PESTEL analysis for India

India:
The worlds largest democracy and seventh largest country geographically, India has a rich and
proud culture. The U.S. Census Bureau projects India will surpass China in population by year
2025. With the median age of their population at 25.3 years, India has an enormous and well
educated workforce, which provides the country with a significant competitive edge over other
developing nations. Furthermore, only 5% of Indias population is over age 65, while other
countries such as the U.S. and China have rates of 13% and 8% respectfully. This is an advantage
for India as their competitors will most likely have higher social expenditures to support the
healthcare and other needs for their elderly citizens.
India enjoys an abundance of natural resources to include the fourth largest coalreserves in the
world, iron ore, manganese, mica, bauxite, titanium ore, natural gas, diamonds, petroleum, and
limestone. Their official government website brags that until 1896, India was the only source of
diamonds in the world. Also, Indias crop production potential is strong, with 48% of the land
being arable.
The most widely spoken language in India is Hindi. However, English is the subsidiary official
language and is used to conduct political, national, and commercial communications. This gives
India a significant advantage over competing countries, such as China, who have not recognized
English as the international language of choice for commercial activities.
Social:
Indias social landscape continues to show signs of neglect, so pronounced in some areas, such as
in the disputed states of Kashmir and Jammu, it has led to social unrest and militant activities.
The major concerns for the country include: 1) establishing an effective and affordable
healthcare system, 2) ensuring an adequate supply of safe drinking water, 3) controlling
communicable diseases, and 4) improving the education system, specifically the literacy rates.
India ranked 128th out of 177 countries in human development. During the past decade, this
ranking has declined while the economy has grown at record rates. For example, the disparity of
annual earnings between those of the higher income groups and lower income groups has

become more pronounced over the recent years. Also, regional differences in development are
becoming more salient. Specific indicators for lack of human development include the following
facts from the U.S. CIA.
India also ranks 142nd in the world for GDP expenditure on education by investing only 3.2%
toward these programs. This fact, along with their low literacy rates of 61% total (73% male,
48% female), places India at a significant disadvantage with other developed and developing
countries. For instance, the U.S. literacy rate is 99% for both male and female, while Chinas
statistics show 92% overall rate, with 96% men and 88% women. This data reveals two major
problems for India: 1) over 400 million citizens are unable to communicate effectively and 2)
unfair and unequal opportunities for women.
Legal:
Trade and business are more global today then earlier, regimes earlier expanded to encompass
global trade, today it is the large appropriate foot printed nimble innovative companies which
rule the roost.
Economic Regulations: Economic laws of the country may be mapped broadly into:
i) Corporate Laws: Primarily the Companies Act, 2013 ("Companies Act") and the regulations
laid down by the Securities and Exchanges Board of India ("SEBI");
ii) Operational and contract laws as Industries (Development and Regulation) Act, 1951; Indian
Contract Act, 1872, Sale of Goods Act, 1930, Specific Relief Act, 1963, Competition Act, 2002.
iii) Exchange Control Laws: Primarily the Foreign Exchange Management Act, 1999 ("FEMA")
and numerous circulars, notifications and press notes issued under the same;
iv) Sector Specific Laws: Specific Laws relating to Financial Services (banking, non-banking
financial services), Infrastructure (highways, airports) and other sectors:
v) Intellectual property laws; and,
vi) Tax framework;

Companies Act, 2013: In the business framework domain, high at the pecking order for
business legal environment is the enactment pertaining to corporate body as to its structuring,
setting up, operation, governance et al. India gave to itself a fresh enactment for the same being
Companies Act, 2013. The objective behind the 2013 Act is lesser Government approvals and
enhanced self-regulations coupled with emphasis on corporate democracy.
Mergers and Acquisitions- Mergers and amalgamations are the subject matter of the Companies
Act. The power to approve amalgamations, mergers and de-mergers rests with the State High
Courts of India for both listed and unlisted companies wherein the registered offices of the
company are registered. This power was under the 1956 Act was proposed to be transferred
pursuant to the Companies (Second Amendment) Act, 2002, to the National Company Law
Tribunal (hereinafter the "NCLT") this position is maintained under the 2013 Act. The present
2013 Act has transferred the same to NCLT subject to being notified
Industries (Development and Regulation) Act, 1951: In order to provide the Central Government
with the means to implement its industrial policies, several legislations have been enacted. The
most important being the Industries
(Development and Regulation) Act, 1951 (IDRA). The main objectives of the Act is to empower
the Government to
take necessary steps for the development of industries; to regulate the pattern and direction of
industrial development; and to control the activities, performance and results of industrial
undertakings in the public interest
Competition Act: The GoI has notified the Competition Act, 2002 (hereinafter "Competition
Act") which shall repealthe MRTP Act as and when all the substantive provisions of the
Competition Act are notified in their entirety21 Under the Competition Act, mergers,
amalgamations and acquisitions with substantial asset base or turnover would require to be
scrutinized by the CCI. A Combination that exceeds the threshold limits specified in the
Competition Act in terms of assets or turnover or which causes or is likely to cause an
appreciable adverse effect on competition within the relevant market in India can be scrutinized
by the CCI.

Securities law- the gamut of laws and regulation as securities law for primary markets (IPOs,
QIPs, etc.) or in the secondary markets (insider trading, market manipulation, etc.) emanate from
the Securities and Exchange Board of India Act, 1992 and its Rules, Regulations, General
Orders, Guidelines, Master Circulars & Circulars.
The Foreign Exchange Management Act, 1999 ("FEMA") consolidates the law relating to
foreign exchange with the objective of facilitating external trade and payments and for
promoting the orderly development and
LABOUR REGULATIONS
General: Another important aspect of legislations is the industrial relations, which involves
various aspects of interactions between the employer and the employees; among the employees
as well as between the employers. In such relations whenever there is a clash of interest, it may
result in dissatisfaction for either of the parties involved and hence lead to industrial disputes or
conflicts.
Wages and fringe benefits vary considerably by industry, company size and region. Wages have
two components: the basic salary and the dearness allowance, linked to the cost-of-living index.
A mandatory bonus supplements wages. Companies use both time and piece rates. The former
are more common in organized industries, such as engineering, chemicals, cement, paper and
glass. Piece rates are encouraged to boost productivity. Some industries also pay production
premiums.

TAX FRAMEWORK
Taxation Structure and Incentives
India has a federal structure and a well-developed three-tier tax framework, comprising of taxes
levied by the Central Government, the State Governments and the Local Authorities. Power to
levy taxes and duties is distributed among the aforesaid three tiers, in accordance with the
provisions of the Constitution of India. Further fiscal revenue is shared between the Central
Government and the State Governments. The principle taxes and duties that the Central

Government is empowered to levy are, inter alia, Income Tax (which is a direct tax), Customs
duty, Central Excise, Central Sales Tax (hereinafter "CST ') and Service Tax (which are indirect
taxes). The principal taxes levied by the State Governments are, inter alia, Value Added Tax
(hereinafter "VAT"), Stamp Duty, State Excise duty (levied on the manufacture of alcohol,
alcoholic preparations, and narcotic substance), Land Revenue, Entertainment tax and Tax on
Professionals. The Local Authorities are empowered to levy tax on immovable properties, Octroi,
tax on markets and tax or user charges for utilities such as water supply and drainage. The
incidence of tax can either be direct or indirect.
Environmental:
Indias current environmental protection policies are wide-ranging and adequate to meet the
intended goals. However, there has been little improvement, and arguably a decline in some
areas, due to slow implementation and lack of enforcement. The primary challenge centers on
trying to balance sustained economic growth and environmental impact. Depleting water
resources as the population continues to grow continues to be a primary concern. Also, Indias
dependence on coal for thermal energy is causing widespread problems to include air pollution
and the corrosive effects of acid rain.
Many of Indias major cities contain particulate levels considered unsafe by the World Health
Organization (WHO). It is crucial for India to skillfully manage the tradeoffs between expansion
and the environment as they move forward.
Indian business sector and government understands the impacts environmental factors such
climate and weather can have. In India, the quality of air has been affected by urbanization and
industrialization. Several problems have also been associated with environmental degradation in
India such as pollution and premature deaths . This has led to the establishment of noise controls,
pressure groups on environmentalism as well as regulations on waste disposal.

PESTEL analysis for China

Outlined below is the PESTEL analysis for China as a whole.

1) Political Factors
i.
Constitutional System
China or Peoples Republic of China adopts socialist system or communism in their
political system in their decision-making processes in governing the country. The
countrys sole political party in power is known as the Communist Party of China. The
government have the sole power to control all activities done by their citizen as what
have been describe in how communism system worked in governing a country. In
other words, the purposes of working in China are to contribute to the nation and also
to the government as the government control on all activities in the country.
ii.

Stability of Government
The stability of the China government is quite moderate and stable because the
administration of the government are not publicize to the public either through the
press or on the internet. So, the degree of the citizen involvement in the politics is low
because of the heavy restrictions impose by the government. However, the policies
impose and the law regulations are quite effective in terms of economy where China is
one of the leading countries in the world. In the recent years (2001), China has joined
the World Trade Organization and results rapid growth in industrial and manufacturing
sectors because of the cheap labor in China. But still problems such as managing
environmental degradation, demographic pressure and the extreme immigration from
rural to urban area must be faced by the government.

iii.

Business Freedom
The business freedom in China is quite tight because of the regulation impose by the
government where they restrict businesses from other countries coming in. But
recently, China government open their gate to the outside world to set up business in
their country. It takes 37 days to start anew business in China compared to the world
average 38 days. While it takes 1.7 years from the filling for insolvency in court until
the resolution of distressed assets. Examples of business freedom in China are
supermarketization and opening market to foreign multinationals company because of
the entry of China into WTO. Supermarketization is where the government shuts down
the traditional wet market and transform them into supermarket.

iv.

Trade Freedom
In the past few decades, China loosen their trade policy to the outside world in their
trading, export and import industry. Chinas weighted average tariff rate was 3.9
percent in 2008 based from the web (heritage.org). Factors that affect the cost of trade
freedoms are import and export bans and restrictions, import and export licensing,
non-transparent tariff classifications, complex regulations and standards, subsidies,
state trading in certain goods, services market restrictions, issues involving the
protection of intellectual property rights, and inconsistent and corruption-prone
customs administration add to the cost of trade. So, Chinas trade freedom score to
account for non-tariff barriers deducted about twenty points.

v.

Tax Policies
Below are the economic data for China.
Tariff Rate
Income Tax Rate
Corporate Tax Rate
GDP (billion)
GDP per Capita
Unemployment Rate
Inflation Rate
FDI Inflow (millions)
Tax Burden % GDP
Government Expenditure % GDP
Population (billions)

3.9
45.0
25.0
7900
5962
4.2
5.9
108300
18.3
19.9
1300

Based on the rates and statistic given, we can see that China has moderate Corporate
Tax Rate and high Income Tax rate. The government encourages more new-technology
business in the market besides allowing foreign institution enters the nation financial
institution in providing foreign currency. Because of lower corporate tax rate, many
MNC started to open their business in China and the numbers of FDI have increased
rapidly. Furthermore, on October 2008, new policies impose where individual income
tax is no longer paid on interest on bank deposits. The overall tax revenue as a
percentage of GDP was 18.3 based on what recorded in the recent years.

2) Economic Factors
Economic Freedom Score 51.0

Population
1.3 billion
GDP (PPP)
$7.9 trillion
9.0% growth
11.0% 5-year compound annual growth
$5962 per capita

Tariff Rate
Income Tax Rate
Corporate Tax Rate
GDP (billion)
GDP per Capita
FDI Inflow (millions)
Tax Burden % GDP
Government Expenditure % GDP

3.9
45.0
25.0
7900
5962
108300
18.3
19.9

Unemployment

4.2%

Inflation (CPI)

5.9%

FDI Inflow

$108.3 billion

Economic Freedom vs World Average

i.
ii.

Disposable income of buyers

Credit accessibility
The government has directly and indirectly controls their banks and financial
institution. Investment done in China are also control and regulated because of their
judicial system is very vulnerable to the political issues and influence

iii.

Unemployment rates
Labor force
Labor force by occupation a) agriculture (39.5%)
b) industry (27.2%)
c) services (33.2%)
Unemployment rate
-

812.7 million

4.2% (2008 est.)

*Official data from urban area only.

*Including migrants may boost total unemployment to 9%.
*Substantial unemployment and underemployment in rural areas.
Source from www.cia.gov

iv.

Fiscal Freedom
China has moderate Corporate Tax Rate and high Income Tax rate. The government
encourages more new-technology business in the market besides allowing foreign
institution enters the nation financial institution in providing foreign currency. Because

of lower corporate tax rate, many MNC started to open their business in China and the
numbers of FDI have increased rapidly. Furthermore, on October 2008, new policies
impose where individual income tax is no longer paid on interest on bank deposits.
The overall tax revenue as a percentage of GDP was 18.3 based on what recorded in
the recent years.
v.

Monitory Freedom
From 2006 until 2008, the inflation rate is around 5.2% where it is consider moderate
for that particular percentage. As what mention where China economic freedom score
is around 51 from the full score 100. So, we can see that the economic is a mixture of
free market and control market. The price of product sold can be determined by the
quantity demanded of the product. But still the government intervenes on certain
goods and products to maintain stability of the prices. The government also gives
subsidies to small business and industry to compete with foreign goods where they can
sell at lower prices.

vi.

Investment Freedom
Chinas Foreign Investment Catalogue describe that different foreign investment are
group under different types such as encouraged, prohibited, restricted and permitted
China laws and regulatory are non-transparency, complex and inconsistently enforced
laws and regulations, weak protection of intellectual property rights, corruption,
industrial policies protecting local firms, and a legal system that cannot guarantee the
sanctity of contracts where these must be face by the foreign investor. Financial
transactions are also tightly regulated.

vii.

Financial Freedom
The financial systems in China are control directly to the government and it is tightly
controlled. In China, there are supervised roughly 5,600 financial institutions in 2008 and
China has only two private banks while there are four state-owned banks account for over 50
percent of total assets. This financial system is control and supervised

Regulatory Commission.
viii.

Interest rates
Central bank discount rate

2.79%

by The China Banking

Commercial prime lending rate

ix.

5.31%

Inflation
Inflation rate
5.9% (2008 est.) and -0.7% (2009 est.)
Inflation rate decline vastly from 2008 until 2009 because of the stable currency of
China.

3) Social Factors
Population

1.34 billion (2009 est.)

Population growth rate

0.66% (2009 est.)

Population Below Poverty Line

2.00% (2009 est.)

Infant mortality rate

20.25 deaths per 1,000 live births (2009 est.)

Life expectancy at birth

total population: 71.44 years

male: 69.71 years
female: 73.26 years
(2004 est.)
Total fertility rate

1.79 children per woman (2009 est.)

Ethnic groups
:
Han Chinese 91.5%, Zhuang, Manchu, Hui, Miao,
Uyghur, Tujia, Yi, Mongol, Tibetan, Buyi, Dong, Yao, Korean, and other nationalities 8.5%
(2000 census)

Nationality
Chinese

noun: Chinese (singular and plural) adjective:

Religions
:
Daoist (Taoist), Buddhist, Christian 3%-4%,
Muslim 1%-2% note: officially atheist (2002 est.)
Languages
:
Standard Chinese or Mandarin (Putonghua, based
on the Beijing dialect), Yue (Cantonese), Wu (Shanghainese), Minbei (Fuzhou), Minnan
(Hokkien-Taiwanese), Xiang, Gan, Hakka dialects, minority languages (see Ethnic groups entry)
Literacy

total population: 90.92 %

male: 95.14 %
female: 86.53 %
(2004 est.)
HIV/AIDS - Adult Prevalence Rate:

0.10% (2009 est.)

Source from http://globaledge.msu.edu/countries/china/statistics/

i.

Distribution of Wealth
Distribution of income or consumption by percentage share

Lowest 10% :

1.80%

Lowest 20% :

4.66%

Second 20% :

9.00%

Third 20%

14.22%

Fourth 20%

22.13%

Highest 10% :

33.06%

Highest 20% :

49.99%

Source from http://globaledge.msu.edu/countries/china/statistics/

China has an extreme gap between the lowest 20% and the highest 20% after 60 years
China change their system in their economy.

ii.

Changes in lifestyles and trends

Lifestyles and trends in China change in many ways such as the level of consumption,
attitude towards new product especially from the west, changes in the quality of life,
and also changing from quantity satisfaction to quality satisfaction. Besides that,
changes in trends can be seen from the degree of fashion sense where citizen tend to
buy more colourful and striking colours compare dull- coloured clothes.

iii.

Educational levels
The literacy rate for China is around 91.0% was able to read and write at a specified
age. While the average years of schooling is 11.2 year. Education expenditures in
China is about 1.9% of the GDP.

iv.

Labor Freedom Ranks

Chinas labor regulations hinder overall employment and productivity growth. The
non-salary cost of employing a worker is high. Dismissing an employee may require
prior consultation with the local labor bureau and labor union.

v.

Freedom of corruption
Corruption is perceived as widespread. China ranks 72nd out of 179 countries in
Transparency Internationals Corruption Perceptions Index for 2008. Corruption
affects banking, finance, government procurement, and construction most severely,
and there is a lack of independent investigative bodies and courts.

vi.

Property Rights
Chinas judicial system is weak, and many companies resort to arbitration. Local
officials can ignore court decision with impunity. All land is state-owned, but
individuals and firms may own and transfer long-term leases (subject to many
restrictions) as well as structures and personal property. Intellectual property rights are
not enforced effectively. Copyrights, patents, brand names, trademarks, and trade
secrets are routinely stolen.

4) Technological Factors
i.

Science and Technology

Through the period, the achievement of science and technology in China are
remarkable where they manage to achieve many discoveries in the science field. The
major achievements are the discovery of the Daqing Oilfield, building the first atomic
reactor, successful testing of atom and hydrogen bombs, synthesis of crystalline
insulin, positron and negatron electronic collider, nuclear power stations, carrier
rockets, and satellite launching technology. Rapid improvement in science and
technology also create more jobs in the manufacturing industry and also make the
quality of life better and easier.

ii.

Research and Development

The government design many plans and strategies in developing the R&D industry.
Many programs to enhance R&D industry are launched such as the Torch Program
and the Scaling Heights Program

5) Environmental Factors
i.

Environmental Protection Laws

The government takes serious matter on protecting the environment where they
impose many regulations and laws in protecting, preventing and controlling industrial
pollution and improving urban environment. The government also collaborates with
many NGOs in order to maintain the Mother Nature. WTO conducted a report on the
quality of air in 272 cities worldwide, pointed out seven out of the ten cities that are
the most polluted in the world were in China.

6) Legal Factors
i.

Employment Regulations
Chinas labor regulations hinder overall employment and productivity growth. The
non-salary cost of employing a worker is high. Dismissing an employee may require
prior consultation with the local labor bureau and labor union.

ii.

China Tax Reigme

China is known as one of the most attractive incentives packages in Asia.
Tax incentives and other facilities for the manufacturing sector are provided for in
the Promotion of Investment.

iii.

Starting of New Business

When foreign investors want to set up business in China, they have to wait for
approval from the Government for a long time.

PESTEL analysis for Finland

Outlined below is the PESTEL analysis for Finland as a whole.
1) Political Factors
i.

Constitutional System
Finland joined the European Union in 1995 and adopted the euro as its currency in
1999. The country is sparsely populated, with about one-fourth of its land mass above
the Arctic Circle, but boasts a modern, competitive, and transparent economy with

ii.

vibrant information and communications technology sectors.

Stability of Government.
The modern and competitive Finnish economy has long benefited from high levels of
economic freedom. The economy remains a world leader in business freedom, trade
freedom, property rights, and freedom from corruption. Private enterprises continue
to blossom and promote innovation in an efficient regulatory and legal environment.
With prudent and sound banking practices, the financial sector has weathered the
global financial turbulence relatively well. Finlands overall high level of economic
freedom is curbed by high government spending and the rigidity of the labor market.
As in many other European social democracies, high government spending (close to
half of Finlands GDP) supports an extensive welfare state. Restrictive labor
regulations undermine employment and productivity growth. Previously robust
economic growth slowed in 2009 due to the global recession, and Finland, like many
other European nations, faces demographic challenges in the form of an aging
population and shrinking workforce that could threaten future growth and the
governments ability to maintain generous social spending programs. Finland became

a member of NATOs Partnership for Peace program in 1994 but has not pursued full
NATO membership because of its neutral military status.

iii.

Business Freedom
The overall freedom to start, operate, and close a business is strongly protected under
Finlands regulatory environment. Starting a business takes an average of 14 days,
compared to the world average of 35 days. Obtaining a business license requires
much less than the world average of 18 procedures and 218 days. Bankruptcy is
straightforward and not costly.

iv.

Trade Freedom
Finlands trade policy is the same as that of other members of the European Union.
The common EU weighted average tariff rate was 1.3 percent in 2008. However, the
EU has high or escalating tariffs for agricultural and manufacturing products and its
MFN tariff code is complex. Non-tariff barriers reflected in EU and Finnish policy
include agricultural and manufacturing subsidies, quotas, import restrictions and bans
for some goods and services, market access restrictions in some services sectors, nontransparent and restrictive regulations and standards, and inconsistent regulatory and
customs administration among EU members. Ten points were deducted from
Finlands trade freedom score to account for non-tariff barriers.

v.

Tax Policies
Below are the economic data for Finland.

Tariff Rate
Income Tax Rate
Corporate Tax Rate
GDP (billion)
GDP per Capita
Unemployment Rate
Inflation Rate
FDI Inflow (millions)
Tax Burden % GDP

1.3
30.5
26.0
188.2
35427
6.4
3.9
-4200
43.1

Government Expenditure % GDP

Population (billions)

47.3
5.3

Finland has moderate tax rates but a relatively high level of overall taxation. The top
income tax rate is 30.5 percent, with municipal rates between 16.5 percent and 20
percent. The top corporate tax rate is 26 percent. Other taxes include a value-added
tax (VAT), an inheritance tax, and a flat 28 percent tax on capital income. In the most
recent year, overall tax revenue as a percentage of GDP was 43.1 percent.
2) Economic Factors
Economic Freedom Score

Population
GDP (PPP)

73.8

5.3 million

$188.2 billion

0.9% growth

3.2% 5-year compound annual growth

$35,427 per capita

Tariff Rate
Income Tax Rate
Corporate Tax Rate
GDP (billion)
GDP per Capita
Tax Burden % GDP
Government Expenditure % GDP
Population (billions)

Unemployment
Inflation (CPI)
FDI Inflow

6.4%
3.9%
-4200.0 million

1.3
30.5
26.0
188.2
35427
43.1
47.3
5.3

Economic Freedom vs World Average

i.

Unemployment rates
Labor force
Labor force by occupation -

2.678 million

Agriculture and forestry: 4.5%

Industry: 18.2%
Construction: 7.3%
Commerce: 15.9%
Finance, insurance, and business services: 14.5%
Transport and communications: 6.9%
Public services: 32.7%
Unemployment rate

ii.

6.4%

Fiscal Freedom
Finland has moderate tax rates but a relatively high level of overall taxation. The top
income tax rate is 30.5 percent, with municipal rates between 16.5 percent and 20
percent. The top corporate tax rate is 26 percent. Other taxes include a value-added tax
(VAT), an inheritance tax, and a flat 28 percent tax on capital income. In the most
recent year, overall tax revenue as a percentage of GDP was 43.1 percent.

iii.

Monitory Freedom
Finland uses the euro as its currency. Between 2006 and 2008, Finlands weighted
average annual rate of inflation was 3.1 percent. As a participant in the EUs Common

Agricultural Policy, the government subsidizes agricultural production, distorting the

prices of agricultural products. It also imposes artificially low prices on
pharmaceutical products. Ten points were deducted from Finlands monetary freedom
score to account for measures that distort domestic prices.
iv.

Investment Freedom
Finland is open to foreign direct investment. Certain acquisitions of large companies
may require follow-up clearance from the Ministry of Trade and Industry. Non
European Economic Area investors must apply for a license to invest in security,
electrical contracting, alcohol, telecommunications, aviation, and restaurants.
Regulation is relatively transparent and efficient. There are no exchange controls and
no restrictions on current transfers or repatriation of profits, and residents and nonresidents may hold foreign exchange accounts. Restrictions on the purchase of land
apply only to non-residents purchasing land in the Aaland Islands.

v.

Financial Freedom
Finlands sophisticated financial system provides a wide range of services, guided by
sound regulations and prudent lending. There are more than 300 domestic banks, but
three bank groups (Nordea, OP Bank Group, and the Sampo Group) dominate the
system. The government owns about 14 percent of the Sampo Group. Banking is open
to foreign competition, and about 60 percent of assets are foreign-owned. Capital
markets determine interest rates, and credit is available to nationals and foreigners.
The stock exchange is part of a BalticNordic exchange network. Merger of the
Financial Supervision Authority and Insurance Supervisory Authority came into force
in January 2009. The impact of the global financial turmoil on the banking sector has
been relatively muted.

vi.

Interest rates
Central bank discount rate 1.75% (31 December 2009) and 3% (31 December 2008)
* this is the European Central Bank's rate on the marginal lending facility,
which offers overnight credit to banks in the euro area
Commercial bank prime lending rate -

3.51% (31 December 2009)

5.79% (31 December 2008)
vii.

Inflation
Inflation rate
0% (2009 est.)
4.1% (2008 est.)

3) Social Factors

Population

5.25 million (2009 est.)

Population growth rate

0.10% (2009 est.)

Population below Poverty Line

0.00% (2009 est.)

Infant mortality rate

3.47 deaths per 1,000 live births (2009 est.)

Life expectancy at birth

Total population: 78.71 years

male: 75.30 years
female: 82.30 years
(2004 est.)
Total fertility rate

1.73 children per woman (2009 est.)

Ethnic groups
:
(Gypsy) 0.1%, Sami 0.1% (2006)

Finn 93.4%, Swede 5.6%, Russian 0.5%, Estonian 0.3%, Roma

Nationality

noun: Finn(s) adjective: Finnish

Religions
:
Lutheran Church of Finland 82.5%, Orthodox Church 1.1%,
other Christian 1.1%, other 0.1%, none 15.1% (2006)
Languages
:
Finnish 91.2% (official), Swedish 5.5% (official), other 3.3%
(small Sami- and Russian-speaking minorities) (2007)
Literacy:
total population: NA %
male: NA %
female: NA %
HIV/AIDS - Adult Prevalence Rate

0.10% (2009 est.)

Source from http://globaledge.msu.edu/countries/finland/statistics/

i.

Distribution of Wealth
Household income or consumption by percentage share:
lowest 10% :
lowest 20% :
second 20%:
third 20% :
fourth 20% :
highest 10%:
highest 20%:

ii.

NA%
NA%
NA%
NA%
NA%
NA%
NA%

Changes in lifestyles and trends

Doesnt have many changes in lifestyles and trends since Finland are counted as one of
the modern countries.

iii.

Educational levels
The education levels in Finland are very good where the literacy is 100% for both
male and female. The average school life expectancy is 17 years.

iv.

Labor Freedom Ranks

Burdensome labor market regulations hamper employment opportunities and
productivity growth. The non-salary cost of employing a worker is high, and
dismissing an employee can be costly. Restrictions on work hours are rigid.

v.

Freedom of corruption

Corruption is perceived as almost nonexistent. Finland is tied for 5th place out of 179
countries in Transparency Internationals Corruption Perceptions Index for 2008.
Finland is a signatory to the OECD Anti-Bribery Convention. The Council of Europes
Group of States against Corruption has recommended that Finland sharpen its controls
over political financing and increase the transparency of donations to political parties
and election candidates.

vi.

Property Rights
Property rights are well protected, and contractual agreements are strictly honored.
The quality of the judiciary and civil service is generally high. Expropriation is
unlikely. Finland adheres to numerous international agreements concerning the
protection of intellectual property.

4) Technological Factors
i.

Science and Technology

Technology and innovation policy measures seek to contribute to enhancing the
competitiveness of Finnish industry and the well-being of society, with the aim of
making Finland capable of providing companies with a top-flight innovation
environment internationally, which also attracts foreign R&D investments. Thus, at the
beginning of its term, Prime Minister Vanhanens second government intends to
prepare a National Innovation Strategy.

ii.

Research and Development

R&D funding will be increased to 4 per cent of Finlands gross national product. This
funding will be allocated to centres of strategic excellence in sectors that are pivotal to
the development of the national economy, society and citizens welfare. The regional
innovation base as well as co-operation between business communities and education

and research communities will be strengthened through a Centre of Expertise

Programme that consists of cluster-based networking.

5) Environmental Factors
i.

Climate
Cold temperate and potentially subarctic but comparatively mild because
of moderating influence of the North Atlantic Current, Baltic Sea, and
more than 60,000 lakes.

ii.

Current issues
Air pollution from manufacturing and power plants contributing to acid
rain, water pollution from industrial wastes, agricultural chemicals;
habitat loss threatens wildlife populations.
6) Legal Factors

i.
ii.
iii.

Employment Regulations
Health and Safety Regulations
Trade and Regulations Standards

Why do you think Finland tops the chart for overall ranking of the Best Countries in The
World?
Finland tops the chart for overall ranking of the Best Countries in the World because it is a
small country and the population of the country is small. So, it is easier to manage either in terms
administrative, economy, health, law and many more. Finland adapt free market in their
economy so the demand and supply fluctuate freely and the entry barriers to the country is quite
low. Besides that, Finlands trade policy is the same with other members of the European Union.
Inflation rate is also low in Finland while unemployment rate is quite high. Although the
unemployment rate is high in Finland, the quality of life is still good because workers in Finland
must pay high income taxes where from this taxes, the government used the taxes to give fund to
those who are unemployed. Every month government will give them the fund to their bank
account. Wealth distribution is also distributed quite equally among the citizens where the gap is
not that big among the low income and high income. Besides that, the climate and weather also
take effect to the ranking where the weather is quite calm and because of the geographic area
where it is situated far north in the globe. So, around 10 weeks in a year the sun will not set
during the summer.

Reference
http://www.heritage.org
https://www.cia.gov
http://globaledge.msu.edu
http://www.newsweek.com
http://www.china.org.cn