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International Business Compass

31 May 2017

Original content provided by BDO Estonia

The BDO International Business Compass measure the attractiveness of a country as a multi-dimensional concept in three dimensions: the economic, politico-legal and socio-cultural conditions. The appeal of a country is associated with its level of development. It is understood as a combination of economic, politico-legal and social factors. On the one hand, the attractiveness of a particular country with regard to potential investment decisions is at the forefront, which clearly expresses an economical perspective. On the other hand, economic factors alone can only reflect the situation of a country in a limited fashion, because political, legal, social and cultural aspects also play a part and ultimately have an influence on how appealing a country is as an investment location. The three dimensions correlate with each other and are therefore statistically not entirely independent. However, this is neither required for their aggregation within the index, nor is it realistically achievable. From a statistical point of view, the attractiveness of a country is a level variable as a result of the interaction of a number of factors. The selected indicators may have both a positive and a negative effect on the overall structure, i.e. increase or decrease the attractiveness. The selection of indicators is based on whether they have a logically explicable and, if possible, already proven influence on the attractiveness construct. The second step aggregates specific factors in two sub-indices. The aim is to bundle information through indicators that have an influence on the appeal of a particular country as a potential market or production site.


Please find the International Business Compass webpage for more detailed information.