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2018 Annual Assessment

In a little more than one generation Israel’s innovation has transformed its place in the world. Just recently Israel won the Eurovision contest with a notably creative performance by Neta Barzilay. In addition, the Israeli delegation came home with four medals in the Physics Olympics held for high school students, not for the first time. Of course, Israeli high-tech startups and firms are world famous including Mobileye, Checkpoint and Waze.

Statistical data confirms Israel’s innovative capacity. Israel has received high scores in various global indices, some of which refer specifically to innovation and creativity. The GCI (Global Creativity Index) ranked Israel fourth among 75 countries in its Global Technology Index (a sub-index of the GCI) in 2010, and third among 139 countries in 2015. Israel ranked 20 among 75 countries in 2010 and 28 among 139 in 2015 in the Talent Index which measures the share of the workforce in the creative class and the share of adults with higher (post-high school) education.1

In the Global Innovation Index, Israel ranked 17 of 127 countries in 2017, 14 of 142 in 2013, and 23 of 132 in 2009-2010.2

In a third global index, the Bloomberg Innovation Index of more than 200 economies, Israel ranked 10th in 2018-2017, 11th in 2016, and 5th in 2015.3
Israel also received high rankings in more specific indices. It ranked first in the Science and Technology section of the Global Dynamism Index (GDI).4 In IMD Competitiveness 2015 Yearbook (of 148 economies), Israel took first place in innovative ability, second place in innovation, and third place in global innovation.5

Today, research-based innovation generates approximately half of Israel’s export revenues. But this is not the main story. Countries, East and West, seek cooperation with Israel in order to benefit from its innovation in the informatics, health, agriculture, space, defense, energy and other sectors. Among these countries, quite a few are politically distant from, if not publicly critical of Israel. As in the past, when China and India discreetly asked Israel for defense and agricultural technologies while publicly attacking its policies, today there are still countries where the defense establishment holds sway over reluctant politicians to allow cooperation and trade with Israel. Israel’s innovative talent increases its links with the wider world and enhances its reputation and “soft power.” More than that, Israel’s innovation has created positive interest in Jews and their culture in Asian countries – half the world – which until recently were not aware of Judaism. In the West, there are subtle changes. The French media, for example, would today report unbiased economic and innovation news from Israel. In the past, most French media coverage of Israel was about war and occupation.

Zionism and the State of Israel are among the greatest innovations of the Jewish people. There is ample evidence that both Zionism and the Jewish state, in turn, have stimulated innovation and creativity generally in both Israel and the Diaspora. This is obvious in literature, historiography, and some of the performing arts, and can even be shown in science and technological achievement.

Israel’s high-tech startups are the ‘calling cards’ of its innovation.

The high-tech sector has impressive achievements and continues to serve as the economy’s growth engine. Data from recent years continues to be encouraging and Israel continues to enjoy the fruit of its cutting-edge industry. At the same time, we cannot ignore the warning signs and challenges that confront us. Many studies as well as the data from recent years include warning signals that in order to continue to enjoy a comparative advantage, one must implement a thoughtful policy that responds to both external and domestic challenges. Chief among the external challenges is rising foreign competition. Among the domestic challenges are inadequate numbers of properly trained and educated personnel (see below) and maintaining Israel’s relative position as a top investor in research and development (R & D). Israeli companies also face the challenge of scaling up. This seems to be the reason that Israeli technologies are bought by foreign companies, which results in Israeli financial and intellectual capital leaving the country.

Innovation – used here more broadly than just the economic and technological sense – means change, rupture, and transformation. The Israeli taste for innovation did not suddenly appear out of nowhere. Jewish history abounds with change and innovation. It has largely been the response of a minority to the challenges of discrimination, persecution, and migration. The Jewish minority had the resources to respond flexibly and innovatively to persecution and discrimination over the centuries because it had a tradition of literacy and education, and because large parts of it specialized in urban, commercial, and financial occupations. For the State of Israel, foreign hostility is still the single most important and most extensive driver of innovation. But what is Israel’s main long-term innovation challenge? The late Shimon Peres defined it years ago: How can Israel maintain its innovative power and leadership in a world where every country is rushing to catch up, often investing more money than Israel? Also, the focus of innovation might change. If the external dangers to Israel recede, and if Israel’s economy keeps growing, civilian innovation will become more important compared to defense innovation: environment, water, health, energy, transportation. This process has started already.

Knowledge acquired through education was key to innovation in the Jewish past and will remain so in the future. Today, Israel’s performance in science and technology, and the underlying research and education, are critical. The number of peer–reviewed scientific papers published by Israelis continues to grow. However, insofar as other countries publish more, Israel’s international ranking declines. Much more worrying is the decline in the standing of Israeli universities.

According to the Academic Ranking of World Universities (ARWU), all Israeli institutions declined in 2017. The Technion is the only remaining Israeli educational institution that ranks in the top 100 worldwide.6

If we look deeper, at the performance in academic ranking of world universities by subject field, four Israeli universities are among the top 100 in science, and specifically in mathematics and computer science. In 2017, Weizmann Institute of Science was ranked 10th in Computer science, and the Hebrew University of Jerusalem ranked 11th in mathematics.

Israel’s education lags behind some other advanced countries in quantity or quality. Science merits a more robust protection against the vagaries of Israeli coalition and budget politics. Another challenge is coping with major educational gaps in Israel’s population. Large numbers of Haredim reject modern education and make few contributions to science and technology. Without change a national crisis may be looming here.

Diversity is a second source of innovative performance. Israel’s diversity has been a huge advantage. People from different countries and backgrounds have different perspectives when looking at a problem, and various solutions to solve it. Is diversity of culture and thought increasing or decreasing in Israel? Cooperation is essential and does not stifle diversity. Nobody can innovate alone. Large, innovative countries can have an advantage over small countries. Small innovative countries such as Switzerland or The Netherlands, surrounded by large, cooperative countries, have a huge advantage over another small country – Israel which is surrounded by a hostile environment.

Israeli science and technology policy struggles to overcome many of these disadvantages. Israel engages in a lot of scientific and technological cooperation with the United States and Europe. The BDS movement has had little effect so far, but this could change. Although opportunities are opening up in Asia, too many Israelis still hesitate to go east. Another way of compensating for isolation in a hostile environment is by enhancing cooperation with the Jewish Diaspora. While much scientific and funding cooperation exist for research and new technological ventures between Israelis and Jews in the diaspora new platforms and networks can enhance this cooperation even further.

One of the most important factors in maintaining high innovation in Israel is the Israeli government. Small countries with large research-based multinational companies – Switzerland and The Netherlands were already mentioned – can do with less government, Israel cannot. Israeli government policies both in regard to education, science and technology and in regard to economics are crucial to maintaining and even increasing Israel’s innovative edge.

Endnotes


1 הניקוד הכולל של ישראל במדד אינו גבוה באף אחת מהשנים, בין היתר מכיוון שהמדד בוחן גם מידת טולרנטיות, שבה ישראל מקבלת בעקביות ציונים נמוכים
2010- 66
2015- 93
http://martinprosperity.org/media/Global-Creativity-Index-2010_Reissued.pdf

The Global Creativity Index 2015


2 https://www.globalinnovationindex.org/userfiles/file/GII-2009-2010-Report.pdf
http://www.wipo.int/edocs/pubdocs/en/economics/gii/gii_2013.pdf
https://www.globalinnovationindex.org
3 https://www.bloomberg.com/news/articles/2018-01-22/south-korea-tops-global-innovation-ranking-again-as-u-s-falls
4 https://www.globaldynamismindex.com/gdi.html
5 https://www.luzzatto.co.il/images/publications/israel-national-technological-innovation-report-2016-hebrew.pdf
6 http://www.shanghairanking.com

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