(photo credit: Reuters)
Israel dropped two places to 19th in Swiss business school IMD’s 2012 World
Competitiveness Index, despite displaying improvement in inbound direct
investment, real GDP growth per capita and the unemployment rate.
Kong maintained its position as the most competitive of the 59 economies ranked
by IMD, edging out the United States, Switzerland, Singapore and Sweden. Qatar
(10th) and the United Arab Emirates (16th) were the top two Middle Eastern
Israel’s score of 78.57 from a possible 100 put it directly
behind the United Kingdom and directly ahead of Ireland.
The IMD World
Competitiveness Center has published its study every year since 1989. Considered
a leading indicator of economic competitiveness, it assesses countries in four
categories – economic performance, government efficiency, business efficiency
and infrastructure – based on national statistics and surveys of top
Israel improved strongly in the area of direct investment
flows inward, which increased to $11.4 billion (or 4.69 percent of GDP), in 2011
from $5.15b. the previous year. It was also judged positively on real GDP growth
per capita, which rose to 2.98% in 2011 from 2.27% the previous year, and its
unemployment rate, which dropped from 6.6% to 5.6% in 2011.
Nation” continued to lead by example in business efficiency and infrastructure,
maintaining its number one ranking for business expenditure on R&D (3.52% of
GDP), total expenditure on R&D (4.41% of GDP), and public and private sector
ventures. It ranked second in entrepreneurship, innovative capacity, scientific
research and several other sub-categories listed under infrastructure.
the other hand, Israel was punished for its poor current account balance, which
dropped to -0.1% of GDP in 2011 from 2.9% the previous year, and is expected to
fall even further in 2012. It also lost points for its higher rate of
consumer-price inflation, and for direct investment flows abroad – which
decreased to $3.32b. (or 1.37% of GDP) in 2011 from $7.96b. the previous
Israel continued to be let down by its economic performance,
ranking 36th in that category for the third successive year. In particular, it
was downgraded for relatively high cost of living, low workforce participation
(38.63% of the population), and exports of goods (27.38% of
According to the report, Israel’s main challenges now are to
maintain growth, reduce bureaucracy and the burden on the business sector;
invest in periphery infrastructure, including education and support of small-
and medium-sized enterprises; increase labor force participation amongst
minority groups; and decrease economic gaps.
Federation of Israeli
Chambers of Commerce President Uriel Lynn, whose organization is IMD’s local
partner, supported this conclusion, saying that the business community is
disadvantaged by government-level corruption and by the increase of handicaps
imposed by state-owned monopolies such as local municipalities, ports and the
Israel Electric Corporation.
IMD also conducted a survey for its yearbook
which showed that Israeli business executives are overwhelmingly positive about
globalization (eighth-most positive out of 59 countries), but a little less
understanding about the need for economic and social reforms
Notably, Ireland ranked first in both the globalization and
reforms surveys, while France ranked last in both surveys.