Israel's Prime Minister Benjamin Netanyahu attends the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 25, 2018. .
(photo credit: REUTERS/DENIS BALIBOUSE)
Israel has the twentieth most competitive economy and the most positive attitude toward entrepreneurial risk in the world, according to the World Economic Forum’s annual study on the global economy published on Wednesday.
The WEF Global Competitiveness Report maps the competitiveness landscape of 140 economies based on 12 key pillars, including institutions, infrastructure, ICT adoption, macroeconomic stability, business dynamism and innovation capability.
While the report finds relative weakness among many Western countries when it comes to mastering the innovation process
, Israel is considered to possess the most positive attitude towards entrepreneurial risk worldwide.
This year’s report relied on a new methodology to offer improved insights into an economy’s readiness for the future, as we enter the Fourth Industrial Revolution (4IR), taking into account factors including idea generation, entrepreneurial culture, openness and agility. Each country received an overall competitiveness score ranging from zero to 100.
According to the report, the United States is the economy closest to the ideal state – where a country would obtain the perfect score on every component of the index – receiving a competitiveness score of 85.6. It is followed by Singapore (83.5) and Germany (82.8).
Ranked in 20th place for a second consecutive year, Israel received a competitiveness score of 76.6 – a slight increase from 2017 – and leads the Middle East and North Africa. After Israel, the United Arab Emirates is ranked 27th globally with a score 73.4. The global average score is 60.
“The country has grown to become one of the world’s innovation hubs, thanks to a very strong innovation ecosystem,” said the report.
The WEF highlights that Israel spends the most of any country on research and development (4.3% of GDP), and is “where entrepreneurial failure is most accepted and innovative companies grow the fastest.”
The report also emphasizes the role of Israel’s “extremely educated” workforce (8th globally), where people acquire the appropriate skills that employers are searching for (2nd globally), in addition to near-equal participation of women (6th globally), reliance on professional management (19th globally) and a well-developed financial sector with the second-best availability of venture capital worldwide.
It does warn, however, that the dominance of a few large companies (51st globally) could hinder the dynamism of domestic markets, although competition remains vibrant within the service sector (31st globally), particularly in professional services.
“Israel is a very polarized country, economically and in terms of tools, so that if we as an entire country can be up there at number 20, it must tell you how good the top end is,” Prof. Dan Ben-David, president of the Shoresh Institution for Socioeconomic Research and a public policy professor at Tel Aviv University, told The Jerusalem Post.
“It’s the hi-tech industry; it’s driven by universities that are among the best in the world. Yet in terms of labor productivity, we have been falling further and further behind the G7 since the 1970s. A huge part of society is not receiving the tools and conditions necessary to work in a modern economy,” he said.
“We are leaders in terms of patents relative to country size – we are way ahead of the G7. If you look at venture capital investments in Israel, which are proof that we have a lot of ideas, Israel and the United States are way ahead. We have this engine, it has got all the cylinders – but we are running on just a few of them. It is not enough,” Ben-David said.
“We need more people with cutting-edge capabilities – that is the weight that has been holding us back. Otherwise, the sky is the limit.”
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