Israel ranked in the 19th place among the world's 59 leading economies in terms of competitiveness, according to the 2012 World Competitiveness Yearbook of the International Institute of Management Development in Switzerland – a two spot drop from the previous year.
The IMD is the world’s most renowned and comprehensive annual report on the competitiveness of nations, ranking and analyzing how a nation’s environment creates and sustains the competitiveness of enterprises.
The institute measured 59 countries on the basis of four main criteria: Economic performance, government efficiency, business efficiency and infrastructure.
With the Federation of Israeli Chambers of Commerce as the report's representative in Israel, the Jewish state ranked 54th in workforce participation and 49th in cost of living.
The Israeli economy further ranked 48th in the basic infrastructure (roads, electricity) category, and fell in the level of government efficacy from 16th place to the 21st place.
However, Israel ranked first as the world's top investor in research and development, similar to 2011, and came in at second place for total public expenditure on education.
The Federation of Israeli Chambers of Commerce attributed Israel's results in this year's report to strict regulation imposed on Israeli businesses. According to the federation, such regulation brought about Israel's eight spot drop to the 26th place in the business legislation category.
"The report indicated that there are three main structural problems in the Israeli economy: bureaucracy, a low participation rate in the workforce and an unwillingness to embrace competition and deal with the problematic cost of living," said attorney Uriel Lynn, President of the Israeli Chambers of Commerce.
According to the report, the most competitive economies ranked in 2012 are Hong Kong, Sweden, Singapore the US and Switzerland. Meanwhile, Argentina, Croatia, Greece the Ukraine and Venezuela came in at the bottom of the list.