Israel Slips to 20th in International Competitiveness

In the 2018 Global Competitiveness Report, Israel slipped four places with a score of 76.6 points

High-tech workers in Israel.
Tomer Appelbaum

Israel slipped to 20th place in the 2018 Global Competitiveness Report, published by the World Economic Forum on Tuesday evening.

Last year, Israel was ranked 16th.

The report gave Israel a score of 76.6 points.

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This year’s index uses a new ranking system that takes into account factors that weren’t included in previous years, and includes a total of 98 indicators. The forum calls these factors the “Fourth Industrial Revolution.”

The top five countries remain unchanged from previous years: The United States, Singapore, Germany, Switzerland and Japan. In places six through 10 are the Netherlands, Hong Kong, the United Kingdom, Sweden and Denmark.

The last spot on the list of 140 countries goes to Chad.

The list seeks to rank countries based on policy, economic capability and productivity.

According to the report, the main factor threatening Israel’s economic growth remains as before: Bureaucracy and regulation. Israel is ranked 59th in terms of ease of bureaucracy, 74th in terms of how long it takes to open a business, 50th in terms of the cost of opening a business, and 45 in terms of the ease in receiving credit.

Israel also ranks quite low in several important categories, including complexity of fees and payments (81st), ease of hiring foreign workers (125th), and government budgetary transparency (90th).

Its ranking for air and sea infrastructure dropped to 42nd, and quality of professional training dropped to 37th. Israel also ranked poorly in terms of simplicity of import duties (81st).

However, Israel is the highest ranked country in the Mideast and North Africa.

The report also notes that Israel is one of the best countries in the world for innovation, ranking 10th. Israel is ranked first in terms of its investment in research and development relative to GDP, at 4.3%, and also ranks first in terms of its treatment of entrepreneurs, and the growth pace of innovative companies.

Israel also ranks highly in terms of its educated workforce, with an average of 13 years of schooling, putting it eighth on the list.

The country also ranks second on the list of places where workers acquire skills that suit what employers are looking for. The workers are well integrated into the workforce thanks to low taxes on employers (5.9% of corporate profits), a nearly equal representation of men and woman in the workforce (6th on the list), and professional management (19th). Israel ranks 22th on the list of developed financial sectors, and 2nd in access to venture capital.

Detrimental factors are the outsized presence of a few major corporations (a ranking of 51).

Israel also ranks 31st in terms of competitiveness of the services sector.

“Competitiveness is not only associated with higher incomes, but also better socioeconomic outcomes, including life satisfaction,” states the World Economic Forum.