Israeli hi-tech takes center stage in market rebound
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As Israel is invited to join the Organization for Economic Co-Operation and Development (OECD), the Jewish nation's high-tech and emerging industries once again attract economists' eyes.
"Israel's scientific and technological policies have produced outstanding outcomes on a world scale," said the statement released Monday by the OECD concerning accession of Israel, along with Estonia and Slovenia.
Indeed, Israel's advanced industries were among the first in the world to rebound from the global financial crisis, and had an important impact on the country's resurgence from the crisis.
"The Israeli high-tech sector was comparatively less affected in the wake of the global financial crisis, and even helped soften the blow to the market," Eldad Shidlovsky, head of the Economics and Research Department at Israel's Finance Ministry told Xinhua in a recent interview.
Success in high-tech
While Israeli exports dropped by 12.5 percent, high-tech exports in 2009 continued to grow at a rate of 5.5 percent in dollars - albeit lower than in previous years.
"Considering that the high-tech sector makes up about one third of exports of goods and services, it not only lowered the impact on the Israeli market but even stimulated the recuperation of the Israeli economy in the second half of 2009," Shidlovski added.
Ayelet Nir, chief economist of the I.B.I. Investment House, echoed Shidlovsky's views, noting that the success of some of the industry's giants was enough to help pull the entire industry along.
"Intel opened its new 3.5 billion U.S. dollars Fab28 factory in Kiryat Gat in 2008 - which had a positive impact on exports, and strongly pushed up the electronics market. The timing was crucial, " Nir said.
Nevertheless, the Israeli high-tech work force was reduced from 260,000 to 248,000, weighed down by the effects of the global crisis, which also saw venture capital, traditionally an important source of financing for the sector, plummet.
In an attempt to soften the financial blow to the Israeli high- tech sector, the Israeli government sought to offer assistance through the Office of the Chief Scientist, both by establishing a new biotech fund for 250 million shekels as well as by presenting the office with a larger budget of 200 million shekels. In addition, a fund for loans to medium-sized businesses was also offered.
In a further attempt to address the challenges of the crisis, the government created a new ministerial position in the Israeli cabinet called the Economic Strategy Minister. The post was created following the formation of a new government in March 2009, and is held by Israeli Prime Minister Benjamin Netanyahu, who helped lift the Israeli economy out of a recession while serving as finance minister from 2003 to 2005.
"The government considers it a priority to promote the advanced industries," Shidlovsky said.
Israel's investment in research and development (R&D), at 4.9 percent of gross domestic product (GDP), is the highest in the world. Though the majority of that investment is business research and development, about 20 percent comes from the government, Shidlovsky noted.
