Israel secures top-10 ranking in 2017 Bloomberg Innovation Index

South Korea topped the list for the second year in a row, followed by Sweden, Germany, Switzerland, Finland, Singapore, Japan, Denmark, the United States and Israel.

January 18, 2017 11:09
3 minute read.
A general view shows central Tel Aviv backed by the Mediterranean Sea

A general view shows central Tel Aviv backed by the Mediterranean Sea . (photo credit: REUTERS)


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Moving up one spot from last year, Israel has been named the 10th most innovative economy in the world in the 2017 Bloomberg Innovation Index.

The index, according to Bloomberg, ranks economies annually by analyzing seven contributing factors such as research and development spending and the concentration of public hi-tech companies in each country. Israel moved from 11th place to 10th this year, ousting France from its place in the top-10 strongest innovation economies.

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South Korea topped the list for the second year in a row, followed by Sweden, Germany, Switzerland, Finland, Singapore, Japan, Denmark, the United States and Israel.

While the ranking began with more than 200 economies, those that failed to report data for at least six of these seven categories were eliminated, reducing the list to 78 nations, according to the index. Bloomberg then published the overall and category scores for the top 50 countries.

Israel achieved first place in the “researcher concentration category,” or the number of professionals – including postgraduate PhD students – engaged in R&D per million people in the country. The country was ranked second and trailed only South Korea in the “R&D intensity” category, or R&D expenditure as a percentage of gross domestic product (GDP).

Israel also did well in “hi-tech density” – the number of domestically domiciled hi-tech public companies – placing third, just after the United States and France.

While Israel may have excelled in these three categories, the country’s performance was not as strong in the remaining four categories, particularly in “manufacturing value-added” (the net output of the manufacturing sector) – as a percentage of GDP and per capita – and “productivity” – GDP and gross national income per employed persons ages 15 and older. In both of these categories, Israel ranked only 30th.

The country achieved only 20th place in “tertiary efficiency,” or the total enrollment in tertiary education. In “patent activity,” or the number of resident patent filings per million population and filings per $100 billion GDP, Israel ranked 18th.

Although pleased with Israel’s advancement, Avi Hasson, the Economy Ministry’s chief scientist and chairman of the Israel Innovation Authority, stressed that the country has much room for improvement.

“What this shows in a very clear way is our competitive advantages and our relative disadvantages,” Hasson told The Jerusalem Post on Wednesday afternoon. “What we’re seeing – and that goes for our general ranking – really is an average of an economy that is very, very high in terms of innovation capabilities in some industries, while it is quite mediocre in other industries.”

Manufacturing and productivity in particular face problems in Israel and require “intensive treatment,” if Israel would like to maintain its competitive edge in comparison to other innovative economies, Hasson explained.

“This is exactly the vision of the newly formed Israel Innovation Authority,” he said.

“We want to stay on that podium of medals,” Hasson continued. “But while doing that, we want to pull up the rest of the economy with us.

We want to expand what we’re doing successfully in Start-Up Nation to other parts of the economy.”

To help accomplish these goals, Hasson said, some 600 companies from traditional industries, such as plastics, have already undergone Israel Innovation Authority programs, increasing productivity in exports and revenues. The Innovation Authority, which officially replaced the ministry’s Chief Scientist’s Office in January 2016, has budgetary resources and personnel dedicated to tackling these issues, he explained.

Looking at the categories in which Israel excelled on the Bloomberg Innovation Index, Hasson said that the country’s high placement in research-related areas was “no surprise.”

“We have a very strong R&D community, both in terms of academic excellence and industrial R&D,” he said, noting that 300 multinational companies have built R&D centers here. “It doesn’t go without saying that we’re going to stay [in the top 10], but it really shows what has happened here in the past 20 years.”

While South Korea topped the Innovation Index, a Bloomberg report about the rankings examined how several Nordic countries also did well this year, with one expert attributing their success to an “individualistic” attitude among residents.

In Hasson’s opinion, the combination of individualistic goals and a communal culture in Israel help fuel the country’s innovative successes.

“On the one hand, there’s strong individual can-do attitude. Entrepreneurship is a lot about that,” he said. “But part of what makes this place unique is that it’s networked. People work in teams. That is truly a cultural strength for us.”

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