Hong Kong, the Netherlands, and Britain are among the best places to do business, according to a survey by the Milken Institute of Santa Monica, California. The review of capital markets shows a widening gap, however, between industrial nations and other parts of the world.

Economist Glenn Yago says the annual report on capital markets has good and bad news. "The countries that have been developing a financial infrastructure as a key asset of their ability to grow their economies have improved over the past year," he says.

He says Singapore's developed capital markets put it in fourth place in the survey, tied with Switzerland.

The economist says there is more good news from Asian countries that suffered in the financial crisis of the late 1990s. Most, he says, have recovered. "They have also, for the most part, started to address some of the gaps in their financial system and their ability to convert savings to investment and to attract foreign investment," he says.

The analyst says Asian equity markets are improving, and many Asian countries are developing bond markets, which give businesses other sources of capital.

Asia's financial giant, China, is one of the countries making improvements, says economist James Barth, a co-author of the paper who does consulting work with China's banking sector. He says the United States has diversified capital markets, but most Chinese businesses get their financing from banks. "The banks in China provide about 80 percent of the financing to generate the growth that's occurred over the years. What we need now, and China recognizes, is to broaden its capital markets," he says.

He says China is building its bond and equity markets, and adds that India's fledgling capital markets are growing even faster.

Glenn Yago sees some improvements among what he calls "frontier capital markets." Bahrain, Kuwait, Slovenia and Latvia rank high in this group. He says other countries have fallen behind, widening the gap between the "Have" and "Have Not" nations. Countries with poor capital access include Ukraine, Romania, Pakistan, Croatia and most of Africa.

"There are a number of historical reasons, reasons of the lack of leadership within those countries, of concentration of economic and political power. Those are also countries that have less democratic systems for the most part, and those are the ones that have suffered the most from the absence of more developed financial systems," he says.

The United States fell from third to sixth place in the survey of capital markets because of lingering corporate scandals, concerns about transparency, and reduced initial public offerings in the past year.