Innovation boosts Israel’s rank in global competitiveness

Switzerland topped the overall rankings in the Global Competitiveness Report 2010-2011.

OfficeWorkers311 (photo credit: Ariel Jerozolimski)
(photo credit: Ariel Jerozolimski)
Israeli innovation has helped the country to jump up three spots in this year’s global competitiveness ranking, rising to 24th after having suffered losses in competitiveness over the past few years.
Switzerland topped the overall rankings in the Global Competitiveness Report 2010-2011, published by the World Economic Forum over the weekend, which ranks 139 economies around the world.
The United States dropped two places to fourth and was overtaken by Sweden in second place and Singapore in third place, after already ceding the top place to Switzerland last year.
“Policy-makers are struggling with ways of managing the present economic challenges while preparing their economies to perform well in a future economic landscape characterized by uncertainty and shifting balances,” said Klaus Schwab, founder and executive chairman of the World Economic Forum. “In such a global economic environment, it is more important than ever for countries to put into place the fundamentals underpinning economic growth and development.”
This year’s ranking stemmed Israel’s slide over the past three years, during which it had dropped 13 places.
The ranking is based on the assessment of 12 pillars of competitiveness including institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, business sophistication, and innovation.
Israel’s improvement in the ranking was mainly attributed to the country’s innovation.
“The country’s main strength remains the excellent and improving capacity for innovation, the category in which Israel came in 6th place, which rests not only on highly innovative businesses but also on the availability of high-quality research institutions and is reflected in a high number of patents,” stated the report.
Israel’s favorable financial environment, the category in which it was placed at 14th, and in particular the availability of venture capital, the pillar in which it came in 10th place, have further contributed to making the country an innovation powerhouse, according the report’s country profile assessment.
However, the report also warned of future challenges to maintaining and improving national competitiveness such as the continued upgrading of institutions – where Israel was ranked in 33rd place – and a renewed focus on raising the bar in terms of the quality of education. In the latter category, Israel came in 78th place.
“Low educational outcomes, in particular in the area of mathematics and science, could, over the longer term, undermine the country’s innovationdriven competitiveness strategy if not addressed,” stated the report. “As in previous years, the security situation remains fragile and imposes a high cost on business and room for improvement also remains with respect to macroeconomic stability.
In addition, this year’s report cited the levels of efficient government bureaucracy, infrastructure quality and tax burdens as problematic parameters for doing business in Israel.
In geographical comparison, Israel is ranked among the countries from the Middle East, which occupy the upper half of the rankings, after Qatar (17th) and Saudi Arabia (21st), but before the United Arab Emirates (25th), Tunisia (32nd), Kuwait (35th), and Bahrain (37th).
The People’s Republic of China (27th) continues to lead the way among large developing economies, improving by two more places this year, and solidifying its place among the top 30. Among the three other BRIC economies, Brazil (58th), India (51st) and Russia (63rd) remain stable.
Several Asian economies performed strongly, with Japan (6th) and Hong Kong (11th) also in the top 20. In Latin America, Chile (30th) is the highest ranked country, followed by Panama (53rd), Costa Rica (56th) and Brazil (58th).