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For the third straight year, Israel fell in The World Economic Forum's annual Global Information Technology Report, which analyzes and ranks the information technology industries of countries around the world.
The 2005-2006 report, released last week, ranks Israel's information and communications technology industry (ICT) 19th out of 115 countries surveyed worldwide - that's seven notches below Israel's 12th place ranking in 2002-2003, the country's best finish since the report began five years ago.
Israel's rank has declined every year since then - to 16th in 2003-2004, 18th in 2004-2005 and now 19th. Israel was ranked 22nd in the World Economic Forum's first report in 2001-2002.
The report is regarded as an important benchmark for measuring how ICT impacts a country's economic growth and international competitiveness.
According to Rachel Roei, Director of the Foreign Trade Administration's Investment Promotion Center, which is a part of the Ministry of Industry, Trade and Labor, the drop in rankings does not, however, necessarily signal a decline in the country's ICT industry.
"Israel is competing with much bigger countries that have much bigger budgets," she said. "It's only natural to occasionally move up or down in the rankings."
The rankings are based on a positive or negative Networked Readiness Index (NRI) assigned annually to each country, which reflects the overall environment a country offers for ICT development, its population's readiness to adopt ICT and the extent its population uses and benefits from ICT.
Despite its three-year decline, Israel's 2005-2006 NRI of 1.16 leads the Middle East and European neighbors such as Italy, Spain, France, Ireland and Belgium.
In addition, Israel's ICT industry is highlighted in a special case study in this year's report entitled, "Israel: Factors in the Emergence of an ICT Powerhouse."
The case study explores how the Israeli government has encouraged the country's information and communications technology industry, through initiatives such as "heavy investment in education," "effective investment incentives," "investment in research & development in a proportionâ€¦higher than that of any other industrialized country" and "incubator and venture capital programs."
The US took the top spot in this year's report, followed by Singapore, Denmark, Iceland and Finland. Other top performers included Canada, Taiwan, Sweden, the UK, Australia, Japan and Germany.