Israel’s Innovation Policy

Mr. Amos EiranSenior Faculty Member

ISEMI College for Entrepreneurship Education Sofia, 30 October 2014

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Presentation Outline

• Israel - Introduction• Israel at a Glance• History of Israel’s Innovation Policy• Israel’s Success Factors

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Israel & the World

4Israel

Map of Israel

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Israel at a Glance

• Celebrated 66th anniversary in 2014

• Population today about 9 million (7 Jewish, 1.6 Arab [Muslims & Christians], 1.6 others [Christians, Druze, etc.])

• 1960s – approx. 70% of Israeli exports were agricultural

• Today - high tech products are approx. 30% of exports

– Agricultural produce less than 2%

• No local markets most start ups are export-oriented

6http://www.themarkerit.com/tmit/article/3681

Innovation Snapshot

• Over 120 listings of innovative companies on NASDAQ

• 2nd only to Canada, in terms of presence in US stock markets

• Approximately 5,000 start up companies engage in R&D– 60% are less than 5 years old

• Approximately 800 high tech start-ups are established each yearsince the early 1990’s – 2nd highest number of start-up firms worldwide, after the U.S. (per capita)

• The world’s highest % of scientists and engineers per capita7

Israel's High Tech Exports• In 2013 total exports of goods and services was about $US 70 B,

of this approx. $US 21 B high tech & electronic industry (30%)• In 2009 total exports of goods and services was $US 47.9B,

of this approx. $US 17.9B high tech & electronic industry (37%)

Exports move from West to East

North AmericaEuropeAsia

8Source: Ministry of Industry & Trade, 2012

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Exports

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History of Israel’s Innovation Policy (A)

• Pre-1970• Infrastructure built

• 1967• French Arms Embargo

• Impetus for High-Tech Industry

• 1955-85• Industrial development of military technologies & systems

• 1975• Government Support Programs established

• Office of Chief Scientist• Israeli Export Institute (IEI)• The Israel/US Bi-national Industrial Research & Development (BIRD)

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History of Israel’s Innovation Policy (B)

• Establishment of bi-national & multinational industrial R&D foundations & agreements– BIRDF (1979) - USA-Israel Industrial R&D Foundation– CIIRDF (1994) - Canada-Israel Industrial R&D Foundation– SIIRD(1995) - Germany-Israel Industrial R&D Foundation

• 1982- First success cases on NASDAQ (Scitex, Elscint)

• 1990+ Establishment and operation of tech. incubators – Umbrella and nurturing environment for inventors– To support technologically-trained immigrants and Israeli citizens– Infrastructure supported 100% by Government

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History of Israel’s Innovation Policy (C)

• Establishment and operation of “Yozma” (1993-95)– Government venture capital fund– Initial sum of $100 million– Privatized in 1998

• Establishment and growth of Israeli VC industry (1993) Catalyzed by:– the Yozma VC Fund– peace process– immigration

• Intensive offerings on NASDAQ (Since 1994)

• Emergence of Int’l investment banks in Israel (Since 1995)12

Israel’s Success Factors

• Israel’s Higher Education System • The IDF as a source of excellent managers

– Compulsory service for all– Fosters teamwork and technical excellence

• Tech transfers from defense R&D to civilian markets• Government incentives to encourage capital

investment and scientific R&D• Opening of large and rapidly growing international

markets to Israeli exporters (result of peace processes)

• Free trade agreements with U.S. and Europe

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Israel’s Higher Education System

• The Sectors of Education, Health, Security were traditionally government controlled – The Higher Education system was originally based on the

German system, now mostly US– Israel has 7 leading publicly-funded universities, which are

research-focused.– It also has about 50 regional colleges (teaching focused),

since early 1990’s

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Students in Higher Education Institutions

• 1980 – 58,000 • 1990 – 70,000• 2000 – 105,000• 2011 – 250,000• 2012 – 298,400 • 2013 – 305,550

15Source: Based on PBC, Table 3.1 (Jerusalem, PBC, 2000 and Council of Higher Education website 2011-2013)

Thank you for listening!

Amos.eiran@gmail.com

Please ask any question you like!