Transcript Israel

Israel’s Economy
1948-2009
From Oranges to Innovation
* * *
Gil Haskel, Director
Economic Department III, MFA
Israel’s Economy 1950-1980:
Agriculture & Basic Industries
The beginning:
• Fresh Agro Products
• Simple Irrigation and Water Management
• Post harvest
• Seeds
• Chemicals
* Basic Industries: Textile, Chemical, Metal &
Machinery…
Mainly due to water
shortages, agriculture
turned gradually into
agro
technology
Israeli Agrotech Exports
• Greenhouses
• Dairy Farming
• Poultry Farming
• Aquaculture
• Water Management Irrigation
• Seeds
• Mechanization
• Fertilizers and Pesticides
• Turnkey Projects, Consulting and Know-How
Israel’s only
natural
resource:
salt !
Along the years Israel
transformed into a
knowledge based
economy
Israel’s Economy 1980-2009
It’s all about Technology…
• Source of Leading Technologies used
Worldwide (ICQ, Firewall, Disc-on-Key, PillCam…)
• Home to Global Market
Leaders, such as Amdocs,
Checkpoint, M-systems,
Comverse…
• Global R&D and
Innovation Center
Israel’s Economy Today:
Technology & Hi-Tech
Export of Oranges vs. Software:
8800
Software
7800
6800
exports
($millions) 4400
2400
Oranges
0
A High-Tech Oriented Industry
Low Tech
8%
Med-Low
Tech
18%
High Tech
48%
(2005 – 46%)
(1995 – 37%)
Med Hi-Tech
26%
Source: Central Bureau of Statistics (excluding diamonds)
Israel’s 21st century Economy –
Main Characteristics
Knowledge based
Export (trade) Oriented
Rapid Development of Technological high tech industries
Entrepreneurial Culture
Global R&D Center
Supportive Business Environment
Highly Influenced by global economy.
How did it happen?
Lack of Natural Resources -> emphasis on technology
Limited access to international technologies -> local R&D
Limited Local market -> Export oriented industry
Skilled and educated manpower (New immigrants & IDF)
The “Israeli spirit” = Innovation, Flexibility, Persistence
Government support for R&D activities + Int’l cooperation
Vibrant VC Sector + Strong multinational presence
The Israeli Economy today
“The Silicon Miracle”
Israel’s
Economic Indicators
Criteria
GDP
2005 2006
2007
2008
131
142
162
172
5.3%
5.2%
5.3%
4.1%
22,870
24,380
57.6
63
71.4
75
Imports of Goods & Services (B$)
57.6
61.8
73.8
78
Unemployment Rate
9%
8.4%
6.8%
6.8%
2.4%
-0.1%
3.4%
3.8%
(B$)
GDP Real Growth rate
GDP per Capita
(%)
(PPP, $)
Exports of Goods & Services
Inflation Rate
(%)
(B$)
25,870
* Source: Economist Intelligence Unit, EIU, Bank of Israel
27,300
GDP (PPP) in our neighborhood
(2007 - IMF)
Israel – 25,870 USD
Lebanon – 11,270 USD
Egypt – 5,491 USD
Jordan – 4,700 USD
Syria – 4,300 USD
Lebanon + Egypt + Jordan + Syria = 25,761 USD
Where does Israel excel?
Telecommunication
Software
Data security
Electronics
Agro-technology
Biotechnology
Medical equipment Optics
Homeland security
Internet
Nanotechnology
ISRAEL
Export
Oriented
Economy
Exports of Goods by Region
[2008]
Rest of the World
7%
Africa
Latin America
2%
3%
Eastern Europe
6%
Asia
20%
EU
29%
North America
33%
Leading Export Destinations of Israel
[2008]
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
USA
EU
Belgium
Hong-Kong India
Holland
Germany Britain
Italy
Turkey
-
20 bil.
18 bil.
4,6 bil.
4,1 bil.
2,4 bil.
2,0 bil.
1,9 bil.
1,9 bil.
1,6 bil.
1,6 bil.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
France
China
SwitzerlandBrazil
Spain
Japan
Cyprus
S. Korea
Russia
Australia -
1,3 bil.
1,3 bil.
1,2 bil.
1,2 bil.
1,1 bil.
881 m.
881 m.
818 m.
776 m.
708 m.
Leading Export Destinations of Israel
20000
2005
18000
2006
16000
2007
2008
12000
10000
8000
6000
4000
2000
IN
D(
5)
HO
L(
6)
G
ER
(7
)
FR
A
(1
1)
CH
I( 1
2)
JA
P(
16
)
KO
R(
18
)
(4
)
HK
G
(3
)
BE
L
EU
(2
)
0
US
A(
1)
$ Mil'
14000
Foreign direct Investment In Israel
($BN)
14.3
16
10
14
12
10
5.1
8
4.8
3.9
3.6
3.1
2
1.8
6
1.7
4
2
0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
10
Foreign Companies Invested in Israel
US
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Microsoft
Google
AOL Time Warner
Intel
IBM
Boeing Enterprises
Cisco Systems
GE
Lucent
3Com
Hewlett Packard
Merrill Lynch
Motorola
Sun Microsystems
Europe
•
•
•
•
•
•
•
•
•
•
•
•
•
Siemens
DaimlerChrysler
Volvo
Cable & Wireless
Baan
Volkswagen
Deutsche Telecom
L’Oreal
British Telecom
Danone
Ares Sereno
Unilever
Nestle
Asia
•
•
•
•
•
•
•
•
•
•
•
•
•
Samsung Electronics
Daewoo
Nomura
Hutchison Telecomm.
LG Group
Sony
Toyo Ink
Hyundai
Acer Computers
Sumitomo Trading
Fuji
Honda
Sun Pharmaceutical
Industries Ltd.
Free Trade Agreements
Canada
USA (1985)
Mexico (1999)
European Union – Association Agreement 2000
EFTA (1992)
Jordan (1995): Bilateral Trade Agreement
Turkey (1997)
Mercosur (2008)
Source: MOF
Industrial R&D Cooperation Agreements
Austria
USA
UK
Finland
Spain
Netherlands
Canada
Hong Kong
China
Sweden
Belgium
E.U.
Ireland
Singapore
Source: MATIMOP / MOF
Korea
Germany
Portugal
France
Italy
India
The Statistics tell
the whole story
The Global Competitiveness Report 2008-2009
country profile
[http://www.weforum.org/documents]
“As in previous years, Israel, at 23rd position,
leads the Middle East and North Africa ranking…
the country’s well-developed human and
institutional infrastructure for innovation…as
well as its widespread adoption of the latest
technologies, continue to contribute to Israel’s
strong competitiveness and productive
potential. Israel ranks 6th in terms of overall
innovative capacity, with excellent national
research institutes (3rd) and the government
taking a proactive role in procuring high-tech
products. The success of the resulting research
activity is reflected in the high rate of patenting
per capita (5th) registered by Israeli residents.
The well-developed financial markets play a key
role in supporting the process of turning ideas
into marketable products through facilitated
access to venture capital (8th) and equity
The Global Competitiveness Report 2008-2009
country profile
ISRAEL (out of 160 ranked countries):
 3rd in quality of scientific research institutions












5th in utility patents
5th in strength of investor protection
6th in terms of overall innovative capacity
8th in company spending on R&D
8th in venture capital availability
8th in legal rights index
9th in no. of procedures required to start a business
9th in availability of scientists and engineers
18th in FDI and technology transfer
18th in University-industry research collaboration
Highest Concentration of High-Tech Startups after
Silicon Valley
More companies that originated in Israel are listed on
NASDAQ than from any other country in the world
Gross domestic expenditure on R&D
[http://stats.oecd.org]
Israel is The World
Leader in Civilian R&D Investment
As Percentage of GDP
4.4%
3.6% 3.5%
3.3%
1.1%
Ita
ly
1.3%
la
nd
Ire
K.
1.6%
U.
m
Be
lg
ui
Fr
U.
an
ce
2.1% 1.9%
1.8%
S.
A
2.4%
an
y
m
a
er
G
Ko
re
er
la
nd
a
itz
Ko
re
Sw
an
Ja
p
en
Fi
nl
an
d
2.5%
ed
Sw
Is
ra
el
2006 4.5%
2.9% 2.9%
Rate of Research Positions
in the Business Sector
Source: OECD
Hi Tech Environment
Engineers & Scientists (per 10,000 workers):
Israel
135
USA
82
Japan
80
Germany
S. Korea
60
25
Global Capacity for Innovation
Index (CfII) Ranking
Country / Economy
CfII 2008-9
CfII 2006-7
Rank
Score
Rank
Germany
1
6.0
5
Japan
2
5.9
1
Switzerland
3
5.9
3
Sweden
4
5.8
6
Finland
5
5.6
4
United States
6
5.5
2
Denmark
7
5.5
10
France
8
5.4
14
Korea, Rep.
9
5.3
15
Israel
10
5.2
7
Netherlands
11
5.1
11
Austria
12
5.1
17
Norway
13
4.9
18
United Kingdom
14
4.9
12
Belgium
15
4.9
16
Taiwan, China
16
4.7
8
Iceland
17
4.6
19
Canada
18
4.5
13
Singapore
19
4.5
9
Slovenia
20
4.5
34
Source: World Economic Forum
(2009)
OECD SCIENCE, TECHNOLOGY AND INDUSTRY OUTLOOK
2008 – ISBN 978-92-64-04991-8 – © OECD 2008
[country notes – Israel]
“Israel stands out on a number of innovation
indicators. At 4.65% of GDP it has the world’s
highest R&D intensity, over twice the OECD average
of 2.26%. The intensity of business R&D expenditure
is also higher than in all OECD countries, at 3.64% of
GDP in 2006. Israel has the fifth highest number of
scientific articles per million population, after
Switzerland, Sweden, Denmark and Finland…
…Israel’s innovation system is a key driver of
economic growth and competitiveness. While the
success of the Israeli system is primarily
attributable to vibrant business sector innovation
and a strong entrepreneurial culture, the
government has also played an instrumental role
in financing innovation, especially in SMEs, and in
providing well-functioning framework conditions
for innovation, including venture capital (VC),
incubators, strong science industry links, and
quality university education”
We see our future in a highly
motivated and educated young
generation