'Israel’s OECD membership is undeserved'

Government ministers have been stepping up comparisons to the Organization for Economic Cooperation and Development to highlight Israel’s strong economic performance. But, according to one prominent local academic, Israel’s membership in the organization of developed economies is undeserved.

Israeli membership in the OECD is akin to a national soccer team participating in the World Cup without having decent players, Prof. Ehud Menipaz, chairman of Ben- Gurion University of the Negev’s Ira Center of Business Research and a professor in entrepreneurship management, told The Jerusalem Post Thursday.

“We don’t want to join a league in which we are continuously ranked among the lowest, and we don’t want to be in league where we are at risk of being asked to leave because of poor performance,” he said. “We cannot compare ourselves to emerging economies. We must compete with what the Davos Forum calls ‘innovation-driven countries.’”

The Israeli economy has grown faster since the 2008- 09 global financial crisis than most of the other 33 OECD economies, the Bank of Israel said in its annual report Wednesday. Industry, Trade and Labor Minister Shalom Simhon debated Menipaz at a Tel Aviv conference earlier this week, saying that Israel’s admission to the OECD in 2010 was appropriate, both in timing and nature, and it illustrated the country’s competitive advantage.

On Thursday, Menipaz reiterated his argument that growth figures masked the truth, which he said was revealed by Israel’s poor showing in five key global indexes: WEF Global Competitiveness Index, in which Israel is ranked No. 22; Heritage Foundation Index of Economic Freedom (No. 48); World Bank Ease of Doing Business Index (No. 34); Transparency International Corruption Perception Index (No. 36); and Global Entrepreneurship Monitor (No. 21).

Regarding the Global Entrepreneurship Monitor, for which Menipaz is the head of its Israel team, he said: “We always think of ourselves as being the most entrepreneurial national on Earth. The book ‘Start-up Nation’ tells these same stories on an anecdotal basis, but these findings put Israel at best in the second or third tier of Western entrepreneurship.”

Menipaz said Israel’s low ranking is due to three factors: local start-ups either run out of money, their products or services are uncompetitive, or they make a successful exit that transfers all employment opportunities and other economic benefits to the country in which the purchasing company is located.

“We may be the most creative people on Earth, but we are not very patient and do not make sustained efforts to create a business,” he said.

The best solution would be to establish an advisory board of government officials, distinguished businessmen and academics, Menipaz said. It would be similar to “a permanent Trajtenberg Committee” and would monitor OECD reports and prepare appropriate policy responses in specific areas where Israel performs poorly, he said.

Citing delays in releasing merchandise from ports, Menipaz said there are many areas in which poor performance can be improved. Many different authorities are involved in this “bureaucratic mayhem,” he said, including the Finance Ministry, the Israel Tax Authority, the Ports Authority, the Health Ministry and the Agriculture Ministry.

There is an argument that we could reduce the number of trucks in this country by 70 percent if they operated 24 hours a day, instead of seven to nine hours a day, Menipaz said. But to make this change, he said, all these authorities would need to sit down together and come to an agreement, and this would also need the backing of the business community.

“There are many benefits to making this happen,” Menipaz said, “but the different authorities do not integrate their respective procedures. There is no one body that treats every issue.”