Innovation Based Economy The Israel Experience Eliezer (Moodi) Sandberg Former Minister of Science and Technology Former Minister of National Infrastructures emsandberg@gmail.com
Israel at Glance Area: 20,325 sq.km Population: 7 Million Households: 1.8 M Literacy Rate (15 yrs) : 96% Urban Population: 91.5% GDP: 125 B USD Internet Users: 2.5 M (ADSL:1.5M) Fixed telephone Lines:3.2 M Mobile: 7.2 M (104%) Haifa Tel-Aviv Jerusalem Beer-Sheva
Jaffa Oranges vs. Software Exports ($ millions) 3500 Oranges Software 3000 2500 2000 1500 1000 500 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
5 4 3 2 1 0 Expenditure on Civilian R&D as % GDP 4.6 3.6 3.2 3.02.7 2.42.4 2.3 2.2 2.12.02.0 1.9 1.8 Source: Ministry of finance 1.61.61.6 1.41.4 1.3 1.1 1.0 0.90.80.70.7 Finland Japan Switzerland Korea Germany Iceland USA Denmark France Belgium Netherlands Austria UK Norway Canada Ireland Australia Czech Republic New Zeland Italy Spain Portugal Greece Slovak Republic Israel Israel Sweden
Where does Israel excel? Telecommunication Software Encryption and data security Electronics Agro-technology Biotechnology Medical equipment Optics Internet Nanotechnology
Invented in Israel VoIP Pillcam RSA Copaxone DiskOnKey WiMAX Mobile Pentium Drip irrigation Instant Messaging (ICQ) FireWall (CheckPoint)
National Policy Chief Scientist (OCS) in the Ministry of Industry & Trade 24 Technology Incubators MAGNET Consortia Program Direct investment in R&D Companies: 1 B$ a Year The Ministry of Science & Technology Infrastructure Programs Tax Exemption Programs
Ministry of Science & Technology Infrastructure Programs: 1995-2007 Materials Electro-Optical Materials Micro-Electronic Materials Biotechnology Nanotechnology Environment & Agriculture Biomedics Embrionic Stem Cells Regional R&D Centers 11 Centers from the Galilee (north) the Negev (south)
OCS Programs Local International R&D Fund Tnufa Technological Incubators Seed Fund Magnet Magneton, Nofar R&D Centers in Universities Support of Research Institutes Bi-National Funds Bi-National Agreements EU R&D Program FP-6 FP-7 US-Israel Science & Technology Commission
Building an Industry: Brief History 1918 Hebrew University in Jerusalem 1924 Technion in Haifa 1967 French Embargo 1969 Government R&D Centers 1973 Chief Scientist at the Ministry of Trade 1984 - Law for the Encouragement of Industrial R&D 70 s-90 s - Large Scale Projects: Kfir, Lavy, Merkava, EW Free Trade Agreements with US and Europe: Israel is the only country with such agreements.
Creation of VC Industry The best deal the Government ever made! 1992: 100m$ to YOZMA Government-owned fund of funds Matching of 8M$ to 12M$ in private money to form a VC fund offering the option to buy out the Government 10 YOZMA Funds were created 1997: YOZMA Program ended RESULT: Local and foreign VC investments in VC fund of 8.2 B$ in 1998-2003 Over 100 NASDAQ IPO s More than 3,000 Start-up Companies created over the years Ten s of Thousands of new jobs created
Nasdaq Index vs. VC Investments
Electronic and Software Industry SALES & EXPORT (M$) DOMESTIC EXPORT 16, 000 15, 000 14, 000 13, 000 12, 000 11, 000 10, 000 9, 000 8, 000 7, 000 6, 000 5, 000 4, 000 3, 000 2, 1, 00 00 0 00 4,596 2,795 1,801 5,310 3,375 1,935 6,000 3,970 2,030 6,840 4,630 2,210 7,800 5,480 2,320 9,980 6,700 2,280 10,380 8,050 2,330 11,530 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 EST. 9,130 2,400 15,500 14,750 13,000 2,500 12,250 2,500 13,040 10,740 2,300 13,170 10,870 2,300 15,800 13,400 2,400 16,70 0 14,200 2,500
ISRAEL ELECTRONICS & SOFTWARE INDUSTRIES EXPORTS BY INDUSTRY GROUP 2005 Civilian Comm. & Telecomm. 13.4% 22.9% Medical Systems 8.8 % 23.7% Software Components 17.8% 13.4% Industrial Equipment Defense Systems
Scientists & Engineers per 10,000 pp 140 120 100 80 60 40 20 Israel US Japan Germany Canada Switzerland Taiwan UK Ireland Italy Singapore Spain 0
R&D in Electronics and ICT as % of GDP 5 4 % 3 2 1 % R&D per GDP % ICT R&D per GDP 0 ISRAEL SWEDEN USA JAPAN IRELAND Source: IVC Research Center, VenfureOne
Modern Technologies in Traditional Industries From Textile to R&D - Bagir Smart Agriculture - organitech Drip Irrigation - Netafim Water Technologies - Watech
If you will, it is no fairytale Theodor (Binyamin Ze ev) Herzl