A research team dealing with the subject of Israel as a small market in a global economy, recently submitted its conclusions and its recommendations, which have, among others, criticism on the decrease in the scope and quality of scientific research in Israel in the last few years.
The members of the team, headed by Mr. Eli Hurvitz, Chairman of the Board of Directors of Teva Industries, included Israel Economic Prize Winner Prof. Elhanan Helfman of Harvard University, who conducted the study for the Caesarea Conference for many months, discussed in their study, among others, the increasing gap between the growing hi-tech sector and the rest of the sectors in which there is no growth, as well as the expanding gaps between weak populations and the rest of the population and the effects of this phenomenon.
In their report, the researchers presented figures that showed that the scientific technology and communications sector, which is the prominent high-tech area, grew rapidly up until 2000, while there wasn’t any significant growth in other sectors of the economy, and that in the last two years this sector is once again growing at a rate that is higher than the growth rate of the economy. The researchers state that growth of the different sectors in the economy is essential in order to achieve long term, stable growth.
Strong criticism was also given to the increase in the social and economic gaps between weak populations and the rest of the population. The study states that prominent weak groups (the ultra-orthodox, Israeli Arabs and specifically the Bedouin population and the Ethiopian community) suffer from the highest rates of poverty and the lowest rates of participation in the workforce and level of human capital, and that these gaps are a growing burden on the growth potential of the economy.
The researchers stated that a significant rise in the rate of participation in the workforce and the level of human capital of these populations, is an essential condition for the achievement of long term growth in production and income per person in Israel, and recommended a policy for the promotion of the weak groups in Israel which includes, among other things, the removal of negative incentives for integration into the workforce, encouragement of initiatives in the lagging sectors, making easier access to workplaces through the improvement of infrastructures, setting incentives for the employment of high-tech workers in the periphery etc.
Criticizing the research and development policy, the researchers claimed that the scope of academic research in Israel today is lower than necessary in order to achieve long term stable growth, and that the decrease in the scope and quality of scientific research will cause great damage to the Israeli economy and will hurt the economy’s ability for growth in the long run.
Furthermore, there isn’t an economic model in Israel today that promises a lasting high scientific level and that the governmental participation has gone through a significant cut-back without substitute sources of funding being found. The researchers warned that the scientific level that is so important to Israel’s future economic success is in a state of erosion, and that this problem is especially severe due to the threats of competition to the Israeli economy from developmental countries.
The staff of researchers reached the conclusion that in order to maintain Israel’s technological status the science and technology infrastructure must be strengthened the majority of which exists and is being developed at the research universities, and this is done, among other things, by the re-outlining of the funding arrangement, the re-examination of the character of research and development that is most worthy of support, and encouragement of the creation of Israeli corporations which could be large research and development consumers.
The other members of the team were Mr. Yoram Oron, Founder and Managing Partner, Vertex Venture Capital, Prof. Elhanan Helfman of Harvard University, Prof. Manuel Trachtenberg of Tel Aviv University, Attorney Amnon Lorch of Yigal Arnon and Co. Law Offices and Dr. Yaakov Sheinin Managing Director of Economic Models.</