Israel 20th in domestic economic strength

Israel climbed 22 places to rank as the 20th strongest domestic economic power among the 61 countries surveyed.

inflation arrow up 88 (photo credit: )
inflation arrow up 88
(photo credit: )
Israel climbed 22 places to rank as the 20th strongest domestic economic power among the 61 countries surveyed in this year's IMD World competitiveness rankings. The Federation of Israel Chambers of Commerce said this helped the country maintain its 25th place in overall economic competitiveness in a report compiled by the Swiss-based International Institute for Management Development. "This is a very important achievement," said FICC President Uriel Lynn. "The fact that Israel ranked so highly in research conducted by an international organization emphasizes that the economic policies adopted over the last three years have been correct." For each of the 61 countries surveyed, IMD divided its research into four categories including "economic performance" - in which domestic economic performance is listed and where Israel's overall ranking rose to the 33rd position from 38 in 2005. In the remaining three categories, Israel dropped to 32nd from 29th for "Government efficiency," and to 25th from 21st for "business efficiency," and rose two places to 17 for its infrastructure. Each sub-category is split into different criteria, leaving a total of 312 ranking items in the report, two-thirds of which were brought from hard data and the remainder in survey data compiled by IMD. Under the infrastructure section, Israel again ranked in first place for its total expenditure on research and development as a percentage of gross domestic product. It also topped the list this year for its spending on education as a percentage of GDP, and its business expenditure on R&D projects. Israel also proved strong in the transfer of knowledge from the universities to the business sector (ranking in fourth place) and the availability of skilled labor, where it climbed from 10th to fourth place. The corporate tax rate, work force participation rate, emphasis on customer satisfaction among companies and labor disruptions, were some of the categories which pulled Israel down, ranking in the bottom 10 of the list. The US, once again, topped the overall ranking as the most competitive economy in 2006, although IMD said that second placed Hong Kong and Singapore in third place were closing in. IMD noted that the US has a large difference between the performance of its government and the economy. "Hong Kong and Singapore are catching up with the US because their governments are more in synchronization with economic performance," the report said. "A growing gap between governments and economic performance is always a bad omen for the future."