Economic conservatism is the fiscal approach that advocates for a free market with limited government intervention. It is characterized by the principles of individualism, private property rights, reduced government debts, and economic freedom. According to the research study, “Worlds of Welfare Capitalism and Wellbeing: A Multilevel Analysis”, by Chris Deeming and David Hayes, people residing in conservative states are unhappier than the ones living in social-democratic countries. The study observes the correlation between happiness and income, and similarly between GDP per capita and happiness. The findings of the study suggested that conservative countries are likely to experience unhappiness twice, as compared to social-democratic countries. Countries with higher GDP per capita are likely to report happiness twice, compared to the countries with lower GDP per capita. The unemployment rate of a country also plays a pivotal role in determining its social well-being. The study showed a 50% increase in unhappiness in countries with a high unemployment rate.
For instance, Mexico is among the conservative economies in America, with its low tax rates and less government spending on social welfare. According to a research survey by WVS, Mexico’s political culture is still evolving despite its economic transition in 2000. The majority of Mexicans believe in a democratic state but also exhibit less trust in their government. A majority of Mexicans would prefer to live under economic pressure, without having to give away their civil liberties to have economic security under an authoritarian government. There are several factors including lower levels of income equality, less generous social safety nets, and distrust in government that are contributing to lower levels of social welfare in the country.
Economic Conservatism in Europe
Europe is home to some of the most conservative economies characterized by less generous social safety nets and lower tax rates. Some examples are Serbia, Latvia, Albania, and Moldova, with less spending on social welfare and lower tax rates. The unemployment rate in these countries is another factor contributing to the lower level of social well-being in the region. For example, according to the UNECE, conservative countries such as Serbia and Albania reported youth unemployment rates of 27.5% and 27.2% respectively in 2021. However, the lower tax rates in the region might help the businesses to grow. Prominent sectors responsible for growth in Europe include manufacturing, technology, and healthcare among others.
Major Players in the European Market
Some of the leading companies driving the European economy include ASML Holding N.V. (NASDAQ:ASML), Novo Nordisk A/S (NYSE:NVO), and Shell plc (NYSE:SHEL).
ASML Holding N.V. (NASDAQ:ASML) is a leading semiconductor equipment maker. As of October 30, it has a market cap of $233.63 billion. On October 25, the company announced the launch of its technology education program, ASML Junior Academy, in the US. The program was first launched in the Netherlands in 2022, in collaboration with Mad Science, a leading STEM education provider. The program was a success in the Netherlands, with around 50,000 students expected to receive technology lessons across 146 campuses in 2023. The company will be investing $2.2 million, over three years, in collaboration with Mad Science, for the academy program in the US. The ASML Junior Academy program aims to expand to 50 US campuses within three years.
Novo Nordisk A/S (NYSE:NVO) is a leading healthcare company in Europe. As of October 30, It boasts a market cap of $433.97 billion. On October 14, the company announced that it had agreed to acquire Ocedurenone from KBP Biosciences PTE., Ltd for $1.3 billion. Ocedurenone, the non-steroidal mineralocorticoid receptor antagonist, has potential applications in cardiovascular and kidney diseases. The acquisition is subject to regulatory approvals and is expected to be completed by the end of 2023.
Shell plc (NYSE:SHEL) is a leading multinational giant in Europe. As of October 30, It has a market cap of $218.88 billion. On October 23, the company announced that it had signed an agreement to extend its partnership with Oman LNG. Both companies signed an amended shareholders agreement to extend their partnership till 2024. As per the revised agreement, Shell plc (NYSE:SHEL) will now acquire an additional 5% stake in Oman LNG, increasing its total stake to 30%. The acquisition will provide Shell plc (NYSE:SHEL) with the opportunity to expand its business in the Middle East. The agreement is awaiting regulatory approvals and is expected to be completed in the first quarter of 2024.
Now that we have talked about economic conservatism and discussed business updates in Europe, which is home to a few economically conservative countries, let’s look into the most conservative countries in the world and their economic development.
30 Most Conservative Countries in the World and Their Economic Development
30 Most Conservative Countries in the World and Their Economic Development
Methodology
To compile the list of the 30 most conservative countries, we used three metrics, personal income tax rate, corporate tax rate, and annual social assistance spending of a country. We obtained the tax rates data from Trading Economics. The annual social assistance spending accounts for the percentage of GDP a country spends on its social welfare, including public works, education, health services, food, pensions, and cash transfers. We obtained the social spending data from the World Bank. Please note that we have used the most recent data available for all three of our metrics. Countries with lower tax rates and social assistance spending are considered conservative. We calculated the score for each country by assigning weights to each metric as follows:
25% for Personal Income Tax Rate
25% for Corporate Tax Rate
50% for Annual Social Assistance Spending
We then divided the total calculated score by 100 to obtain a rating out of 1. Countries on our list are ranked in descending order of the total calculated score.
30 Most Conservative Countries in the World and Their Economic Development
30. India
Personal Income Tax Rate (2022):10%
Corporate Tax Rate (2022): 34.94%
Annual Social Assistance Spending as a percentage of GDP (2016): 1.43%
Insider Monkey rating: 0.231 out of 1
India reports a GDP per capita of $9,180 and a GDP growth of 6.3% as of 2023, according to the IMF. In 2016, India's annual spending on social welfare was 1.43% of its GDP. It is ranked among the most conservative countries in the world with a personal income tax rate of 10% and a corporate tax rate of 34.94%.
The top companies in Europe dominating the market include ASML Holding N.V. (NASDAQ:ASML), Novo Nordisk A/S (NYSE:NVO), and Shell plc (NYSE:SHEL).
29. Uruguay
Personal Income Tax Rate (2023): 20%
Corporate Tax Rate (2023): 25%
Annual Social Assistance Spending as a percentage of GDP (2015): 1.14%
Insider Monkey rating: 0.231 out of 1
Uruguay is a country located in South America. According to the IMF, it reports a GDP per capita of $29,980 and a GDP growth of 1% as of 2023. The country derives its economic growth majorly from its agriculture sector, exports, and services. In 2015, Uruguay's annual spending on social welfare was 1.14% of its GDP. It is ranked among the most conservative countries in the world with a personal income tax rate of 20% and a corporate tax rate of 25%.
28. Turkey
Personal Income Tax Rate (2023): 20%
Corporate Tax Rate (2023): 25%
Annual Social Assistance Spending as a percentage of GDP (2019): 1.13%
Insider Monkey rating: 0.230 out of 1
Turkey reports a GDP per capita of $41,890 as of 2023, according to the IMF, and a growth of 4% in its GDP. The growth is driven by its agriculture sector, services sector, and other major industries. In 2019, Turkey spent an annual 1.13% of its GDP on social welfare as reported by the World Bank. It is ranked 28th on our list.
27. Latvia
Personal Income Tax Rate (2023): 25%
Corporate Tax Rate (2023): 20%
Annual Social Assistance Spending as a percentage of GDP (2016-2017): 1.02%
Insider Monkey rating: 0.230 out of 1
Latvia reports a GDP per capita of $40,890 and a GDP growth of 0.5% as of 2023. It is ranked among the most conservative countries in the world with a 20% corporate tax rate and a 25 % personal income tax rate. According to the World Bank, Latvia reported an annual spending of 1.02% of its GDP on social assistance from 2016 to 2017.
26. Bangladesh
Personal Income Tax Rate (2022): 15%
Corporate Tax Rate (2022): 30%
Annual Social Assistance Spending as a percentage of GDP (2015-2019): 0.77%
Insider Monkey rating: 0.228 out of 1
Bangladesh reports a GDP per capita of $8,670 and a GDP growth of 6% as of 2023, as reported by the IMF. From 2015 to 2019, Bangladesh allocated 0.77% of its GDP to social welfare annually, as reported by the World Bank. It is ranked among the most conservative countries in the world with a personal income tax rate of 15% and a corporate tax rate of 30%.
25. Peru
Personal Income Tax Rate (2023): 15%
Corporate Tax Rate (2023): 29.5%
Annual Social Assistance Spending as a percentage of GDP (2015-2021): 1.23%
Insider Monkey rating: 0.228 out of 1
Peru reports a GDP per capita of $15,890 as of 2023, according to the IMF, and a growth of 1.1% in its GDP. The growth is driven by its exports. Peru spent an annual 1.23% of its GDP on social assistance from 2015 to 2021. It is ranked 25th on our list.
24. Madagascar
Personal Income Tax Rate (2023): 25%
Corporate Tax Rate (2023): 20%
Annual Social Assistance Spending as a percentage of GDP (2016-2020): 0.15%
Insider Monkey rating: 0.226 out of 1
Madagascar reports a GDP per capita of $1,9190 as of 2023, according to the IMF, and a percentage increase of 4% in its GDP. Madagascar spent an annual 0.15% of its GDP on social welfare from 2016 to 2021. It is ranked 24th on our list.
23. Botswana
Personal Income Tax Rate (2023): 20%
Corporate Tax Rate (2023): 22%
Annual Social Assistance Spending as a percentage of GDP (2018-2019): 2.97%
Insider Monkey rating: 0.224 out of 1
Botswana is a country located in Southern Africa. According to the IMF, it reports a GDP per capita of $19,390 and a GDP growth of 3.8% as of 2023. Botswana spent an annual 2.97% of its GDP on social assistance from 2018 to 2019. It is ranked among the most conservative countries in the world with a personal income tax rate of 20% and a corporate tax rate of 22%.
22. Jordan
Personal Income Tax Rate (2023): 23%
Corporate Tax Rate (2023): 20%
Annual Social Assistance Spending as a percentage of GDP (2015-2021): 1%
Insider Monkey rating: 0.220 out of 1
Jordan reports a GDP per capita of $12,810 and a GDP growth of 2.6% as of 2023, according to the IMF. It is ranked among the most conservative countries in the world, with a 20% corporate tax rate and a 23% personal income tax rate. According to the World Bank, Jordan reported an annual social assistance spending of 1% from 2015 to 2021. It is ranked 22nd on our list.
21. Tunisia
Personal Income Tax Rate (2023): 27.5%
Corporate Tax Rate (2023): 15%
Annual Social Assistance Spending as a percentage of GDP (2019): 0.48%
Insider Monkey rating: 0.215 out of 1
Tunisia reports a GDP per capita of $13,250 as of 2023 and a growth of 1.3% in its GDP, according to the IMF. In 2019, Tunisia spent an annual 0.48% of its GDP on social welfare, according to the World Bank. It is ranked 21st on our list with a corporate tax rate of 15% and a personal income tax rate of 27.5%.
20. Democratic Republic of Congo
Personal Income Tax Rate (2023): 12%
Corporate Tax Rate (2023): 30%
Annual Social Assistance Spending as a percentage of GDP (2016): 0.68%
Insider Monkey rating: 0.213 out of 1
The Democratic Republic of Congo reports a GDP per capita of $1,510 and a GDP growth of 6.7% as of 2023. It is ranked among the most conservative countries in the world with a 30% corporate tax rate and a 12 % personal income tax rate. According to the World Bank, Congo reported an annual social assistance spending of 0.68% in 2016.
19. Indonesia
Personal Income Tax Rate (2023): 20%
Corporate Tax Rate (2023): 22%
Annual Social Assistance Spending as a percentage of GDP (2016): 0.55%
Insider Monkey rating: 0.213 out of 1
Indonesia reports a GDP per capita of $15,840, and a GDP growth of 5% as of 2023. In 2016, Indonesia spent an annual 0.55% of its GDP on social welfare, according to the World Bank. It is ranked among the most conservative countries in the world with a personal income tax rate of 20% and a corporate tax of 22%.
18. Albania
Personal Income Tax Rate (2023): 25%
Corporate Tax Rate (2023): 15%
Annual Social Assistance Spending as a percentage of GDP (2018-2020): 1.87%
Insider Monkey rating: 0.209 out of 1
Albania is a country in Southern Europe. It reports a GDP per capita of $19,570 as of 2023 and a percentage increase of 3.6% in its GDP growth. The growth is driven by its agriculture sector, services sector, and other major industries. Albania spent an annual 1.87% of its GDP on social welfare from 2018 to 2022. It is ranked 18th on our list.
17. Vietnam
Personal Income Tax Rate (2023): 20%
Corporate Tax Rate (2023): 20%
Annual Social Assistance Spending as a percentage of GDP (2016-2017): 1.55%
Insider Monkey rating: 0.207 out of 1
Ranked 17th on our list, Vietnam reports a GDP per capita of $14,290 as of 2023 and a GDP growth of 4.7%, according to the IMF. Vietnam spent an annual 1.55% of its GDP on social welfare from 2016 to 2019.
16. El Salvador
Personal Income Tax Rate (2023): 10%
Corporate Tax Rate (2023): 30%
Annual Social Assistance Spending as a percentage of GDP (2017-2019): 1.36%
Insider Monkey rating: 0.207 out of 1
El Salvador reports a GDP per capita of $11,720 and a GDP growth of 2.2% as of 2023, according to the IMF. It is ranked among the most conservative countries in the world, with a personal income tax rate of 30% corporate tax rate and 10% personal income tax rate. According to the World Bank, El Salvador reported an annual social assistance spending of 1.36% from 2017 to 2019.
15. Estonia
Personal Income Tax Rate (2022): 9%
Corporate Tax Rate (2022): 30%
Annual Social Assistance Spending as a percentage of GDP (2016-2017): 2.25%
Insider Monkey rating: 0.206 out of 1
Estonia is a country in Northern Europe. It reports a GDP per capita of $45,240 as of 2023, according to the IMF. Estonia spent an annual 2.25% of its GDP on social welfare from 2016 to 2017. It is ranked 15th on our list with a 30% corporate tax rate and a 9% personal income tax rate.
14. Serbia
Personal Income Tax Rate (2021): 25%
Corporate Tax Rate (2021): 15%
Annual Social Assistance Spending as a percentage of GDP (2019-2020): 1.19%
Insider Monkey rating: 0.206 out of 1
Serbia is a country located in Central Europe. According to the IMF, it reports a GDP per capita of $26,070 and a GDP growth of 2% as of 2023. Serbia spent an annual 1.19% of its GDP on social welfare from 2019 to 2020. It is ranked among the most conservative countries in the world with a personal income tax rate of 25% and a corporate tax of 15%.
13. China
Personal Income Tax Rate (2023): 15%
Corporate Tax Rate (2023): 25%
Annual Social Assistance Spending as a percentage of GDP (2015-2016): 1.05%
Insider Monkey rating: 0.205 out of 1
China reports a GDP per capita of $23,310 and a GDP growth of 5% as of 2023. It is ranked among the most conservative countries in the world with a 25% corporate tax rate and a 15% personal income tax rate. According to the World Bank, China's annual social assistance spending was 1.05% from 2015 to 2016.
12. Angola
Personal Income Tax Rate (2023): 15%
Corporate Tax Rate (2023): 25%
Annual Social Assistance Spending as a percentage of GDP (2015-2020): 0.49%
Insider Monkey rating: 0.202 out of 1
Angola reports a GDP per capita of $7,080 and a GDP growth of 1.3% as of 2023. It is ranked among the most conservative countries in the world with a 25% corporate tax rate and a 15 % personal income tax rate. According to the World Bank, Angola reported an annual social assistance spending of 0.49% from 2015 to 2020.
11. Belarus
Personal Income Tax Rate (2022): 20%
Corporate Tax Rate (2022): 18%
Annual Social Assistance Spending as a percentage of GDP (2015-2017): 2.38%
Insider Monkey rating: 0.201 out of 1
Belarus reports a GDP per capita of $24,020 as of 2023, according to IMF, and a GDP growth of 1.06%. Belarus spent 2.38% of its GDP annually on social welfare from 2015 to 2017. It is ranked 11th on our list with a 20% personal income tax rate and an 18% corporate tax rate.
Investors looking for exposure to the European market can look up leading companies including, ASML Holding N.V. (NASDAQ:ASML), Novo Nordisk A/S (NYSE:NVO), and Shell plc (NYSE:SHEL).
