Report says: Israeli tech strong, bureaucracy weak

Report says: Israeli tech strong, bureaucracy weak

The Networked Readiness Index praises Israel’s innovation, but education and legal issues are a concern

The Global Information Technology Report's Network Readiness Index map (Photo credit: Courtesy)
The Global Information Technology Report's Network Readiness Index map (Photo credit: Courtesy)

Israel ranked number 15 in this year’s Networked Readiness Index, published in the Global Information Technology Report by the World Economic Forum, a measure of a country’s realization of its “digital potential,” or ability to marshal information and communications technology (ICT) to advance business and society. Israel “leads the regional rankings with a stable profile” in the use of technology to advance the economy and society in general, the list said.

The index, which the WEF has published for 13 years, measures the capacity of 148 economies to leverage ICT for growth and well-being, looking at a variety of factors, from Internet and communication infrastructure to legal and social issues, education, entrepreneurship, innovation in research and development and the effectiveness of the legal system in contract enforcement. The index found Israel lacking in this last area.

The index’s rankings are based on a combination of data from publicly available sources and the results of an Executive Opinion Survey, a comprehensive annual questionnaire of more than 15,000 executives conducted by the WEF in collaboration with over 160 leading partner research institutes and business organizations. The WEF’s Israeli partner is the Israel Manufacturer’s Association.

The index shows Israel as a world leader in areas such as R&D and innovation and the use of the ICT in business. Israel ranks fifth in the world in the number of patents filed, with 79.4 patents filed per million people, behind Japan (118.9), Finland (110.1), Sweden (88.8) and South Korea (87.8), and ahead of 10th-place United States (51.6). In its “capacity to innovate” (the ability to marshal resources to develop new technologies), Israel is among the elite, tied for third place with Germany, the US and Japan, and right behind Switzerland and Finland. Israel scored well in how well companies can absorb and use new technologies (fifth place), venture capital availability (eighth), government willingness to buy and use new technology (ninth), and in e-participation, which indicates the quality and availability of government resources and information on-line (seventh).

Israel is the second cheapest place in the world for fixed broadband Internet connections, right behind Sri Lanka, according to the index. For mobile broadband, Israel is far less affordable, ranking 89th on the affordability index. Likewise, Israel scores poorly (84th) for the level of competition in the Internet and telephony sectors. Those rankings may be outdated; for the mobile and affordability indices, the report uses figures from 2011, before the establishment of the lower-cost cell phone companies like Golan Telecom and Rami Levy Communications. Those companies drove down the price of cell phone voice and data rates significantly, but the resulting increased affordability will be reflected only in future reports.

Although Israel’s communication and technical infrastructure is solid (ample electric production, nearly full cellphone network coverage around the country). Israel fares worse in areas such as bureaucracy, the effectiveness of law-making bodies and economic competitiveness. In the latter category, Israel comes in 95th, near countries such as Botswana, Lesotho, Bhutan, Myanmar and Mongolia. The US (14th), all of Western Europe and much of Eastern Europe and even China (46th) have far more competitive economies, although Israel’s is still more competitive than Russia’s (113th) or Iran’s (121st).

Israel is far ahead of its neighbors in the overall index ranking (Jordan is 44th, Egypt 91st and Syria does not appear on the list), as well as any other Middle Eastern country (the next country from the region on the list is Qatar, ranked 23rd). Although it portrays itself as an advanced country, Iran is ranked 104th overall and does poorly in almost all indices. Israel is ahead of Iran in almost all areas — except for quality of math & science education, where Iran ranks 40th, and Israel 78th.

Israeli bureaucracy is also impeding the advancement of the tech economy, the index states. It is easier and faster to start a business in 69 other countries than it is in Israel, and it is easier and faster to settle disputes in the courts of 43 other countries than in Israel’s. Enforcing contracts in Israel is extremely difficult; the country ranks 47th in number of procedures needed to enforce a contract, and 125th in the number of days needed to enforce them.

Israel again ranks 15th place overall, leading the regional rankings with a stable profile. The country continues to boast a fairly good ICT infrastructure that remains affordable and results in very high levels of ICT usage across all agents. Around three-quarters of the country’s households have a personal computer and Internet connection at home and are Internet users. More than half of the population has access to mobile broadband.

Overall, the index says, “Israel’s government has made a significant effort to offer its services online, and e-commerce is fairly well developed. In addition, the country benefits from a rather skillful labor force (39th), despite some concerns about the quality of education, that — coupled with favorable conditions for innovation and entrepreneurship and a high capacity of companies to innovate — result in very high technological capacity, as evidenced by the high number of overall patents, notably in ICT-related fields.”

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