The World Economic Forum (WEF) ranks Israel 22nd in its 2011-12 Global Competitive Report, up two places from last year, and up five places from 2009.
The WEF says that the report comes out amid multiple challenges to the global economy and a continuing shift in the balance of economic activity away from advanced economies and toward emerging markets. Policymakers are struggling to find ways to manage the present economic challenges while preparing their economies to perform well in an increasingly complex global landscape.
Switzerland again topped the rankings of 139 countries, followed by Singapore, which overtook Sweden to take second place. The US continues the decline it began three years ago, falling one more place to fifth place. Japan fell three places to ninth place. Western European countries took the remaining top ten positions, Finland (4th), Germany (6th), the Netherlands (7th), Denmark (8th), and the UK (10th).
The report states, "Israel's main strengths remain its world-class capacity for innovation (6th), which rests on highly innovative businesses that benefit from the presence of the world’s best research institutions, geared toward the needs of the business sector. The excellent innovation capacity, which is additionally supported by the government’s public procurement policies, is reflected in the country’s high number of patents (4th). Its favorable financial environment (10th), particularly the solid availability of venture capital (2nd), has further contributed to making Israel an innovation powerhouse; these elements have become stronger in the course of the past year."
The WEF warns, however, "Challenges to maintaining and improving national competitiveness relate to the need for continued upgrading of institutions (33rd) and a renewed focus on raising the bar in terms of the quality of education. If not addressed, poor educational outcomes, in particular in the area of math and science (79th), could undermine the country’s innovation-driven competitiveness strategy over the longer term. As in previous years, the security situation remains fragile and imposes a high cost on business (74th).
"Room for improvement also remains with respect to the macroeconomic environment (53rd), where increased budgetary discipline with a view to reducing debt levels would help the country maintain stability and support economic growth going into the future."
