Each year, the World Economic Forum releases its Global Competitiveness Report, examining data on the soundness, resilience, sophistication and innovation of businesses in each country to compile evaluations of the economy of 138 countries, providing insight into the drivers of their productivity and prosperity.
The 2016-2017 edition highlights that declining openness is threatening growth and prosperity. It also highlights that monetary stimulus measures such as quantitative easing are not enough to sustain growth and must be accompanied by competitiveness reforms. Final key finding points to the fact that updated business practices and investment in innovation are now as important as infrastructure, skills and efficient markets.
“Declining openness in the global economy is harming competitiveness and making it harder for leaders to drive sustainable, inclusive growth,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.
On the Global Competitiveness Index for 2016–2017, Israel is ranked in 24th place, behind Switzerland, Singapore, the US, the Netherlands, Germany, Sweden, the UK, Hong Kong and Japan, and directly behind Ireland in 23rd place. In last year’s report, Israel was ranked 27th. UAE in 16th place and Qatar in 18th are the other two Middle Eastern countries in the top 25, but for Qatar the ranking represents a 4-point drop from last year’s report.
Among other areas, the World Economic Forum looks at innovation, taking into account the quality of scientific research, company spending on Research and Development, ties between academia and industry, the number of patents, and the number of engineers and scientists in each country. In the index for innovation and sophistication factors, Israel is ranked in 2nd place (the US is 4th), with Switzerland in first place.
In innovation capacity, Israel is 9th, Switzerland 1st, the US 6th.
In business dynamism, Israel is ranked 19th, right behind Canada (the US is in first place, Germany 10th).
The most problematic factors for doing business in Israel, according to the report (in descending order): inefficient government bureaucracy, high tax rates, policy instability, an inadequately educated workforce, problems in access to financing, excessive tax regulations, and restrictive labor regulations.
Israel’s least problematic issues: little corruption (who would have thunk, right?), capacity to innovate (there’s plenty), work ethic in national labor force (Israelis work like horses), crime and theft (very low), inflation (non-existent), and public health (Israel has one of the best public health programs in the West).
According to the International Monetary Fund, Israel’s GDP is $296.1 billion, GDP per capita $35,343.3
The Middle East and North Africa region continues to experience significant instability in geopolitical and economic terms as spillover effects from the conflicts in Libya, Syria, and Yemen are undermining economic progress in the entire region.
Instability is also being created by the uncertain future of energy prices after recent falls, which affect the region’s countries in different ways. Oil-exporting countries—which include Algeria (87th), Bahrain (48th), the Islamic Republic of Iran (76th), Kuwait (38th), Oman (66th), Qatar (18th), Saudi Arabia (29th), the United Arab Emirates (16th), and Yemen (138th)—are experiencing lower growth, higher fiscal deficits, and rising concerns about unemployment. Growth in Gulf Cooperation Council (GCC) economies averaged 5.2 percent between 2000 and 2012, but fell to 2.5 percent in 2015. The forecast for 2016 is also 2.5 percent, and rising oil supplies are expected to keep prices low and limit growth expectations for the coming years.