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Inefficient government bureaucracy and onerous taxation are among the biggest millstones weighing on the neck of Israeli business, according to the Competitiveness Index published yesterday by the World Economic Forum for the years 2007-2008. Moreover, Israel's ranking in the list slipped: it was more competitive in the previous report, falling to 17th place among 131 countries, from 14th place in 2006.

The report doesn't mention exactly why Israel's relative rank eroded but it may be due to improvements in other countries, rather than any exacerbation of the woes here at home. That said, from the perspective of foreign investors who base their investment decisions in part on the WEF report, Israel has become less attractive.

The WEF publishes a Global Competitiveness Report on a yearly basis, and as usual, the United States topped the overall ranking.

The paper is based on information in the public domain as well as a survey of top executives in each economy it covers. "This year, over 11,000 business leaders were polled in a record 131 countries," the WEF explained on its Web site.

After the United States, by the way, the most competitive countries were Switzerland in second place, followed by Denmark, Sweden, Germany, and Finland. The least competitive were the African nations of Chad and Burundi.

In Israel, 21 percent of the 250 respondents named inefficient government red tape as the worst problem business encounters in Israel, while 16 percent named the high level of tax as the most burdensome woe.

The index is influential, but should still be viewed with due caution.

It is based on a survey of executives chosen by the Manufacturers Association and the WEF, and on data in the public domain. It is the very affiliation with the Manufacturers Association that renders the conclusion somewhat suspect: it is second nature for manufacturers to grouse about government. Put otherwise, it's habitual with them.

Looking at the subsection of technology and innovation, Israel ranks a respectable fifth among the 131 nations.

In the quality of its research institutes and the availability of engineers and scientists, it's in third place, and in applicable patents it's back in fifth.

Moving onto corporate investment in R&D, and procurement of hi-tech products by the government, Israel is in 7th place this year.

In use of advanced technology and the number of PCs per capita, Israel is in 4th place, yet in the proportion of population surfing the Internet, it suddenly plunged to 46th position.

Israel's capital market is in 10th place in respect to its sophistication. In protection of investors and availability of venture capital, Israel is in 5th place again.

In restrictions on the movement of capital Israel is in 25th place and in sophistication of the broad financial market, it sinks to 18th.

The topic of "Opening a new business" evoked mixed reactions. From the perspective of regulation, Israel is in 10th place. But from the perspective of the time it takes to open a new business, it sank to 67th position.

The Antitrust Authority can pat itself on the back, though not too complacently: In efficacy of anti-monopolistic policy, Israel ranks 16th.

But when it came to scientific education, the People of the Book sank to 31st place, from 17th the year before. As the report is based on perceptions, the slump may be based on the intense media attention given to the brain drain and contracting budgets for education.