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Government Support of Innovation: The Israeli Case

Office of the Chief Scientist

Rachelle Toobian

on 18 June 2013

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Transcript of Government Support of Innovation: The Israeli Case

Government Support of Innovation:
The Israeli Case

Avi Hasson | Chief Scientist, Ministry of Economy
is the central issue in economic prosperity."
Michael Porter
Chair, Institute for Strategy and Competitiveness
Harvard Business School
Israel at a Glance
GDP Growth Rate, 2009-2012
Israel Government Bonds Yield, 2008-2012
Population: 7.8 million

Area: 22,072 sq km

Nobel Prizes: 10
4 Chemistry
3 Peace
2 Economics
1 Literature
Sources: Central Bureau of Statistics, Nobel Foundation
Cumulative GDP growth rate, in real terms
Source: Ministry of Finance
Investments Growth Rate, 2009-2012
Cumulative fixed capital formation growth rate, in real terms
Source: Ministry of Finance
Exports Growth Rate, 2009-2011
Cumulative export in goods & services growth rate, in real terms
Source: Ministry of Finance
Yield rates of Israeli government bonds, by coin issued
Source: Ministry of Finance
Private Consumption (Standard of Living) Growth Rate, 2009-2011
Cumulative private consumption growth rate
Source: Ministry of Finance
Israel: Global Leader in Research and Innovation
Over 250 foreign companies have established R&D centers in Israel
But this was not always the case...
Timeline of Israel's Economic Growth
Few natural resources

Plenty of highly skilled human capital
Israeli economy reaches an impasse after two decades of extraordinarily rapid growth

Government makes decision to focus on the knowledge industry
Office of the Chief Scientist established
Late 1960s
Creation of the R&D Fund

Establishment of the BIRD Foundation
Technological Incubators Program

establishment of the VC industry

Magnet Programs
OCS is
continually evolving
to meet the challenges of a
"Do you know what my favorite renewable fuel is? An
ecosystem for innovation
Thomas Friedman
Columnist, The New York Times
Pulitzer Prize Winning Author
The innovation ecosystem is complex...
...and Israel has distinct contributing characteristics
Government plays a key role in optimizing the ecosystem
Risk Sharing
Social Goals
"How does Israel do it?"
Support Infrastructure
Capital Availability
Talented Professionals
Culture of entrepreneurship

Highly educated
Source: 24/7 Wall St., calculation based on 2012 OECD report of percentage of adults with tertiary education
Technology Incubators

Defense technology transfer

Top universities and research institutions

Business-friendly corporate and tax laws
Experienced Israeli VC community

Government financial support
"If you
give people tools
, and they use their natural abilities and their curiosity, they will develop things in ways that will surprise you very much beyond what you might have expected."
Bill Gates
Co-Founder and Chairman, Microsoft
Co-Founder, Bill & Melinda Gates Foundation
Limited Natural Resources
Development of water and agricultural technologies
Development of alternative energy technologies
Security Needs
Development of defense technologies
Civilian technology transfer
Limited Domestic Market
Mass Immigration
There are many paths between an idea and a product...
The OCS Supports most of these paths
Competitive R&D
Pre-Competitive Research
Basic Research
Government Should Enable and Nurture
What can industry expect from us?
Returns to the economy
"Only those who attempt the absurd can
achieve the impossible
Success Story #1
Success Story #2
Success Story #3
Success Story #4
Albert Einstein
Theoretical Physicist
Nobel Prize in Physics, 1921
Companies target foreign markets
Highly skilled industry workers with diverse backgrounds
Source: OECD
Proof of Concept
Research & Development
Single Company
Bi/Multinational Corporation
Human Capital
R&D Fund
Horizon 2020
Binational Funds
& Agreements
Horizon 2020
encourage constant development
of the ecosystem

conditions for continuous growth
of companies
It is
the government’s role to
the private sector nor to
the “next big thing”.
that can be invented
has been invented

Charles H. Duell, US Patent Office Official, 1899
"Fooling around with
alternating current
is just a waste of time.
No one will use it
, ever.

Thomas Edison, American inventor, 1889
energy produced
by the breaking down of the
is a
very poor
kind of thing. Anyone who expects a source of power from the transformation of these atoms is talking moonshine."

Ernest Rutherford, shortly after splitting the atom for the first time
The OCS designs and executes R&D programs related to
relevant government initiatives, including:

have reached what looks like a
permanently high plateau

Irving Fisher, Yale University Economics Professor, 1929
Alternative fuels
Emissions reduction
Cyber security
Space technology
Fixed Conditions
Long Term Programs
Adapting to Change
Science & Technology
Tectonic Changes in the Ecosystem
Full transcript