paper is based on the hypothesis that the best locations for investments are determined by economic growth, level of development, and business environment. These variables are quantified through fourteen indicators that account for the inertia and prospects of Gross Domestic Product (GDP) growth, employment, and GDP per capita, as well as the performance of the country in terms of political stability, sovereign risk, credit to the private sector and regulatory environment. These indicators are weighted to assign a final rating that indicates which of the considered nations has more favorable conditions for international investments. The results show that Australia has the best score among the countries considered, and stands out for having the highest GDP per capita of APEC and a good expectation of jobs generation until 2020. The countries that follow Australia in this list are the United States, Korea, Canada, and Singapore. Mexico obtained 53 points out of 100, with its lowest scores in private sector credit and political stability indicators. At the bottom of the standings were Vietnam and Thailand, with scores of 30 and 36 points out of 100, respectively. This is related to the low valuations they obtained in terms of GDP per capita, sovereign risk, political stability and regulatory environment, as well as their low investment in research and development, which is likely to compromise their ability to innovate and grow.