The index endeavors to measure how well countries support economic activity by providing businesses with access to capital, both domestic and foreign. Such access to financing can help spur growth and job creation, and the annual survey tries to help nations see financing barriers which could dampen their global competitiveness. The survey is undertaken by the Milken Institute, a US-based think tank focusing on global capital markets and the access to finance, particularly for small and medium size enterprises. The institute was founded by junk-bond guru and Forbes magazine's 458th-richest person in the world Michael Milken, who served less than two years in US federal prison out of a 10-year sentence for insider trading, fraud and tax evasion and who has a net worth of $2.1 billion, Forbes said.

Access to capital as economic indicator holds particular significance for Lebanon, as some studies show that some 80 percent of the nation's businesses fall into the category of small- and medium-sized enterprises, which almost always have to rely on outside capital for financing.

"For an economy to grow - especially an economy based on small- and medium-seize enterprises - it needs access to capital," said Nassib Ghobril, head of research at Byblos Bank. The survey did not give any reasons for Lebanon's precipitous drop, but Ghobril attributed the fall more to the rapid catching-up done by many countries around the world that share Lebanon's standing as emerging markets.

"It is not because something bad happened in Lebanon," he told The Daily Star Sunday. "It's because other countries are improving. [They] are working hard to attract capital. That goes across emerging markets."

Lebanon's score of 5.12 points on the 10-point scale declined by 11.4 percent from 2006 but was still up 5.1 percent from 2005. Lebanon's tally bested the global average of 4.73 points, the MENA average of 4.68 points and the Arab average of 4.56 points, but lagged behind the average of 5.35 points for upper-middle-income countries.

Globally, Lebanon ranked ahead of Russia, Peru and Turkey and came behind Slovenia, China and Slovakia. Regionally it rabked ahead of Tunisia, Egypt, Morocco, Iran, Syria, Yemen and Mauritania, while finishing after Jordan, Oman, Saudi Arabia, Kuwait, the United Arab Emirates and Israel.

The index is based on 56 structural and qualitative variables grouped into seven categories: macroeconomic environment, institutional environment, financial and banking institutions, equity-market development, bond-market development, alternative sources of capital and international funding. -Daily Star