How to find information about foreign economies

A number of international organizations publish information that can be used to understand the economies of various countries. That information is useful to international investors as well as all others who are interested in a particular economy, including their own. This guide provides a brief discussion and links to the various information sources. We have focused on the freely available data from long-standing and reliable agencies. The various indexes and ratings published by them provide 90 percent of the information needed to understand a foreign economy.

1. Business Environment and Regulations

Doing Business Ratings

The “Doing Business” database provides the most comprehensive information about regulations across countries. Annually, the World Bank publishes country rankings on ten indicators including the procedures for starting a business, registering property, getting credit, enforcing contracts, and others. The different indicators are also aggregated into one composite measure called the “Ease of doing businesses.” The data are collected through extensive interviews with representatives of the private and public sectors in each of the participating 183 countries. The methodology across countries is standard which allows for international comparison. Moreover, there is substantial detail on the various procedures for opening and running a business as well as links to important legal documents. More recently, the database includes sub-national indexes for different cities within a country.

Source: Doing business ratings

Investing Across Countries Ratings

In a related database, the World Bank collects information specifically for foreign investors. The Doing Business database is very informative of the overall business climate in a country but it focuses on small and medium-sized enterprises. The Investing Across Countries database covers topics like the ease of starting or acquiring a foreign business and the arbitration of commercial disputes.

Source: Investing across countries

U.S. Department of Commerce Guides

The United States Department of Commerce publishes very informative reports called “Doing business in (various countries).” The reports are compiled by the U.S. embassies around the world and serve to help U.S. companies expand internationally in terms of trade and investment. The coverage is substantial with significant detail about various sectors of the economy, investment opportunities, the relevant government institutions, rules and regulations, and much more. The focus is on helping U.S. companies but the reports have plenty of useful information for anyone interested in that economy.

Source: Commerce guides

2. Economic Outlook and Forecasts

World Economic Outlook

There are numerous institutions and private agencies making forecasts about the economy. Of those, we suggest using first and foremost the “World Economic Outlook” by the International Monetary Fund (IMF). The reports are published two times per year and provide an overview of the trends in the global economy, in various regions, and for each country separately. Regular updates are published between the semi-annual reports. The updates give information about major new developments and corrections to the forecasts.

Providing surveillance of the global economy is one of the key jobs of the IMF and they have done it for over 50 years. The IMF has a large staff of economists whose primary job is to study various economies. No other organization has the same level of expertise in these matters. Of course, all of that does not ensure correct forecasts. It is notoriously difficult to make economic predictions. However, the IMF reports: 1) are as good as any other; 2) have a very large scope covering the entire global economy; and 3) are free.

Source: World outlook

OECD Economic Outlook

Besides the IMF, one can consult the Economic Outlook prepared by the Organization for Economic Cooperation and Development (OECD). The OECD is a long-standing organization of the relatively richer and larger economies. One of its responsibilities is to provide monitoring and economic analysis of the member states. The Outlook gives a summary of the predictions for the member countries as well as for several important emerging markets.

Source: OECD outlook

European Union Outlook

If one is interested in the European Union economies, we suggest the “Economic Forecast” of the European Commission. The report is published two times per year with an interim update. The economy of each member state is discussed in a separate section with a good balance of detail and general overview.

Source: EU outlook

Central Bank Reports

If you would like to know more and obtain in-depth coverage and data on a particular economy, the most comprehensive source is usually the central bank of that country. Links to the central banks can be found at the Bank for International Settlements (BIS) in Switzerland. Almost all central banks publish annual and monthly reports in English explaining in detail the developments in their economies and sometimes making predictions. The reports are compiled by the research departments of the banks, usually staffed with internationally trained economists. The advantage of the reports is their depth. The disadvantage is also their depth as one can end up reading too much information and lose the big picture.

Source: Central banks

3. Sovereign Credit Ratings, Credit Risk

The three main agencies that publish credit ratings are Moody’s, Standard and Poor’s, and Fitch. Each of them publishes thousands of ratings of banks, companies, and regional governments. However, the most media attention is focused on the so-called “sovereign credit ratings.” These are estimates of the risk associated with lending money to the central government of a country. The ratings are for two types of credit: denominated in domestic currency and in foreign currency. Besides the ratings, the agencies provide an “outlook” indicating the direction in which the credit risk is likely to move in the future.

The media focus falls on the credit rating of the central governments for several reasons. First, the government credit ratings serve as a benchmark for the overall credit risk in the economy. No other financial or nonfinancial institution in the country could have higher credit rating than the government. Second, the size of the credit market for government bonds is larger than the market for corporate bonds. In other words, most investors are interested in exactly these ratings. Third, changes in the government credit rating have implications for the entire economy. If the government credit ratings deteriorate, then all borrowers in the country will have to pay higher interest rates on credit.

The credit ratings are not an indicator of the business environment in a country. For example, a poor and badly run country could have relatively high credit ratings if the government has low levels of debt. The ratings are also not an indicator of the long-term prospects of the country or the fiscal health of its government. They only provide a near term estimate of the likelihood that the government can service its obligations.

Moreover, the agencies do not have a very good track record predicting major economic changes. For example, they failed to caution the investment public about the recent financial crisis. Despite these caveats, one should look up the credit rating as part of the overall investigation of a country. All three agencies require registration in their online portal to see the ratings. However, one can usually find the ratings of various countries by a simple Google search. Any recent changes in ratings are reported in the media.

Sources: Moody's, Standard & Poor's, Fitch

4. Corruption, Rule of Law, and Quality of the Administration

Corruption from Transparency International

There are several sources of information about the administrative hurdles a business would face in a foreign country. The most well known is the Corruption Perceptions Index compiled and published by Transparency International, an international NGO. The index is a compilation of a number of surveys carried out by various institutions about the perceived level of corruption in a country. The same methodology is applied to constructing the index across different countries, so we have a fairly reliable indicator of the relative rankings of the countries. Of course, one should keep in mind that the index measures perceptions, not actual corruption, and is therefore not precise. This is understandable as direct measures of corruption are not available.

Source: Transparency International

Worldwide Governance Indicators

Another interesting source of information is the Worldwide Governance Indicators published by the World Bank. The advantage of these indicators is their wide coverage. One learns about the rule of law, the efficiency of the bureaucracy, political stability and more. The disadvantage is that the numbers are more academic and difficult to interpret by non-experts. Still, if one spends some time looking at them, a fairly clear picture of the institutional environment of a country takes shape.

Source: Governance indicators

Civil Society

Looking more broadly, the overall state of governance and democracy in a country can be tracked with the “Freedom in the World” reports published by the Freedom House, a longstanding NGO headquartered in Washington D.C. The reports contain annual information about political and civil rights developments in almost all countries. The reports provide a brief but solid overview of the overall political and civic structure of a country.

Source: Freedom House

5. Economic Indicators

One can learn a lot by looking at the key indicators of an economy over the last 10-20 years and comparing it with other countries. The structure of economies is quite stable over time and the past is a good indicator of the future. One can learn whether an economy is prone to boom and bust cycles; whether it traditionally has slow/rapid economic growth and high/low unemployment; if it is export oriented; whether it has well developed financial markets; and much more. One can also see how the economy compares to other countries in the region: is it a leader or a follower; is it affected by what is happening in the region; etc.

The benefit of looking at historical data is that one can make a rough guess about the development of an economy over the long-term horizon. The agencies that make predictions usually focus on 1-2 years in the future. Yet, a business investment is made with a much longer time horizon in mind.

Sources: economic indicators


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