Israel has shown dramatic progress in gaining access to capital for its businesses.
Israel showed the biggest improvement in this year’s newly released Milken Institute Capital Access Index, jumping 13 spots to 12th place. The index ranks 122 countries in terms of their ability to build and sustain business through providing access to capital.
Three major factors contributed to Israel’s dramatic ranking increase: strong macroeconomic policy gains by the Finance Ministry in recent years; vigilant monetary policy by the Bank of Israel; and implementing the country’s first major structural financial reforms.
Israel’s progress also reflects improvements in access to international sources of funding. In addition, the corporate bond market grew strongly, from 12 percent of gross domestic product to 21 percent. The country also created a more favorable business environment by lowering personal and corporate income tax rates.
“The beneficial results of the first steps of structural reforms are becoming apparent,” said Glenn Yago, the director of Capital Studies and the Milken Institute’s Israel Center, adding however that further reforms are necessary.
“To sustain continued growth in the face of external pressures, Israel will need to maintain and accelerate the process of structural reform,” he said. “The recently formed Ariav Committee promises to continue this important work.”
The Finance Ministry and the Bank of Israel established the 11-member committee in the late fall to further increase the effectiveness of capital reforms.
Hong Kong remained in first place in the index, followed by the United Kingdom and Canada.