According to the WEC, the most problematic factor for people doing business in Israel is inefficient government bureaucracy, followed by access to financing, tax rates and restrictive labor regulations.
The country's main strength remains its capacity for innovation (third place), which is based on innovative businesses enjoying the presence of the world's best research institutions, meeting the needs of the business sector.
Israel's excellent capacity for innovation, which is supported by the government's public procurement policy, is expressed in the high number of patents per capita (fourth place).
Its favorable financial environment, particularly the solid availability of venture capital (third place), has further contributed to making Israel an innovation powerhouse.
Challenges to maintaining and improving national competitiveness relate to the need for continued upgrading of institutions (34th place) and a renewed focus on raising the bar in terms of the quality of education.
If not addressed, poor educational outcomes, in particular in the area of math and science (89th place), could undermine the country’s innovation-driven competitiveness strategy over the longer term.
Businesses paying price for security situation
As in previous years, the security situation remains fragile and imposes a high cost on business (65th place).
Room for improvement also remains with respect to the macroeconomic environment (64th place), where increased budgetary discipline with a view to reducing debt levels (121st place) would help the country maintain stability and support economic growth going into the future.
In the Middle East and North Africa, Israel and the six members of the Cooperation Council for the Arab States of the Gulf (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) enjoy strong performance. In the rest of the region, the lack of competitiveness is a source of concern.
According to Amir Hayek, CEO of the Manufacturers Association of Israel, "The report provides further proof that Israel is among the advanced countries in terms of innovation, research and cooperation between the industry and academy, while on the other hand falling to unpleasant places in terms of the burden of regulation and taxation and the quality of infrastructure, preventing the ability of competitiveness that Israeli innovation can and should present in the international arena."