Beyond Kilometers: The Business Distance from Italy

The distance between markets goes beyond kilometers

The distance separating two countries is not measured in kilometers alone. For a company operating in international markets, the presence of similar institutions and rules, economic integration, linguistic proximity and, increasingly, geopolitical alignment also matter.

Business Distance seeks to summarize these dimensions in a single indicator, considering factors such as membership in common economic and institutional areas, the quality of the economic environment, language, the currency system and the degree of geopolitical alignment.¹ The indicator is expressed on a scale from 0 to 100: lower values indicate greater proximity to Italy, while higher values signal greater distance.

The result is a geography that does not necessarily coincide with physical geography. Markets located thousands of kilometers away from Italy may be relatively close from a business perspective, while geographically nearer countries may show a much greater distance.

The map of Business Distance from Italy makes it possible to immediately observe this different geography of international relations.

A concentric geography, with Europe at the center

The map highlights a fairly clear structure. The core group of countries with the lowest Business Distance from Italy consists mainly of the economies of the European Union and the euro area. Belgium, Austria, Germany, the Netherlands, Portugal, Spain and France all record particularly low values, confirming the strong proximity that characterizes the countries most deeply integrated into the European economic and institutional system.

Moving away from the European core, business distance generally tends to increase, but its pattern does not necessarily follow that of geographical distance. Comparing the two measures makes it possible to observe this gap more clearly.

Geographical distance and business distance from Italy

The comparison highlights several groupings particularly clearly. European Union countries are concentrated in the area of minimum distance on both dimensions. By contrast, several advanced non-European economies, including the United States, Canada, South Korea, Japan, Australia and New Zealand, are geographically very distant, but maintain a relatively low business distance. In other cases, the opposite occurs: Russia, despite being geographically much closer to Italy, ranks among the countries with the greatest business distance.

Three emblematic cases

Some countries make it easier to understand how Business Distance can reveal a geography very different from that defined by physical distance alone. The United States, China and Russia represent three particularly significant cases.

United States: geographically distant, close in business.

With a Business Distance of approximately 14, the United States is relatively close to Italy, despite the considerable geographical distance. The result reflects the presence of numerous elements of proximity at the economic and institutional level.

China: distant, but not at the extremes.

China, by contrast, records an indicator value of 70, significantly higher than that of the main advanced economies. However, the figure is less extreme than that observed for other countries characterized by major institutional and geopolitical differences, such as Vietnam and Indonesia, both with values above 90. One possible interpretation lies in China's deep integration into the global economy and global value chains: a characteristic that, while not eliminating the differences between the two systems, helps make the country a much more integrated economic counterpart within the mechanisms of international trade than other economies that are equally distant from an institutional perspective.

Russia: at the extremes of business distance.

Russia is the most extreme case, with a value above 92, placing it among the countries most distant from Italy. This value reflects a combination of institutional differences and strong geopolitical distance, further intensified by the deterioration in relations between Russia and Europe after 2022, when sanctions and the progressive breakdown of numerous trade relations significantly reduced economic ties between the two areas. In this case, Business Distance therefore indicates a much more pronounced separation than that suggested by geographical proximity alone.

Conclusions

Business distance shows how proximity between markets cannot be understood solely in geographical terms. Institutional, economic and geopolitical factors can bring physically distant countries closer together or, conversely, increase the distance between relatively nearby markets.

For this reason, when assessing foreign markets, considering indicators capable of summarizing these differences can help build a more complete understanding of opportunities and the competitive environment. From this perspective, Business Distance is one of the indicators available in Market Selection to support comparisons between markets and identify those that are most consistent with a company's characteristics and objectives.