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Government Support of Innovation: The Israeli Case (Backup)

Office of the Chief Scientist

Rachelle Toobian

on 18 June 2013

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Transcript of Government Support of Innovation: The Israeli Case (Backup)

Government Support of Innovation:
The Israeli Case Avi Hasson | Chief Scientist, Ministry of Economy "Innovation is the central issue in economic prosperity." Innovation/R&D Employment Branding Growth 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 Start 1969 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 1970s Technological Incubators Program

Yozma: establishment of the VC industry

Magnet Programs 1990s OCS is continually evolving to meet the challenges of a DYNAMIC ECOSYSTEM Ongoing "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 Infrastructure 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 avi.hasson@ocs.economy.gov.il "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 Commercialization Research & Development Single Company Bi/Multinational Corporation Funding Infrastructure
Human Capital MAGNET
Incubators Horizon 2020 EUREKA
Binational Funds
& Agreements
Horizon 2020 Actively encourage constant development of the ecosystem

Provide conditions for continuous growth of companies It is NOT the government’s role to replace the private sector nor to predict the “next big thing”. "Everything 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 "The energy produced by the breaking down of the atom 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 ALL relevant government initiatives, including: “Stocks 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 Experimenting Long Term Programs Adapting to Change CERTAINTY DYNAMISM Economy Geopolitics Science & Technology Tectonic Changes in the Ecosystem
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