Photo Credit: Miriam Alster/Flash90
Stanley Fischer, the governor of the Bank of Israel speaks during a session of the Knesset's Finance Committee.

Israel ranked among the top twenty most competitive economies in the world for the third straight year, according to the International Institute of Management Development’s (IMD) 2012 World Competitiveness Yearbook (WCY).

Describing the WCY as “the world’s most renowned and comprehensive annual report on the competitiveness of nations,” IMD analyzed the world’s 59 leading economies on the basis of 329 criteria.

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Israel ranked 19th, a drop of two spots, after two straight years as the 17th most competitive economy. Still, it retained its position as the world’s top investor in research and development (as a percentage of GDP) for the third year in a row, and ranked 2nd for total public expenditure on education. On the downside, it dropped five places in level of government efficacy to 21st, ranked 49th in cost of living, and 54th in workforce participation.

Nevertheless, when analyzed in the long-view, Israel’s economy has become increasingly competitive – only nine years ago it was ranked 29th.

The IMD based its ranking of Israel on data provided by the Federation of Israeli Chambers of Commerce.

The five most competitive of the 59 economies are, in descending order: Hong Kong, the United States, Switzerland, Singapore, and Sweden. Israel ranked one spot behind the United Kingdom, and ahead of economic powerhouses China (23rd), Japan (27th), and France (29th).

Discussing the rankings, IMD’s World Competitiveness Center director Professor Stephane Garelli said that “US competitiveness has a deep impact on the rest of the world because it is uniquely interacting with every economy, advanced or emerging. No other nation can exercise such a strong “pull effect” on the world. Europe is burdened with austerity and fragmented political leadership and is hardly a credible substitute, while a South-South bloc of emerging markets is still a work in progress. In the end, if the US competes, the world succeeds!”

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