Despite General Slip, Israel Still Top R&D Country in the World

Despite General Slip, Israel Still Top R&D Country in the World

Israel slipped to 6th place in the newest Bloomberg Innovation Index of 2020, dropping one spot from last year’s index where Israel ranked 5th. Prior to 2019, the country ranked 10th for two consecutive years.

Israel maintained its top spot for research and development intensity for the third year in a row in the 2020 index. But it dropped to second place for researcher concentration, where it held the top spot last year. Israel placed fifth for high-tech density and seventh for patent activity. The country ranked in the 15th spot for productivity and 31st for value-added manufacturing.

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The Bloomberg Innovation Index ranks the world’s 60 most innovative countries using seven criteria including research and development expenditure as a percentage of GDP, productivity, patent activity, concentration of researchers, including postgraduate PhD students, engaged in R&D per one million people, and concentration of high-tech companies.

While dropping to sixth place in the overall survey, Israel overtook Finland which was third in 2019. It was just one spot below Sweden, which was in seventh place last year and in fifth place this year. South Korea, the country that held the top spot in the index for the last six years, was ousted by Germany, who took first place. The US, which had fallen out of the top 10 in 2018, was in the ninth spot this year, dropping from eighth place in 2019.

Singapore came in third, up from 6th place last year, while Switzerland retained fourth place in the rankings.

Israel once again beat South Korea in the R&D intensity category as it did in 2019, which means it took first place in R&D expenditure as a percentage of GDP. First place in researcher concentration — or professionals engaged in R&D per population — went to Denmark for the second year in a row. It also took the top spot in 2019.

While Israel made a significant jump in patent activity in 2019, surging from the 19th spot from the previous year, it slipped in its number of patent filings this year to seventh place. In high-tech density, the number of locally domiciled high-tech companies, Israel retained its fifth spot for the third consecutive year. Israel once again improved its tertiary education efficiency ranking, measuring the share of new science and engineering graduates in the labor force and those enrolled in a post-secondary education program. The country took 31st place this year, moving up from 36th in 2019 and 41st in 2018.

Meanwhile, in the World Economic Forum’s Global Competitiveness Report for 2019-2020, published in October, Israel stood firm in 20th place out of 141 countries. It was also in 20th place in the 2018-2019 report, but dropped four places from 16th in the report from 2017-2018.

In that report, Israel also secured the top rank for entrepreneurship and the embrace of disruptive ideas as well as macroeconomic stability (the minimizing of a national economy’s vulnerability to the impact of external shocks, companies’ innovative growth, R&D expenditures, and multi-stakeholder collaboration.

Israel received an overall score of 76.7, while the average score for the 141 economies was 61 points.

The report, first published in 2004, ranks an economy’s competitiveness based on 12 pillars (categories) including innovation capability, business dynamism, market size, health, skills, macroeconomic stability, institutions, and infrastructure, and 103 indicators (subcategories.)

The latest index paints a “gloomy picture” a decade after the world financial crisis with a world economy “locked in a cycle of low or flat productivity growth.” The report’s survey of 13,000 business executives also highlights a “deep uncertainty and lower confidence.”

According to the report, Israel is an innovation hub, ranking 15th on the Innovation capability pillar thanks to a well-developed ecosystem, and up from last year’s 16th place.

For the second year in a row, Israel came in first of 141 countries in R&D expenditure as a percentage of GDP under the innovation capability pillar. It also ranked first in the multi-stakeholder collaboration sub-pillar, up from third last year.

“Israel spends the most of any country on R&D (4.3 percent of GDP) and is where entrepreneurial culture is the strongest, the acceptance for entrepreneurial failure the highest, where companies embrace change the most, and where innovative companies grow the fastest,” the WEF report read.

Israel ranked second in the venture capital availability subcategory and “ease of finding skilled employees” as it did last year, coming in only behind the United States in that sub-pillar. Both factors support a “flourishing and innovative private sector”, according to the WEF report.

In the WEF’s Global Competitiveness Report for 2019-2020, Singapore knocked the United States out of the top spot as the most competitive country in the world. The United States came in second and Hong Kong ranked third, surging four spots from last year’s report. The Netherlands came in fourth and Switzerland dropped one spot to round out the top five.

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