Israel Ranked 15th by WEF's Global Competitiveness Index
Israel jumped from 23rd place in 2005 to 15th place on the World Economic Forum’s (WEF) 2006 Global Competitiveness Index, outranking Canada, Austria, France, Australia, Belgium, and Ireland, which follow it in descending order. The United States fell from first to sixth place.
The WEF uses nine groups of criteria to calculate a country’s competitiveness – macroeconomic policy, market efficiency, business sophistication, technological readiness, innovation, infrastructure, health and primary education, higher education and training, and institutions. By affecting an economy’s productivity, the WEF believes that these factors will lead to sustained growth in the future.
The WEF attributes Israel’s improved ranking to the reforms prompted by the Bachar Committee which introduced a degree of competitiveness and professionalism to Israel’s economy, allowing for a revolution in asset management. According to the report’s author, Augusto Lopez-Claros, Israel is attracting a growing number of foreign investors and has exhibited impressive developments in its financial markets, to the extent that it has now developed along regional and international standards. Israel’s competitiveness is aided by its superior higher education and scientific research institutions, which have allowed the country to become a global technology powerhouse. 70% of Israel’s exports are high-tech products, the highest proportion in the world.
Israel is ranked 50th for macroeconomic policy, the lowest of all its rankings, and 29th in the institutions and basic requirements index. Despite its actual ranking in macroeconomic policy, the report favorably cites Israel’s fiscal policy and tax cuts, noting that while Israel’s public spending/GDP ratio was 47.3% is 2005, above the OECD average of 41.8%, the country plans to cut this ratio to 34.4% by 2010.
The US’ plunge in rank, behind Switzerland, Finland, Sweden, Denmark, and Singapore, was attributed to growing imbalances in some macroeconomic indicators as well as the country’s huge fiscal deficit.
Rapidly growing emerging markets, which are changing the global balance of economic power, got mediocre rankings. India is ranked 43rd, China 54th, Russia 62nd, and Brazil 66th.