Israel Outscores 59 Advanced Nations in Business Innovation

But country drops five spots in grabbed top spot in economic competitiveness, according to Swiss study.

Israeli high-tech workers. Rare is the Ethiopian-Israeli among them.
Alon Ron

Israel finished in the middle of the pack last week in a business competitiveness survey by a Swiss business school, but received several top ratings, by some measures, among the world’s 60 most advanced economies.

Among the nations surveyed by Lausanne’s IMD business school, Israel rose to the No. 1 spot in entrepreneurship while retaining its top ranking in the categories of business innovation, business-sector R & D and cyber security. It was ranked second for government R&D investment as a proportion of the country’s gross domestic product, and for public expenditure on education and scientific research. Israel took the third spot for information technology and for the quality of its researchers, scientists and engineers.

Israel’s top spot in the category of cyber security may help the government in its efforts to promote the country as a world center for the cyber security industry.

At the same time, though, the country dropped from 19th to 24th in overall economic competitiveness.

The United States retained its top overall rank in the annual study conducted by the IMD World Competitiveness Center. The United States was followed by Switzerland, Singapore and Hong Kong. The international rankings are based two-thirds on hard data and one-third on the perceptions of business executives.

In general, Israel did well in high-tech industry and education. Its weak points from the standpoint of competitiveness, according to the authors of the study, who were represented in Israel by the Federation of Israeli Chambers of Commerce, included the quality of corporate boards of directors, the risk that R & D centers would be transferred abroad, and the cost of living, including the price of food and rent.

The poor showing of Israel’s corporate boards of directors are apparently the result of the major debt rescheduling agreements and corporate crises that some major Israeli companies faced over the past year and that the corporate boards did not address earlier. The study was based on four general performance parameters: economic performance, business efficiency, infrastructure and government efficiency. On the whole, Israel scored in the middle of the pack on those.

The chairman of the Federation of Israeli Chambers of Commerce, Uriel Lynn, said Israel’s No. 40 ranking in competitiveness on corporate tax rates and No. 49 finish for cost of living are clear indications that economic resilience is not achieved by raising taxes, but by lowering them. There will be no solution to reducing the cost of living, he added, unless the government eliminates customs duties on imported food and other consumer items. (This month the government initiated a plan to eliminate some food import duties.)

Finishing at the bottom of the overall rankings among developed countries was Venezuela, preceded in order from the bottom by Croatia, Argentina, Greece, Bulgaria and Slovenia.