2007 Global Services Location Index


Central and Eastern Europe: new contenders climb the rankings

The trend from last year continues as the established service providers in the region, Czech Republic, Hungary, and Poland lose ground while emerging locations quickly move up the rankings. Bulgaria replaces the Czech Republic as the only country from the region in the top 10. Both Bulgaria and Romania see big jumps in their business environment scores, as they complete preparations to join the European Union in 2007. Despite a larger population base, Romania’s relatively higher costs put it among the middle of the pack at 33rd place. Slovakia continues to do well, just edging out the neighboring Czech Republic at 12th place. The Baltic States, Estonia, Latvia and Lithuania, jump into the Index at 15th, 17th and 28th place. Albeit small in size, all three countries combine a business environment similar to that of most developed countries with a superior cost structure. Estonia today is what Ireland used to be ten to 15 years ago, a relatively low-cost European location with top class, largely untapped, talent and a pro-business policy environment.

Continued improvement in the business environment in the Czech Republic and Hungary can not offset deterioration in cost competitiveness and they slip in the rankings, despite maintaining or improving their absolute scores. Among the big three Central European countries, only Poland manages to maintain its position, thanks to lower wage inflation and infrastructure costs. Despite competitive wages, large populations and strong technical skills, very weak business environment scores (only Pakistan, Senegal and Indonesia fare worse) leave Russia and newcomer Ukraine low in the rankings at 37th and 47th place.

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Tomasz Kulig