A Downward Trend in Israel's Competitiveness

Abstract

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• The ISRAEL 15 Vision focuses on placing Israel among the fifteen leading countries in terms of Quality of Life.​

• The vision's fulfillment requires a social and economic leapfrog which is a significant and enduring improvement in the quality of life of the country's residents compared to other countries.​

• The ability to create a leapfrog in Israeli quality of life depends on the Israeli economy's ability to compete for human capital and global investments.​

• ​An efficient policy for improving the quality of life will be based on comparing Israel to its competitors.​

• Indices that enable international comparison are a useful tool for decision makers in identifying challenges and in estimating the success of policies for the improvement of quality of life.​

• This document compares Israel's performance in 2008 to that in 2006.​

• Conclusion: While the public sector's performance fell even further behind that of the private sector, Israel's world-leading engine of innovation has slowed down.

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What is the issue?

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• The World Economic Forum recently published the 2008 Global Competitiveness Index. The index gives a comparative report of the growth potential of the ranked countries. It examines the factors that influence an economy's productivity, identifies the economy's strengths and weaknesses, and identifies growth engines or constraints on growth. Moreover, it contributes to enhancing debate on competitiveness and productivity.​

• The index's importance stems from two reasons:

  • Leapfrog is based on identifying constraints and opportunities – The index evaluates economies' productivity and efficiency and thus may provide initial indications for the identification of constraints and opportunities. Using the index's data together with other hard data can inform the allocation of limited resources on particular policy issues.

  • The index helps evaluation of Israel's competitiveness policy – Israel has launched reforms in education and capital markets to improve its competitiveness. An analysis of the index enables evaluation of policy outcomes by comparing the performance of Israel and its competitors on human capital, technology and investment.

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