IMD World Competitiveness Index

The IMD World Competitiveness Index analyses to what extent countries create a competitive business environment. In 2007, The IMD ranked Israel 21st out of 55 Countries.


The IMD World Competitiveness Index measures the competitiveness of nations by analyzing how they create a competitive business environment.


The goal of the "Top 15 Vision" is to see Israel achieve a significant socioeconomic advancement that would put Israel among the 15 leading countries in terms of Quality of Life within fifteen years.

Quality of Life is a subjective term determined by various components. Numerous indices attempt to measure the Quality of Life of individuals in different countries. The most prominent indices among them are the Economist's Quality of Life Index, the UN Human Development Index, and the Quality of Life chapter in the OECD Factbook. These indices utilize a range of methodologies and examine diverse components of Quality of Life.

In order to pursue the Top 15 Vision, the Government of Israel should first define the key components relevant to Quality of Life[1] in Israel. Thus the Reut Institute identified three main areas that affect Quality of Life in Israel directly and enable a basis for comparison to other countries:

  • Economic well-being reflects the individual's ability to secure financial stability for himself and for his family.
  • Social well-being reflects the desire and ability of an individual to identify with his community and to play an active role in it.
  • Personal and physical well-being reflects the extent to which an individual's life or health is exposed to danger.

The IMD competitiveness index examines two components of economic well-being: Human Capital and an environment that supports growth. Within these subjects, the index focuses on: economic performance, government efficiency, infrastructure and private sector efficiency.

The Reut Institute has concluded that the IMD index is an appropriate index to estimate the aforementioned components of Quality of Life,2 especially when complimented by the GCI3.

Israel in Comparison to the Top 15

According to the 2007 Index, Israel is ranked 21st out of 55 countries,4 indicating a marked improvement compared with the 2003 ranking (29th). The three leading countries in descending order are: U.S., Singapore, and Hong-Kong.

The Publisher

The IMD Business School in Lausanne publishes data regarding the competitiveness of countries in its Global Competitiveness Yearbook. The Yearbook has been published annually since 1989.5

Structure and Limitations

The IMD Competitiveness Index is comprised of four sub-indices which are divided into 20 pillars made up of 323 variables. The sub-indices are as follows:6

  • Economic Performance - This sub-index evaluates the domestic economy. The pillars that comprise this sub-index are: 'Domestic Economy', 'International Trade', 'International Investment', 'Employment', and 'Prices'.
  • Government Efficiency - This sub-index evaluates the extent to which government policies are conducive to competitiveness. The pillars that comprise this sub-index are: 'Public Finance', 'Fiscal Policy', 'Institutional Framework, 'Business Legislation' and 'Societal Framework'.
  • Business Efficiency - This sub-index evaluates the extent to which the national environment encourages enterprises to perform in a responsible, profitable and innovative manner. The pillars that comprise this sub-index are: 'Productivity and Efficiency', 'Labor Market', 'Finance', 'Management Practices' and 'Attitudes and Values'.
  • Infrastructure - This sub index evaluates the extent to which technological, scientific and human resources meet the needs of businesses. The pillars that comprise this sub-index are: 'Basic Infrastructure', 'Technological Infrastructure', 'Scientific Infrastructure', 'Health and Environment' and 'Education'.

The IMD publishes global rankings as well as the final score for each country. In addition, it details the scores and rankings for each sub-index, pillar and variable.

Although the index measures numerous components of economic well-being, it only partly measures aspects of social well-being and does not measure the personal and physical component of Quality of Life.

Data Sources

The source for two thirds of the data is international databases. The remaining third of the data is based on an international survey of expert managers.7


The IMD Competitiveness Index provides a comparative view of the economic and business potential of the countries evaluated, by examining sources that affect productivity in the economy and identifying engines of and barriers to growth. Furthermore, the index contributes to the public discourse on competitiveness and productivity due to the IMD's strong reputation.

1 See: Reut Institute paper: Quality of Life.

2 In order for international indices to affect the design and implementation of policy they must help identify groups, geographical areas, institutions, or sectors of the economy that need to be addressed. Indices should also help evaluate the success of past policy. Finally, indices have a role in affecting the national discourse and guiding public opinion. See: Reut Institute Policy Positions: Competitiveness Indices - Tools for Policy Design and Seven Indices for Measuring Quality of Life.

4 See Reut Institute paper: The Global Competitiveness Index.


4 For the complete ranking list, see The IMD World Competitiveness Yearbook.

5 For further details, see Ibid.

6 For list of variables, pillars within these sub-indices see Ibid.

7 For example, variable number 3.3.17, "financial transparency", is evaluated through a survey.