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description
Table of contents Introduction 4
Acknowledgments 5
Howtoreadthisreport 6
Theleadingindicators 7
Index–Graphs&Charts:ThePositionofIsraelontheIndicators 8
Part 1: The Intellectual Capital of the State of Israel 9ResearchMethodology 10SkandiaModel 10
TheStateofIsrael-GeneralDescription 13
TheVisionofInnovationintheStateofIsrael 13
FinancialCapital 14
MarketCapital 18
ProcessCapital 20
HumanCapital 24
Renewal&DevelopmentCapital 26
Summary 32
Part 2:The Office of the Chief Scientist –an Overview 33Introduction 34InternationalActivities 34ActivitiesinIsrael 43
Part 3: Israeli Success Stories 47InSightechLtd 48GivenImaging 49Alvarion 50IDE-TechnologiesLtd 51
Sources 52
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AfundamentalprincipleofthevisionoftheStateof Israel istheunderstandingthat intheabsenceofnaturalresources,relianceonhumancapitalandknowledgehasbeenthemostfittingandnaturalchoice.Education,R&D,andtechnologicalinnovationhavebeenthekeysuccessfactorstothenation’seconomicandsocialdevelopment,aswellasthebasisforitsnationalstrength.
The extensive, and seemingly inexhaustible, supply of human resources in Israel hasmade such a strategic emphasis possible. Israel's human capital ischaracterizedbyauniquecombinationofbroadinterdisciplinaryknowledge,entrepreneurialspirit,creativity,andoriginalthinking.Thesequalitieshaveledtoaconstantflowofnewideas,innovativedevelopments,andbreakthroughtechnologies.
TheOfficeoftheChiefScientist,withintheMinistryofIndustry,Trade,andLabor,ismandatedtoexecutegovernmentpoliciesregardingtheencouragementof industrial R&D in Israel.Within this framework, theOfficeof theChief Scientist operates abroad rangeofprograms that encourage technologicalentrepreneurship,enhanceIsrael'sscientificresources,broadentheknowledgebaseoftheindustry,andpromoteR&Dcooperationatboththenationalandinternationallevels.
ThesynergybetweenprudentgovernmentpolicyscientificexcellenceandbusinessapproachhasbornefruitforIsrael'sindustrialsector,aswellasforitsacademicinstitutions.ThisismanifestedinthemanyoutstandingachievementsmadebyIsraelicompaniesandindividualsonaninternationalscale.
Israel's Intellectual Capital Report presents Israel’s core competencies, key success factors, and hidden assets, all of which provide the country with comparative advantages and high growth potential.
The Intellectual Capital Report highlights Israel’s competitive edge in the international market. The profile of Israel that emerges from this comparative study is clearly one of a nation that is a superior partner for global business and worldwide collaboration. The report also presents Israel as a nation that offers great potential for international investments.
ThispapersurveysthecompetitiveadvantagesoftheStateofIsrael,whichincludetechnologicalexcellence,humancapitalandmoderninfrastructure,alongwithothercharacteristicsthathaveplacedIsraelattheforefrontofscience,innovation,andtechnology.
IampleasedtopresentIsrael’suniquecharacteristicsandthecountry’sgrowthpotentialasoutlinedinthefollowingstudy,aswellasinthevariousR&DsupportprogramsofferedbytheOfficeoftheChiefScientist.AstheStateofIsraelentersits60thyear,suchpromisingstatisticsonIsrael’sstatusinrelationtotherestoftheworldencourageustocontinuetoseekoutnewchallengesandareasforfuturegrowth.
Dr Eli OpperThe Chief Scientist of the Ministry
of Industry, Trade and Labor
Introduction
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AcknowledgementsTheIntellectualCapital(IC)ofIsraelReportaimstointroduceboththetangibleandtheintangibleassetsoftheStateofIsraelforfuturegrowth.ThisreportisbasedoninformationanddatacollectedfrominternationalstatisticalpublicationsandthroughkeyfiguresinIsraelhailingfromabroadrangeofdisciplines.
We wish to thank all those who have shared their valuable time with us and helped us in the process of collecting the information for this edition:
•MinistryofIndustry,Trade,andLabor •BankofIsrael•MinistryofFinance •TheIsraelAcademyofScienceandHumanities•Manufactures'AssociationofIsrael •TheNeamanInstitute,theTechnion•TheIsraelExport&InternationalCorporationInstitute •IsraelIVC•StandardInstitutionofIsrael
As Israel celebrates 60 yearsof independence,this3rdversionofthe IntellectualCapitalReportof Israeltakesonanever increasingimportanceinmeasuringthecollectiveachievementsofthecountry.ThefirsteditionwasaprivateversionhandledbyEdnaPasherPh.D.&Associatesin1998.Thesecondedition(2004)wascommissionedandsupportedbytheChiefScientistoftheMinistryofIndustry,TradeandLabor.ThiscurrenteditionwasalsoinitiatedandsupportedbytheChiefScientist,Dr.EliOpper,whohasturneditintoanationalmeasurementtooltopromoteIsraelasakeyplayerintheglobalmarket.
Sinceitsfirsteditionin1998,theIntellectualCapitalRepotofIsraelhasbecomeasourceofinspirationforsimilarexercisesallovertheworld–presented,discussed,andreferencedinmanyacademicconferencesandpapersincludingtherecentglobaleventonKnowledgeBasedDevelopmentinFORUM2007-TheUniversalForumofCulturesandKnowledgeMonterrey2007inassociationwithUNESCO(followingthefirstoneinBarcelonain2004).
ThereportwaswrittenbyDr. Edna Pasher and Ms. Sigal Shachar, EdnaPasherPh.D&AssociateswiththegovernmentalguidanceofMr.AviramZolti,OCS.
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How to read this reportThispaperfocusesonthestudyofthehiddenvaluesofthestateofIsrael,andintroducesitsimpressiveachievementsinvariousfields.Inrecentyears,Israelhasbecomeahothouseforsomeofthemostprofitabletechnologicaldevelopmentsinwhichthebasisforcompetitiveadvantageandfuturegrowthpotentiallies.
ThebooklethasbeenproducedbytheChiefScientistoftheMinistryofIndustry,Trade,andLaborinordertopresentIsrael'spotentialtoinvestors,businesspeople,andpartnersfromallovertheworldbyprovidingacomprehensivepictureofthekeysuccessfactorsofIsrael,suchaseconomicgrowth,researchanddevelopmentinscientificfieldsandhi-tech.Inaddition,thereportprovidesanupdatedlistofgovernmentsupportprogramsandprofilesasamplingofsuccessfulIsraelicompanies.Thebookletincludesthreeparts:
Part 1: The Intellectual Capital of Israel ReportThisreportisthe3rdeditionoftheIntellectualCapitalReport.The2ndeditionwaspublishedin2004bytheChiefScientistoftheMinistryofIndustry,TradeandLabor,andthefirstin1998byEdnaPasherPh.DandAssociates.Thereportisbasedonthetheoreticalmodelcalledthe"SkandiaNavigator"developedbyProf.LeifEdvinsson.Themodelhas5focalareas,whichalltogetherconsiderthetangibleandintangibleassetsofIsrael,namely:FinancialCapitalmarketCapital,HumanCapital,ProcessCapital,andRenewalandDevelopmentCapital.TheseassetsareintegratedtovisualizeIsrael’scompetitiveedgeintheglobaleconomy.TheIntellectualCapitalBalanceSheetisbasedondataandinformationcollectedfrominternationalpublications,suchasOECD,theHumanDevelopmentReport,IMD,theGlobalCompetitivenessReport,amongothers,aswellasfromnationalsourcesandkeyfiguresfromgovernmentalofficesandacademia.
The main findings and The Leading Indicators Thestudyshowsthat,despiteitssmallsizeandrelativelyyoungage,Israelhasmanyexceptionallyoutstandingcompetenciesatitscore:•Excellent human resources:ahighlyeducatedworkforceanduniqueculturalcharacteristicssuchascuriosity,creativity,apositiveoutlook,innovativethinking-allofwhichare
importanttothesuccessofhigh-techresearchanddevelopment.•Modern infrastructure:asupportivebusinessenvironment,ahighlyadvancedbankingfinancialsector,legalprotectionofforeigntrademarksandpatents.•Cutting edge technology and scientific breakthroughs:Israelisoneofthelargestcentersintheworldforhigh-techstartupenterprises.
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The Leading Indicators
Figure no. Source Indicators Israel‘s position
1.1 OECD,2006 G.D.PGrowthComparison 5
2.2 TheGlobalCompetitivenessReport2006 GCIIndicator(GlobalComp.Indicator) 15(outof125countries)
3.6 CentralBureauofStatistics,2006NationalExpenditureonEducationasapercentageofGDP,2003
1
4.1 TheGlobalCompetitivenessReport2006-7 AvailabilityofScientistsandEngineers 1
5.9 IMD,2004 TotalExpendituresonR&D(percentageofGDP),2004 1
5.11 TheGlobalCompetitivenessReport2006-7 VentureCapitalAvailability 2
Part 2: ThispartincludesacomprehensivelistingofgovernmentsupportprogramscurrentlyoperatinginIsraelinordertobuildfinancialsupportandacooperativeinfrastructureforforeigninvestorsandbusinesspeople.
Part 3:ThispartincludesafewexamplesofsuccessfulIsraelicompaniesinvariousfieldswithspecialcontributiontohumanneeds.WechoosetopresentsomeinnovativeIsraelihigh-techcompaniesthathavesignificantcontributiontotheworldwealth.
Thecompaniesare:1.InSightech Ltd.hasdevelopedamedicaldeviceforMRimaging.ThisproductisaMagneticResonanceImaging(MRI)withfocusedultrasoundenergy–anewtreatmentmodality
thatcanreplaceinvasiveproceduresandprovidetherapeuticalternativestomillionsofpatientswithseriousdiseasesaroundtheglobe.
2.Given ImagingdevelopedthePillCam™videocapsulewhichisadisposable,miniaturevideocameracontainedinacapsulethatcanbeeasilyingestedbythepatient.
3.Alvarionistheworld’sleadingproviderofinnovativewirelessbroadbandnetworksolutionsenablingPersonalBroadbandtoimprovelifestylesandproductivitywithportableandmobiledata,VoIP,video,andotherservices.
4.IDE Technologies Ltd.isapioneerandleaderindevelopmentenviornmentallyfriendlyandeconomicalplantsforsalinewaterdesalination,industrialstreamspurification,andeffluentconcentration.
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Index-Graphs & Charts: The Position of Israel on the Indicator
Figureno. Indicators
Israel'sp
osition
1.1 G.D.PGrowthComparison,2005 5
1.2 G.D.PGrowthQuarterly,atannualrate1995-2006 -
1.3 ExternalDebt,GrossandNet -
1.4 ICTEmployment(asapercentageoftotal)Businesssector2003 4
1.5 QuarterlyEmploymentandUnemploymentinIsraelsince1999 -
1.6 IndustrialProductionbyMajorBranches,2006 -
1.7 ManufacturingExportbyTechnologicalIntensity(net),2006 -
1.8 ManufacturingExportbyTechnologicalIntensity,1991 -
1.9 AnnualInflation,1987-2006 -
2.1 AttitudesTowardGlobalization,2006 8
2.2 GCIIndicator,2006 15
2.3 FlexibilityandAdaptability,2006 3
2.4 ResilienceoftheEconomy,2006 6
2.5 NobelPrizesPerCapita-2005 7
3.1 InformationTechnologySkills,2006 3
3.2 TechnologyReadiness 3
3.3 PersonalComputersper(100inhabitants),2004 4
3.4 Cellularsubscribers(per1000people),2006 3
3.5 CyberSecurity,2006 8
3.6 NationalExpenditureonEducation,2003 1
3.7 HigherEducationAchievement2003 6
3.8 QualityofScientificInstitutions,2006 3
3.9 KnowledgeTransfer,2006 4
3.10 LegalEnvironmentSupportsScientificResearch,2006 5
3.11 Start-UpDays–NumberofDaysToStartaBusiness-200512days
3.12 ISO13485-MedicalDevices-QualityManagementSystems,2005 9
3.13 AgriculturalProductivity,2005 3
4.1 HighSkilledLaborForce,(Engineersper10,000employees),2004 1
4.2 AvailabilityofScientistsandEngineers,2006 1
4.3 FemaleLaborForce2005 9
4.4 LifeExpectancy,2004 8
4.5 Physicians(per100,000people)1990-2004 7
5.1 Nasdaq-highCorrelationbetweenTASEandtheNYSE -
5.2 NumberofScientificPublications 3
5.3 University/industryresearchcollaboration,2006 6
5.4 NumberofPatentsRegisteredintheUS,during2003 3
5.5 ShareofEPOPatentApplicationsownedbyUniversities2001-03 3
5.6ICT-RelatedPatentsasaPercentageofNationalTotal(PCTfilings),2006
3
5.7 NumberofUtilityPatentsGrantedperMillionpopulation,2005 5
5.8 BiotechnologyPatents 7
5.9 TotalExpendituresonR&D(percentageofGDP),2004 1
5.10 VCInvestmentbysector,2006 -
5.11 VentureCapitalAvailability 2
5.12 CapitalraisedbyIsraeliHighTechCompanies -
5.13- CapacityforInnovation2006 8
5.14 Entrepreneurship 5
Human Capital
Process Capital
Market Capital
Renewal and Development
Capital
Financial Capital
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Intellectualcapitaliscomprisedoftheknowledge,wisdom,capability,andexpertisethatprovideanorganization/countrywithacompetitiveadvantageoverotherorganizations/countriesanddetermineitspotentialforfuturegrowth.
TheIntellectualCapitalisatheoreticalmodelcalled"Skandia Model"developedbyProf. Leif Edvinsson,theformervicepresidentforIntellectualCapitalatSkandia,aSwedishglobalfinancialservicescompany.Themodelmeasuresthetangibleandtheintangibleassetsoftheorganization/country/region.
WehavechosentheIntellectualCapitalReportasatooltonavigateandguideIsrael’srealizationofitsgoals.The Intellectual Capital Reportprovidesthereaderwithanintegratedandbalancedpictureofthecountry’spotentialforfuturegrowthasweseeittoday.
In1998,Israelwasthesecondcountryintheworld,afterSweden,toproduceanationalIntellectualCapitalBalanceSheet.Sincethen,manycountrieshavemeasuredtheircorecompetenciesandcompetitivenessintheglobaleconomyusingthistool.
Skandia ModelTheSkandiamodelprovidesabalancedandholisticpictureofbothfinancialcapitalandintellectualcapital.Thismodel,which isused tomeasure intellectualcapital,uses themetaphorofahouse to represent theorganizationornation.Financial capitalconstitutestheroofofthehouseandreflectstheorganization'shistoryandpastachievements.Financialcapitaldoesnotnecessarilyenlightenusaboutfutureachievements.Thesupportingcolumns-process capitalandmarket capital-constitutetheareasuponwhichthepresentoperationsoftheorganizations/nationsarebased.Renewal and development capital,issituatedinthefoundationofthehouse,measureshowtheorganization/nationpreparesforitsfuture.Human capitalisinthehouse’scenterandinteractswithallthedifferentfocalpoints.Humancapitalistheheartoftheorganization/nationandiscomposedofthecapabilities,expertise,andwisdomofthepeoplewithintheorganization/nation.Itistheroleoftheorganization/nationtoassist,guide,andsupportitspeopletowardsrealizingtheirstrategicgoals.
Research Methodology
< 11
Skandia Navigator
The Focal Areas of the Model:Thevaluechain,accordingtoLeifEdvinssonexpressesthevariouscomponentsofmarketvalueinthefollowingmodel:Market Value = Financial Capital + Intellectual Capital
Human CapitalHumancapital includesknowledge,wisdom,expertise,intuition,andtheabilityofindividualstorealizenationaltasksandgoals.Thisfocalareaalsoincludesthevaluesencompassedwithinthecultureandphilosophyoftheorganization/nation.Itisimportanttonotethathumancapitalisthepropertyofindividuals,nottheorganization/nation.
Process CapitalCooperationandtheflowofknowledgerequirestructuralintellectualassets, suchas information systems,hardware, software,databases,laboratories,anorganizational/nationalinfrastructure,andamanagementfocus.Suchstructuralintellectualassetssustainandincreasetheoutputofhumancapital.
Market CapitalMarketcapitalreferstothegeneralassetsembodiedintheorganization/nation’srelationshipwiththe internationalmarket.Theassets inthisfocalpointincludecustomer/nationloyalty,aswellasthesatisfactionexpressedbystrategiccustomers,brands,etc.
Renewal and Development CapitalRenewalanddevelopmentcapitalreferstotheorganization/nation'scapabilities and real investments made in an effort to increase itscompetitivestrengthinfuturemarkets,which,inturn,encouragesfuturegrowth.Renewalanddevelopmentassetsincludeinvestmentsinresearchanddevelopment,patents,trademarks,start-upcompanies,etc.
SkandiaNavigator
FinancialCapital
ProcessCapital
HumanCapital
MarketCapital
Renewal&DevelopmentCapital
Past
Present
Future
Intellectual Capital
12 >
Israel's IntellectualCapitalReportpresents Israel’s corecompetencies,key success factors,andhiddenassets:allofwhichprovide thecountrywithcomparativeadvantageandhighgrowthpotential.
TheIntellectualCapitalBalanceSheetisbasedondataandinformationcollectedfrominternationalstatisticspublications,suchasOECD,theHumanDevelopmentReport,IMD,theGlobalCompetitivenessReport,etc.,aswellasfromnationalreportsandkeyfiguresinthegovernmentandacademiaworlds.
TheIntellectualCapitalReporthighlightsIsrael’scompetitiveedgeintheinternationalmarket.TheprofileofIsraelthatemergesfromthiscomparativestudyisclearlyoneofanationthatisasuperiorpartnerforglobalbusinessandworldwidecollaboration.ThereportalsopresentsIsraelasanationthatoffersgreatpotentialforinternationalinvestments.
Inthefollowingdocument,weattempttoprovidean integrativepicturethatcoverseachof Israel’sdiversefieldsofactivityalongwithan in-depthexaminationoftheintellectualassetsassociatedwitheachoftheseareas.
IntellectualCapital FinancialCapital
StructuralCapital HumanCapital
OrganizationalCapital MarketCapital
Renewal&DevelopmentCapital
ProcessCapital
MarketValue
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The State of Israel - General Description
In the21stcentury, Israel is facedwith theexceedinglydemandingchallengeofdevelopment,growth,andrenewal inan increasinglydynamicandcompetitiveworld.Israelisaleadinginnovativenationinnumerousfields.Placing its strategic emphasis on human capital and knowledge has been a fitting and natural choice for Israel given the absence of natural resources within the country, and the 2000 years of intellectual legacy of the Jewish people in exile, with little access to tangible sources for value creation such as land.
TheIsraeligovernmenthasaveryclearstrategicpolicytoencourageinnovation.TheLawforEncouragementofIndustrialResearchandDevelopment(1984)actsasthegeneralmandatetotheOfficeoftheChiefScientist(OCS),whichislocatedwithintheMinistryofIndustry,Trade,andLabor.AnotherimportantpolicyofthisofficeistosupportandtoenhanceinternationaltradecooperationbetweennationsandbetweenIsraelicompaniesandforeigncompanies.
Israelisblessedwithcreativeandinnovativeminds,andthus,iscapableoftransformingnewideasintoproductsofhighaddedvaluewithinashortperiodoftimewithamodestbudget.Thisprocesshasthepotentialtoshrinkthebalanceofpaymentsdeficit,therebyacceleratingprogresstowardseconomicindependence.Assuch,Israelhaschosentoinvestmoreininnovationandhumanresourcesthanininfrastructure.
TheIntellectualCapitalReportdemonstratesthesehiddenvaluesofthecountryanditscompetitiveadvantage,makingthereportavitalmarketingtool.WearehappythatIsrael'sIntellectualCapitalReporthasbecomeaneffectivetoolindepictingIsraelinitstruestform.
The Vision of Innovation in the State of Israel
TheStateofIsraelislocatedinwestAsia,onthesoutheasternedgeoftheMediterraneanSea.ItsharesaborderwithLebanoninthenorth,SyriaandJordanintheeast,andEgyptinthesouthwest.Israelhasadiversepopulationof7,150,000citizens,accordingto2007estimates,andsitsonanareaof20,770squarekilometers.UnlikemostothercountriesintheMiddleEast,Israel is a developed, modern, democratic, and pluralistic country that is attractive to investors and business partners from all over the world.
Despiteitssmallsizeandrelativelyyoungage(60yearsofindependence),Israelhassucceededinaccomplishinggreattechnologicalachievements.Itisattheforefrontofabroadrangeofdisciplinessuchasagrotechnology,biotechnology,computer-aidededucation,anddatacommunication.Israelhasanopeneconomywhichisfullyintegratedintheglobaltradingsystem.
Israelhasworld-classeducational institutions.Research isperformedateachof Israel'ssevenuniversities,fivetechnicalcolleges,andtenspecializedresearchinstitutes.Furthermore,thereisstrongcollaborationbetweenuniversitiesandtheindustrialsector,whichcreatesinnovative,dynamic,andnewideasforfuturedevelopment.
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Financial capital reflects the tangible economic achievements of the country such as: GDP, structure of industry, workforce, rate of services and products per year, etc.
Various figures in the Israeli economy forecast Israel's economic growth rates. These forecasts are mainly based on past performance and statistical data that express the rate of change in tangible assets.
In this chapter, we will present a number of economic indicators that reflect the yields in the country's growth rate during its �0 years of independence.
Gross Domestic Product (GDP) AccordingtotheanalysisoftheBankofIsrael,since2003,economicactivityhasbeenshowingsignsofrecoveryduetotheexpansionofglobaltrade,hi-techactivityandlesseconomicuncertainty.
Thisrecoveryisreflectedinsubstantialincreasesinexportsandinprivateconsumption.In2006,GDPgrowthregisteredat5.1%.
ThisgrowthcanbeattributedtothepositivetrendsintheworldeconomyandthereductionofuncertaintyinthefiscalpolicyoftheIsraeligovernment.
External DebtAttheendofMarch2004,thenetexternaldebt(totalexternalliabilitiesminusexternalassets)was-6.2%oftheGDP.InSeptember2006,thenetexternaldebtstoodat-22.0%oftheGDP.
ThisfigureshowsthatIsrael'sexternalassetsaregreaterthanitsexternalliabilities.Inpreviousyears,liabilitiesweregreaterthanassets.Thisgivesfurtherindicationthatthelikelihoodofabalance-of-paymentscrisisissmall.
Figure 1.2 > G.D.PGrowthatAnnualRate
Source: Economics and Research Department, Ministry of Finance, 200�
10.0
8.0
6.0
4.0
2.0
0.0
-2.0
1990
1994
1995
1996
1997
1998
1999
2000
1991
1992
1993
2002
2003
2004
2005
2006
2001
6.66.1
7.2
3.8
7.06.5
5.6
2.8
4.2
2.9
8.7
-0.6 -0.9
1.5
4.8 5.2 5.1
Figure 1.1 > G.D.PGrowthComparison,2005Turkey
SlovakRepublicCzechRepublic
IcelandIsrael
HungaryKorea
GreeceSpain
PolandIreland
USADenmark
CanadaJapan
UKFrance
Germany
7.4
8.0Source: OECD, 200�
3.02.01.00.0 7.06.05.04.0
6.1
6.0
5.5
5.2
4.1
4.0
3.7
3.4
3.2
3.1
2.9
2.6
1.8
1.2
1.0
3.2
3.2
Figure 1.3 > ExternalDept,GrossandNet(percentageofG.D.P.,end-period)
100
80
60
40
20
0
-20
199
0
1995
199
8
199
9
200
0
2002
2003
200
4
2001
2005
200
6
Source: Economics and Research Department, Ministry of Finance, 200�
< 1�
The Labor Market
ICT EmploymentIn2000,thedevelopedandadvancedhigh-techindustryand the healthy labor market in Israel created manyjobs,particularlyintheInformationandCommunicationTechnologies(ICT)sector.AccordingtoOECDstatistics,therateofICTworkersemployedintheIsrael’sbusinesssectorin2000was8.2%.In2003,thisratedecreasedbutstillremainshighwith7.6%ICTworkers,placingIsrael4thinrelationtootherdevelopedcountries.
The Israeli workforceFollowingtheeconomiccrisisofthehigh-tech industryin 2000 that occurred throughout the Western worldaswellasinIsrael,therewasalabormarketshockthatleftmanypeopleunemployed.Theunemploymentrateincreasedfrom10.9%in2000to10.3%in2003.However,throughout2003andearly2004,thelabormarkettookapositiveturnasIsraelisrejoinedtheworkforceandjobswerecreated.In2006,theunemploymentratedecreasedto7.7%.
ThenumberofIsraeliemployeesintheworkforceincreasedsignificantlybetweenthefirstquarterof2003andthethirdquarterof2006,increasingby262,000employees.In 2006, the number of Israeli employees in the workforcestoodat2,608,000.Thispositivetrendinthelabormarketreflectsthegovernment'ssuccessfulapplicationofitspolicyofloweringtransferpaymentstotheunemployedandcreatingnewplacesofwork.
Industrial Production by Major Branches Overthepastfewyears,theemphasisonproductionshiftedfrom the traditional sectors tomoreknowledge-basedsectors.High technologicaldevelopmenthas increasedtheproductivityofthissector.
AsisshownbyMinistryofIndustryandTradedata,themetals,machinery,andelectronicsindustriesarethelargestmajorbranchesofindustrialproduction,togethermakingup43.5%ofindustrialproduction.
Source:Economic &Planning Administration, Ministry of Industry, Trade & Labor, 200�
Figure 1.� > IndustrialProductionbyMajorBranches,2006
LightIndustries
2.9%
MetalsMachinery&Electronics
43.5%
Mining&Minerals
2.2%
PolishedDiamonds
17.9%
Textiles,Clothing&
Leather3%
Chemicals&Plastics28.5%
Food&Drink2%
FinlandSwedenIreland
IsraelNetherlands
FranceDenmark
NorwayJapan
AustriaCanada
ItalyUK
USAGermany
Source: OECD, 200�
6.04.02.0 12.010.08.0
9.7
9.1
8.1
7.6
7.5
7.4
6.8
6.7
5.7
5.5
5
4.6
7.1
7.2
0.0
5.7
ICTEmployment(asapercentageofTotalBusinessSector,2003)
Figure 1.� >
Figure 1.� >
-2700
-2600
-2500
-2400
-2300
-2200
-2100
-2000
-1900
-1800
12-
10-
8-
6-
4-
2-
0-1999 2006
19992000
20002001
20012002
20022003
20032004
20042005
20052007
2006
8.9 8.68.6
10.510.8 10.9
9.2
8.8
8.37.7
Quarterlyemployment&unemployment
Source: Bank of Israel, 200�
1� >
Israeli Exports by Industry Intheearlyyearsofitsexistence,Israel'sexportsconsistedof agricultural products in overwhelming proportionscomparedtothesizeofthemarketatthattime.Outofa totalof$50millionworthof exportgoods in1950,agriculturalproductsmadeup$35million.Overtheyears,thecompositionofIsrael'sexportshaschanged.Effortshavebeendirectedtowardsthedevelopmentandexportofknowledge-basedproducts,mainlyelectronicproducts,computersoftware,pharmaceuticals,andothers.
According to Israel's Export Institute, the leading
manufacturingexportsbytechnologicalintensityin2006werehigh-techindustries(48%)–anapproximately2-foldincreasesince1991(23%)–andIsraelisoftwaresales,whichhaveincreasedbyover700%overthelast10years,asitcanbeshowninthefollowingfigures.
InflationInflationsince1999hasbeenclosetozero.In2005,theConsumerPriceIndexclimbedby2.4%.In2006,itdeclinedby0.1%.Thisdeclinewaslargelyaresultoftheweaknessofthedollar,thedeclineinoilprices(inthesecondhalfof2006),aswelltheIsraeligovernment’stightcontrolpolicyina
Figure 1.� > ManufacturingExportsbyTechnologicalIntensity-2006
Source: The Israeli Export & International Cooperation Institute, 200�
LowTechnologyIndustries
7%
Medium-HighTechnologyIndustries
27%
Medium-LowTechnologyIndustries
18%
HighTechnologyIndustries
48%
Figure 1.� >
Source: The Israeli Export & International Cooperation Institute, 2003
ManufacturingExportsbyTechnologicalIntensity,1991
LowTechnologyIndustries
17%
Medium-HighTechnologyIndustries
20%
Medium-LowTechnologyIndustries
40%
HighTechnologyIndustries
23%
AnnualInflation1986-2006(endofperiod)
199
4
Source: Economics and Reseaech Department, Ministry of Finance 200�
26.00
21.00
16.00
11.00
6.00
1.00
-4.00
198
619
8719
88
198
919
90
1991
1992
1993
1995
199
619
9719
98
199
920
00
2001
2003
200
420
0520
06
19.7
16.116.4
20.7
17.618.0
9.411.3
14.5
8.1
2002
10.6
7.08.6
1.30.0
1.4
6.5
-0.1
1.22.4
Figure 1.9 >
-1.9
< 1�
Human Capital
Market Capital
Renewal and Development
Capital
Process Capital
A brief review of Israel's economic history and a look at its 2006 economic profile does not give us an indication of the country’s true growth potential. In accordance with our mission, we will now try to define the country's core competencies and key success factors, since these intellectual assets provide the country with a long-term advantage.
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Market capital reflects the intellectual capital embedded in Israel's relations with other countries. The intellectual assets in this area are derived from Israel's capabilities and successes in providing an attractive, competitive solution to the needs of its international clients, as compared with other countries.
Indicators such as openness to globalization and the flexibility and adaptability of Israeli companies to the dynamic global market reflect the resilience of the Israeli economy and its core capabilities in market capital. All of these produce a basis for assessing the country's attractiveness in the eyes of international businessmen and foreign investors.
Openness to GlobalizationTheglobalmarketoffersagreatopportunityforcompaniesandcountriestotapintolargermarketsaroundtheworld.It means they can have access to more capital flows,technology,cheaperimportandlargerexportmarkets.
Sincethe1990's,Israelhasexposeditsdomesticindustrytoforeigncompetition.Israelhasconcentratedonpromotingexports,openingnewmarkets,andexpandingexistingones.Israel'stradepolicywasenhancedbyawiderangeoftradeagreementsandcommercialarrangementswithcountriesandinternationalinstitutions,whichenableIsraeliexportstocompeteontheinternationalmarketwithoutdiscriminationandunderfairconditions.
IsraelhasapositiveattitudetowardsglobalizationasisshownintheIMDdatafrom2006.Israelwasranked8thoutof61countriesparticipatinginthesurvey.
Competitive Advantage – Israel from a Global Perspective TheWorldEconomicForum(WEF)developedanewindicator–GlobalCompetitivenessIndicator–thatexaminesthelevelofcompetitivenessofthecountriesintheworld.In2006,125countrieswereexaminedinthesurvey.Thisindicatordividesthecountriesintothreegroupsaccordingtotheirstageofdevelopment.ThetransitionfromstagetostagedependsonthechangesintheGDPofeachcountry.TheGCIindicatortakesintoaccountmanyindicatorsineconomic,politicalandenvironmentalareas,allofwhichfallunderninecategories.Thesecategoriesaredividedintothreegroups:
First group:institutions,infrastructure,macroeconomy,health,andeducation.Second group:highereducation,marketefficiency,andtechnologyreadiness.Third group: high-techandinnovation.AccordingtotheGlobalCompetitivenessReport,Israel was ranked 15th out of 125 countries in terms of its GCI.Accordingtothissurvey, Israel isoneofthemostcompetitivecountries.OneofthereasonsforIsrael'shighranking is the fact that the improvement in theglobaleconomyhasmanifesteditselfinincreaseddemandforhigh-techindustry,whichisacentralcomponentofIsrael’sindustrialexport.
Figure 2.1>
HongKong
Iceland
Singapore
Chile
Ireland
Denemark
Taiwan
Israel
Netherlands
India
Japan(14)
UK(20)
U.S.A(26)
Germany(39)
France(61)
8.0Source:IMD World Competitiveness Yearbook 200�
3.02.01.00.0 7.06.05.04.0
8.87
8.50
7.93
7.7
7.61
7.57
7.26
7.08
6.98
6.54
6.25
5.40
2.54
7.29
7.38
9.0 10.0
AttitudeTowardGlobalization
Figure 2.2 > GCIIndicatorSwitzerland
FinlandSweden
DenemarkSingapore
U.S.AJapan
GermanyNetherlands
UKHongKong
NorwayTaiwanIceland
IsraelCanadaAustriaFrance
Australia
Source:The Global Competitiveness Report, 200�-�3.02.01.00.0 6.05.04.0
5.7
5.61
5.6
5.58
5.56
5.54
5.41
5.4
5.38
5.37
5.32
5.31
5.29
5.42
5.74
5.76
5.46
5.81
5.63
< 19
Membership in OECD Israel was recently offered membership in the OECD,anorganization foundedto facilitatedevelopmentandeconomiccooperationamongthedevelopedcountries.ThisproposalcameafterimpressiveachievementswithinIsrael'seconomyinrecentyearsandwillmakeIsraelafullmemberinthisexclusiveclubof30developedcountries.InadditiontothepositiveimpactofOECDmembershipfor Israel, it will also allow Israel to unify its statisticalreportswiththoseoftheOECD,providingthecountrywith a clear perspective of its place among the otherdevelopedcountries.
Economic ResilienceTheworldwideeconomyisverydynamic.Countriesarefacedwithmanychallenges,suchasnewmarkets,newcompetitivecompanies,newneeds,etc.Oneofthemostsignificantindicatorsusedtoexamineacountry'sstrengthandstabilityisitsflexibilityandtheextentofitsadaptabilitytonewchallenges.
AccordingtotheIMDsurvey,in 2006 Israel was ranked 3rd in terms of the flexibility and adaptabilityofactorswithintheeconomywhenfacedwithnewchallenges.
Anotherimportantindicatorthatportraysthecountry'sabilitytorespondquicklytochangesandchallengesistheresilienceofitseconomy.Followingtheworldwidehigh-techcrisis in2001,Israelwasoneofthefirsteconomiestorecoverquicklyandtoredirectitsattentiontogrowthanddevelopment.The2006IMDsurveyalsoshowsthatIsraelhasstrongeconomic resiliencetotheeconomiccycleofbustsandbooms.Israel was ranked 6th.
Nobel PrizesNobel Prizes are awardedby the Nobel Foundation ofSweden to men and women who have rendered thegreatestservicetohumankind.Between1901and2006,morethan750NobelPrizeshavebeenawarded.
Inrecentyears,IsraelischolarshavewonNobelPrizes,inchemistry(2004)–Prof. Aaron CiechanoverandProf. Avraham Hershko, both from the Technion – IsraelInstituteofTechnologyinHaifa–andineconomics(2005)–Prof. Israel (Robert) OumanfromEinsteinInstituteforMathematicsandtheRationalityResearchCenterintheHebrewUniversityinJerusalem.
InasurveyconductedbyIMDin2005,Israelwasranked7thinNobelPrizespercapita,measuredpermillionpeople,awardedinphysics,chemistry,physiology,medicine,andeconomicssince1950.Thisisquiteanimpressiveperformancewhenconsideringthesmallsizeandyoungageofthecountry.
Figure 2.�>
Australia
U.S.A.
Denmark
HongKong
India
Israel
Ireland
Norway
Chile
Canada
Switzerland
Japan(14)
UK(21)
Germany(48)
France(51)
Italy(58)
7.39
83210 7654
7.22
7.16
7.09
6.84
6.8
6.68
6.68
6.41
6.32
5.82
4.59
4.39
3.82
6.34
6.38
Source:IMD World Competitiveness Yearbook 200�
ResilienceoftheEconomy
Figure 2.�>
Source:IMD World Competitiveness Yearbook 200�
Sweden
Switzerland
UK
Norway
U.S.A.
Denmark
Israel
Netherlands
Germany
Australia
Ireland
Canada
France
Italy(18)
Japan(19)
1.22
0.20
1.21
0.92
0.87
0.76
0.74
0.43
0.37
0.35
0.22
0.2
0.07
0.06
0.24
0.25
0.4 0.6 0.8 1 1.2 1.4
NobelPrizeperCapita,2005
7.82
7.80
7.59
7.86
7.93
7.95
8.04
Source:IMD World Competitiveness Yearbook 200�8.0
Iceland
HongKong
Israel
Taiwan
Denemark
Ireland
NewZealand
Australia
U.S.A
Brazil
Canada(19)
U.K(39)
Japan(40)
Germany(57)
France(61)
Figure 2.3>
3.02.01.00.0 7.06.05.04.0
7.60
7.15
6.27
6.26
4.58
3.96
Flexibilityandadaptability9.20
8.65
20 >
This focal point reflects Israel's intellectual assets that support its present activities. These assets facilitate sharing, exchange, flow, growth and transformation of knowledge, from human capital to structural capital. These assets include information systems, laboratories, technology, management attention, and procedures. Key process capital success factors for the creation of know-how in Israel have been taken from various fields such as communications, education, agriculture, management, entrepreneurship, risk-taking, employment, immigration, and absorption. These factors create the base of Israel’s business infrastructure.
Israel has a modern infrastructure:• State-of-the-art telecommunications• World renowned research and educational
institutions• Highly advanced banking financial sector• Large volume of high-tech- and science-based
industry • Supportive business environment • Cutting edge technology and scientific
breakthroughs
Communications and Computerization Technological ReadinessRapidandefficientcommunicationsmakeitpossibletoshortenprocesses,receiveinformationandknowledgeinrealtimeandquicklydevelopproductsandservices.Thankstothedevelopedtechnologicalinfrastructurein
Israel, many companies have an available informationtechnologysystem.AccordingtoIMD,Israel was ranked 3rd out of the 61 countriesthatparticipatedinthesurvey,inInformationTechnologyskills.Israel has the same rank (3rd) in the Global Competitiveness Report in terms of its rate oftechnologicalreadiness.Anotherindicatorthatreferstothetechnologicalreadinessistherateofpersonalcomputerswithinthepopulation.In2004,thisfigureregisteredat73.4personalcomputersper100inhabitants.
Telecom ServicesLiberalization,deregulation,privatization,andadvancedtechnologicaldevelopmentspurredtherapidgrowthofthetelecomservicesinIsrael.Farfromthesinglesupplierofalltelecomservicesafewyearsago(Bezeq), Israel'sresidentsnowenjoygrowingcompetitioninallsegments.ThiscompetitionhashadalargeimpactonIsraelitelecom
Source: IMD World Competitiveness Yearbook 200�
Figure 3.1>
Finland
Iceland
Israel
India
HongKong
Denmark
Austria
Sweden
Singapore
USA
Norway
France(20)
Germany(22)
Japan(24)
UK(35)
1 54 6 72 30
9.20
108 9
9.14
8.98
8.94
8.91
8.89
8.56
8.54
8.34
8.02
7.96
7.89
7.26
8.58
8.64
InformationTechnologySkills
Figure 3.2>
Sweden
Singapore
Israel
Iceland
Switzerland
UK
Australia
USA
Luxembourg
Denmark
Netherland
Canada(17)
Japan(19)
Germany(20)
France(25)
1 2 30 4 65 7
6.01
5.69
5.65
5.6
5.57
5.56
5.47
5.46
5.45
5.28
5.21
5.16
4.81
5.49
5.5
TechnologicalReadiness
Figure 3.3>
SwitzerlandUSA
SwedenIsrael
CanadaAustralia
NetherlandDenmark
SingaporeLuxemburgHongKong
UKJapan(16)
France(20)Germany(21)
Source: The Global Competitiveness Report, 200�-0�
82.3
76.2
76.1
30 7020 605040100 9080
73.4
69.8
68.9
62.2
62.1
60.5
60
54.1
48.7
48.5
65.5
68.5
Personalcomputersper100inhabitants,2004(harddata)
Source: The Global Competitiveness Report 200�-�
< 21
consumptionandhasimprovedthequalityofthetelephoneinfrastructureaswell.
DespitethesmallsizeoftheIsraelimarket,therearethreecellular companies which operate three internationaltelecomservicesandfourbroadcastingoperators(3bycableand1bysatellite),allofwhichcompetesuccessfullyforcustomerpreference.CellularpenetrationinIsraelhasbeensosuccessfulthatIsrael was ranked 3rd in the world in the number of cellular subscribers1057per1,000peopleusemobilephonesinIsrael.
Cyber SecurityCybersecurity isanestablisheddisciplineforcomputersystems used for business management. It focuses onprotecting valuable information stored on computersystemsfromadversarieswhowanttoobtain,corrupt,damage,destroy,orprohibitaccesstoit.Cybersecurityformanufacturingandcontrolsystemsmustalsoincludeprotectionagainstcyberorphysicalattackoncomputer
systemsandtheirsupportsystemsbyadversarieswhowishtodisableormanipulatethemwithintenttocauseharm.In recent years, this discipline has become increasinglyimportantbecauseoftherapidtechnologicaldevelopmentandtransformationofindustrycompaniesintoknowledge-basedorganizations.InIsrael,thereishighawarenessofcybersecurityinorganizationsasshownbytheIMDsurveythatexaminedtowhatextentcorporationsareadequatelyaddressingcyber security. Israel was ranked 8th out of 61 developed countries.
EducationEducationisthemajorsourceforknowledgesharingandcreatinghighqualityhumanresources.Israel’sabilitytoharnesseducationforcreatinginnovativeknowledgeandmotivationtodevelophigh-tech inthefuture isacorecapability,whichprovidesgrowthpotentialandalong-termcompetitiveadvantage.
TheIsraeligovernmentconsiderseducationanimportantmeasure for preparing the new generation for thefuture.Therefore,Israel'stotalexpenditureoneducationasapercentageofGDPhasthehighestrate(8.5%)incomparisonwithotherOECDcountries.AccordingtoIMD‘s2006survey,42%ofIsraelisbetweentheagesof25-34havecompletedatleasttertiaryeducation.In2003,Israelwasranked6tnoutof57countriessurveyedbytheIMDreport.
Quality of Scientific Research Institutions Israel has world-class education institutions. ResearchiscarriedoutinIsrael'ssevenuniversities,fivetechnicalcolleges,andtenspecializedresearchinstitutes.Sixoftheuniversitiesarerankedamongthebestintheworld:TheHebrewUniversityinJerusalemisinthetop
Figure 3.�>
210 3 4 5 6 7 8 9
Israel
Korea
U.S.A.
Denmark
Norway
Sweden
France
Finland
UK
Australia
Austria
Netherlands
Japan
Source: Central Bureau of Statistics, 200�
8.5
7.5
7.5
7.0
6.6
6.3
6.1
5.8
5.5
5.0
4.8
6.1
6.3
NationalExpenditureonEducation(asaPercentageofGDP,2003)
Figure 3.�>
Singapore
Austria
Denmark
Switzerland
Iceland
HongKong
Norway
Israel
Finland
Canada
Germany(17)
U.S.A.(18)
Japan(29)
France(31)
UK(36)
Source: IMD World Competitiveness Yearbook 200�
7.66
7.55
7.5
210
7.49
7.41
7.35
7.17
7.16
6.69
6.68
6.18
6.15
5.82
7.20
7.22
3 4 5 6 7 8 9
CyberSecurityFigure 3.�> CellularSubscribes(per1,000people)
HongKongItaly
IsraelCzechRepublic
SwedenUK
GreeceIceland
LithuaniaPortugal
AustriaGermany
FranceJapanU.S.A.
Source: Human Development Report, 200�
1184.0
1090
1057
4002000
1054.0
1034
1021
996
981
978
864
738
716
617
998
999
600 800 1000 1200 1400
22 >
100.TheTechnionIsraelInstituteofTechnology,TelAvivUniversityandtheWeizmannInstituteofScienceareinthetop200.Bar-IlanUniversityandBenGurionUniversityareinthetop300.In a survey conducted by The Global CompetitivenessReport2006-07,Israel ranked 3rd in quality of scientific research institutions out of 125 countriesthattookpartinthesurvey.ThisdatademonstratesthehighreputationofIsrael'sacademicinstitutionsintheeyesofitscitizens.Furthermore, there is strong collaboration betweenuniversities and industry, resulting in highly developedknowledgetransferbetweencompaniesanduniversitiesasisshowninthechart.AccordingtotheIMDsurvey,Israelwasranked4thoutof61countriesintermsofknowledgetransfer."Thanks to quality education, Israel is one of the most advanced countries in the world. Israel is advancing in high-tech even more than other developed countries"Bill Gates, CEO, Microsoft, World Economic Forum, Davos, January 2000.
Legal Environment for Entrepreneurship The government offers generous incentives forentrepreneurs, including government funding for R&Dprojects, grants for foreign investment in fixed assets,andtaxdefermentforupto10years.Inaddition,Israeloffersinvestorsadvantageousconditionsthatinclude:anactivecapitalmarket,astrongbankingsystem,arobustventurecapitalsector,relaxedcurrencyregulations,andcomprehensive protection of trademarks, patents, andotherintellectualproperty.ThislegalenvironmentanditssupportoftechnologicaldevelopmenthavebeenexaminedinsurveysconductedbyIMD.Israel was ranked 5th out of 61 countriesforhavingalegalenvironmentthatsupports
scientificresearch.Thegovernment’ssupportivepolicytowardentrepreneurshipisalsoevidentbythesimplicityofstartingnewbusinessesor start-up companies in Israel. According to the IMDsurvey,only12daysarerequiredtoformanewbusinessorstart-upcompany.
Figure 3.�>
Canada
Japan
Singapore
Korea
Taiwan
Israel
Norway
Finland
Sweden
Belgium
U.S.A.
Spain
France(15)
UK(20)
Germany(30)
Source: IMD, World Competitiveness Year book 200�
53
52
49
20100
47
43.2
42
40
39
39
38
37
33
22
40
40
30 40 50 60
HigherEducationAchievement,2003
Figure 3.�>
Switzerland
U.S.A.
Israel
UK
Germany
Japan
Finland
Belgium
Sweden
Netherlands
Canada
Singapore
France(30)
Source: The Global Competitiveness Report, 200�-0�
6.3
6
6
210
6
5.8
5.8
5.6
5.5
5.5
5.5
5.1
5.6
5.7
3 4 5 6 7
QualityofScientificInstitutions
Figure 3.10>
SingaporeFinland
DenmarkCanada
IsraelHongKong
AustriaSwitzerland
AustraliaNorway
U.S.A.(16)Japan(17)
France(19)Germany(28)
UK(34)
Source: IMD World Competitiveness Yearbook 200�
8.44
8.09
7.86
210
7.81
7.78
7.65
7.43
7.41
7.03
6.85
6.75
5.98
7.49
7.62
3 4 5 6 7 98
6.39
LegalEnvironmentSupportsScientificResearch
Figure 3.9>
Source: IMD, World Competitiveness Year book 200�
KnowledgeTransfer
FinlandU.S.A.
AustriaIsrael
IcelandSingapore
SwitzerlandSwedenCanada
DenmarkGermany(18)
Japan(21)UK(29)
France(37)
7.20
7.05
6.94
210
6.84
6.84
6.74
6.36
6.11
5.57
5.40
4.63
4.34
6.51
6.68
3 4 5 6 7 8
< 23
withIsraeliorganizationsbeingissued107certifications.Israel improveditsrankfromthe2004surveyinwhichitranked10th.
Agricultural ProductivityTheindustrialandservicesectorsaregaininginsignificancearound the world. In contrast, the significance of theagriculturalsectorisdiminishing.
Thesechangeshavenotbypassed the Israelieconomy.Consequently, Israel is intimatelyawareof theneed toconductintensiveresearchintheagriculturalindustryinordertogeneratenewtechnologicaldevelopmentsinthissectorwithinthenextfewyears.Inaddition,Israelgraduallystartedtoinvestmoreintechnologicalagricultureproductsthaninagricultureasaresultofthecountry’slimitednaturalresources,suchaswaterandfertileland.
Asaresult,therehavebeenimprovementsinproductiontechnology and an increase in farm yields despite thereduced significanceof agriculture in the labormarketandthediminishingavailabilityoffarmland.
The indicator that highlights Israel's impressiveaccomplishment in this field in comparison to othercountriesisitsagriculturaltechnologyandefficiency.
Israel's agricultural productivityintermsoftheGDPperpersonemployedinagriculturestandsat$66,960andranks 3rd compared to other countriesaccordingtotheIMDWorldCompetitivenessYearbookof2006.
Figure 3.11>
CanadaAustralia
U.S.A.NewZealand
SingaporeHongKongSAR
RomaniaUK
IrelandIsrael
FranceItaly(26)
Germany(29)Japan(41)
Source: IMD World Competitiveness Yearbook 200�
2
3
20100
5
6
8
12
13
4.5
4.7
8.1
11
9
30 40 50 60 8070 90
1
4
NumberofDaystoStartaBusiness
USAUK
GermanySwitzerland
JapanFrance
CanadaPakistan
IsraelSwedenAustria
ItalyCzechRepublic
Singapore
Source: The ISO Survey of Certifications 200�
800 1000 1200 1400200 400
1310
973
824
367
211
114
0 600
107
85
71
69
54
50
146
153
ISO13485-MedicalDevices-QualityManagementSystems
Figure 3.12 >
NetherlandsScotland
IsraelIcelandFinland
SwedenUSA
AustraliaLuxembourg
UK(12)Italy(13)
Canada(14)France(19)
Germany(30)Japan(34)
10,000
70,116
66,960
64,219
62,258
59,800
55,859
0
51,452
50,099
44,920
41,184
24,898
20,061
56,841
57,523
80,000 90,00020,000 70,00060,00050,00040,00030,000Source: IMD World Competitiveness Yearbook, 200�
79,815
AgriculturalProductivity(GDPperPersonemployed
inAgriculture(US$))
Figure 3.13 >
ISO – Medical devices Israelisoneof158membercountriesintheISOorganization.Over140organizationshavebeencertifiedwithISO14001onenvironmentalmanagementsystems,anddozensmoreareontheirwaytocertification.
ISOistheworld'slargestdeveloperofvoluntaryinternationalstandardsforbusiness,government,andsociety.TheISOsurveyhasbeen carriedout15 times since itwasfirstinstitutedinJanuary1993.
Theyear2005wasthefirstyearthatthesurveyincludedcertificationforthemedicaldeviceindustry'sISO9001:2000-basedqualityrequirement.Inthe2005survey,Israel ranked within the top ten (9th) for the number of ISO 13485:certificationsissued
2� >
Human capital constitutes a population's total capabilities as reflected in education, knowledge, health, experience, motivation, intuition, entrepreneurship - and expertise, all of which are the key success factors in creating a competitive edge in the present and the future. Human capital provides the resources for the development and cultivation of other areas of intellectual assets. The singular importance of human capital is portrayed by its central position in the model of intellectual capital that we are utilizing here. The human factor is the most important link in the process of value creation. Thus, the success of this process depends on the development and renewal of human resources.Israel has excellent human resources:• Highly educated workforce• A multilingual population with cultural, historic, and business ties to almost every other nation
Highly Educated WorkforceIsraelhasahighlyeducatedworkforcealongwithfirstclasseducationalinstitutions.The quality of Israel's human resources is unmatched;Israel has 140 scientists and technicians per 10,000employees,morethananyotherdevelopedcountry.Israelhas135engineersper10,000employees,which is themost concentrated number of engineers in the world.AccordingtotheGlobalCompetitivenessReportof2006,Israel was ranked first in availability of scientists and engineers.
Equal Opportunities TheIsraelivisionrestsontheprincipleofequalopportunityforallitscitizens–withoutprejudiceonthebasisofsex,raceorreligion–asafundamentalvalue.Acountrythatgrantsequalopportunitytoallitscitizensprovides each citizen with a set of opportunities forexploitinghis/herknowledgeandtalents,therebywiselyoptimizing its inherenthuman resources. The indicatorwechosetouseinordertomeasuretheextentofequalopportunitiesinIsraelincomparisonwithothercountriesisthepercentageofwomeninthelaborforce.Female Labor ForceAfull46.54%ofallemployeesintheIsraelieconomyarewomen,accordingtotheIMDCompetitivenessYearbook.Thisisarelativelyhighratecomparedtoothercountriessuch
IsraelUSA
JapanNetherlandsSwitzerland
CanadaTaiwan
UKS.KoreaIceland
Singapore
135
70
38
0
35
34
28
25
22
19
53
65
Source: Economics and Research Department, Ministry of Finance, 200�
160604020 14012010080
High-SkilledLaborForce(Engineersper10,000Employees)
Figure �.1 >
Figure �.2 >
4Source: The Global Competitiveness Report 200�-0�
5 6 7
IsraelJapanIndia
FinlandFrance
SwitzerlandCzechRepublic
CanadaSweden
GermanySingaporeDenmark
IcelandUSA(18)UK(22)
6.3
5.8
5.9
6.0
6.1
6.2
5.5
5.6
5.4
6.3
6.2
5.8
5.8
5.6
5.5
AvailabilityofScientistsandEngineers
30Source: IMD World Competitiveness Yearbook, 200�
35
EstoniaFinland
SwedenSouthAfrica
DenmarkPortugal
IcelandCanada
IsraelFrance
UK(13)USA(15)
Germany(30)Japan(42)
50.08
6055504540
48.36
47.91
47.72
47.5
47.2
47.05
46.7
46.54
46.37
46.12
46.03
44.57
41.43
Figure �.3 > FemaleLaborForce(asapercentageoftotal,2005)
4.Human Capital
< 2�
astheUS(46.03%),Germany(44.57%),Japan(41.43%).ThisdatashowstheemphasisIsraelplacesonintegratingwomenintothelabormarketaspartofanoverarchingpolicyofequality.
CultureThe contribution of culture to the social climate andeconomyisrecognizedthroughouttheworldashavinggreatimportance.Withapopulationofpeoplehailingfrommorethan100countries, Israeli society is rich in cultural diversity andartistic creativity. Theartsareactivelyencouragedandsupportedby thegovernment.The IsraeliPhilharmonicOrchestraperformsthroughoutthecountryandfrequentlytoursabroad,asdotheJerusalemSymphonyandtheNewIsraelOperaaswellasothermusicalensembles.Israelhasseveralprofessionalballetandmoderndancecompanies,whichdrawupontheculturalheritageofmanyimmigrantgroups.Thereisgreatpublicinterestinthetheater,therepertoireofwhichcoverstheentirerangeofclassicalandcontemporarydrama.
Israelboastsmorethan120 museums,includingtheIsraelMuseuminJerusalem,whichhousestheDeadSeaScrollsalongwithanextensivecollectionofregionalarchaeologicalartifacts,art,andJewishreligiousandfolkexhibits.Israelisareavid newspaper readers,withmore than90% of Israeli adults reading a newspaper at least once a week.MajordailypapersareinHebrew;othersareinArabic,English,French,Polish,Yiddish,Russian,Hungarian,andGerman.
Israel has the second highest publication of new books per capita.SevenmillionIsraelisbuy12million
bookseveryyearmakingthemoneofthehighestconsumersofbooksintheworld.
HealthThe indicators for the health of the population as acomponentofhumancapitalaremeasuredbyavailableresourcesforimprovingIsraelis'health,thecurrentyieldsofthemedicalsystem,andthestatusofthegeneralhealthofthepopulation.
Life ExpectancyThehealthstatusofIsrael'spopulation,asindicatedbylifeexpectancyatbirthandtheannualgrowthrateofthepopulation,putsIsraelinarespectablepositioncomparedtoothercountriesoftheindustrializedwesternworld.Life expectancy in Israel is 80 years,identicaltothelifeexpectancyinCanadaandFrance.ThehighlifeexpectancyinIsraelisaresultofanumberfactorsincluding:thegeneralinfrastructureofhigh-standardhealthservices,thehigh-qualityofmedicalresearchandmedicalresources,anexceptionallywell-developedhospitalsystem, and a high number of physicians and medicalspecialistspercapitainIsrael
Physicians in the Medical System ThemedicalsystemintheStateofIsraelisrichinhumanresources,equipment,andmedicaltechnology.AccordingtotheHumanDevelopmentReport,between1990and2004, the number of physicians in Israel per 100,000peoplewas382,placingIsrael 7th out of 63 developed countries.ThehighlevelofhealthcareandrelativelywiderangeofresourcesbolstersIsrael’spolicyofequalitybyenablingthecountrytoprovideahighlevelofmedicalcareforallitscitizens,includingthepoorpopulation.
Japan
HongKong
Switzerland
Sweden
Italy
Iceland
Australia
Israel
Singapore
Norway
NewZealand
Spain
France
Canada
UK(15)
Germany(15)
USA(24)
Source: The World Health Report 200�
82
81
80
79
78
76 77 78 79 80 81 82 83
79
80
80
80
80
80
80
81
81
81
81
82
LifeExpectancy-2004Figure �.� >
Cuba
Belgium
Estonia
Greece
Italy
Lithuania
Israel
Iceland
Switzerland
CzechRepublic
France
Germany
USA
UK
Japan
Source: Human Development Report, 200�
420
230
198
0 700600500400300200100
256
337
351
361
362
382
397
438
448
449
591
337
Physicians(per100,000people1990-2004)
Figure �.� >
2� >
Renewal and development capital focuses on Israel's
main potential for future growth.
In a dynamic environment, early identification of
driving forces and their translation into business
opportunities through scientific activity will lead
to the country's future prosperity. During the years
of its existence, the State of Israel has made great
contributions to scientific research and international
cooperation.
Scientific research is one of the mainstays of Israel's
growth. Israel is one of the "laboratories" for brilliant
ideas. This is evident by the large number of Israeli
companies (over 100) that are traded on the Nasdaq.
Israel is ranked 2nd after Canada in the number of
companies traded on the American Technology Stock
Exchange.
In order to examine Israel's potential, one must
analyze various indicators that focus on Israel's
investments and yields in technological development
and next-generation products.
The Competitive Edge of Israel:
• Israel has been described as the "Second Silicon
Valley" in the world.
• Israel is one of the largest centers in the world
for start-up enterprises, with more than 2500
start-up companies.
• Israel's cutting-edge industries include: agro
technology, biotechnology, computer-aided
education, and data communications.
Israel’s Scientific Advantage TheStateofIsraelhasbuiltastrongscientificcommunity,
dedicatedtoexcellenceandinnovation.Accordingto2004
Thomson ISI Data, during the years 1993 to 2003, 37
Israeliscientistsappearedonthelistofthebest0.01%
ofscientistsintheworld.
Scientific Publications in the World
TheextentandimpactofactiveresearchinIsraelisdefined
bytwomaincriteria–theproductivityofthescientific
communityandthequalityofresearchascomparedwith
therestoftheworld.Productivityistheextentofactivity
withintheacademiccommunity,onemeasureofwhich
isthenumberofpublicationspercapita.Onemeasureof
qualityofresearchisthenumberoftimesapaperiscited
inotherresearchprojects.
This restson theassumption that themoreapaper is
cited,themoreitisassumedtobeofhighqualityandto
havemadeanimpactinitsfield.
According to the Institute of Science Information (ISI),
Israel was ranked 3rd in the world in the number
of scientific publicationspermillionpeoplebetween
1999and2002.
Figure �.1 >
1000
900
800
700
600
500
400
300
200
100
0
TelAviv100NASDAQ
-4500
-4000
-3500
-3000
-2500
-2000
-1500
-1000
-500
0
1/97 1/98 1/99 1/00 1/01 1/02 1/03 1/04 1/05 1/06 1/07
HighCorrelationbetweenTASEandtheNYSE
Figure �.2 >
SwitzerlandSweden
IsraelDenmark
FinlandNetherlands
IcelandUK
NorwayBelgiumAustria
USAGermany
France(15)Japan(18)
Source: ISI - Institute of Science Information, 2003
1309
712
550
0 140012001000800600400200
731
871
929
972
1025
1065
1093
1332
1334
1598
1757
774
1600 1800 2000
NumberofScientificPublications(permillionpopulation,2002)
< 2�
Field ProductivityRank QualityRank
Mathematics 1 11
ComputerScience 2 3
Physics 2 9
MolecularBiology&Genetics 3 4
Engineering 3 12
ClinicalMedicine 4 22
Chemistry 4 5
Biology&Biochemistry 5 10
Astrophysics&Space 6 2
MaterialsScience 9 1
Ecology 11 24
In some fields, Israeli scientists achieved particularly
outstanding output relative to other countries. As can
beseeninthetablebelow,Israelrankedinthetop10
intermsofbothproductivityandqualityinmostofthe
scientificfields.
With the help of the National Infrastructure Scientific
Program of The Ministry of Science and Technology,
Israelhasdevelopednationalexpertiseinthemostcutting
edgefieldsinscience,suchasnanotechnology,genomics,
stemcellresearch,andtheconvergenceofinformation
technologywithnano-bioresearch.
Anotherimportantindicatorofrenewalanddevelopment
capital is the level of collaboration between local
Israel World Share of Science(1999-2003)
Source:TheS.NeamanInstitute,TheTechnion,2006
universities and industry in research anddevelopment.
Suchcollaborationiscriticalfordevelopingnewinnovative
solutions,ideas,products,andpatents.Accordingtothe
Global Competitiveness Report, Israel scored 5.2 on a
scaleof1to7(1=minimalornonexistent,7=intensive
andongoing)forthelevelofuniversity/industryresearch
collaboration.Israel was ranked 6th out of 125 countries
surveyedbythereport.
PatentsRegistration of Patents
Thanks to the Israeli government’s policy aimed at
encouragingknowledgetransferbetweenacademiaand
industry,Israel’sscientificadvantagehastranslatedinto
agrowingnumberofpatentsregistered intheUSand
Europe.
AccordingtoBusinessDataIsrael(BDI)2003,Israel was
ranked 3rd out of 148 countriesintermsofthenumber
ofpatentsper10,000people.
Accordingtothisresearch,between1999and2003,the
numberofIsraelipatentsregisteredintheUSincreased
bymorethan69%.In1999,thenumberofregistered
patentswasonly748,while thisnumber rose to1265
patentsin2003.
From2002to2003,thenumberofregisteredIsraelipatents
increasedby20%.
Figure �.3>
SwitzerlandFinland
SwedenU.S.A.
GermanyIsrael
TaiwanJapan
SingaporeBelgium
NetherlandsUK
CanadaFrance(29)
Source: The Global Competitiveness Report 200�-0�
1 54 62 30
5.7
5.5
5.5
5.5
5.3
5.2
5.2
4.9
4.9
4.9
4.8
3.8
5.2
5.2
University/industryresearchcollaboration
Figure �.�>
JapanTaiwan
IsraelSwitzerland
SwedenFinland
GermanyFranceBritain
Source: BDI-Business Data Israel 2003
2.98
2.96
2.04
0.500.00
2.02
1.92
1.74
0.68
0.70
1.50
1.00 1.50 2.00 2.50 3.00 3.50 4.00
NumberofpatentsregisteredintheUSduring2003
2� >
IsraelalsoplacedhighintherankingsofEPO(European
Patent Office) patent applications owned by
universities.AnOECDreportrankedIsrael3rd – among
countrieswithmorethan150EPOapplicationsregistered
between2001and2003.
Israel also ranked high (3rd) in ICT-related patents
amongcountrieswithmorethan250patentsfiledunder
thePCTbetween2001and2003,accordingtotheOECD
2006report.
Another important indicator is theutility of patents.
Utilityofpatentsismeasuredbythenumberofpatents
forinventions.AccordingtotheGlobalCompetitiveness
Report,thenumberofIsraelipatentsforinventiongranted
betweenJanuary1andDecember31in2005was137.9per
millionpeople,placingIsrael5thoutof125countries.
Biotechnology Israelishometosomeoftheworld'sleadingbiotechnology
researchcenters,renownedfortheirexcellenceinareas
suchasautoimmunediseases,cancer,andneurology.
IsIsraelabouttoexperienceabreakthroughinthisindustry?
AccordingtoMonitorCompanyReport(2001),thisisindeed
possible.Not surprisingly,growth in the Israelimedical
deviceandbiotechnologyindustrieshasbeentremendous.
Between 150 and 200 new life science companies
are established in Israel every year.
VenturecapitalinvestmentinIsraelilifesciencecompanies
hasalsogrownsignificantly.Closeto$200millionwere
investedinIsraelilifesciencecompaniesthroughout2003
– a two-fold increase in life science investments since
1997.
There are 24 technology incubators in Israel, more
than 20% of them involved in projects in the field of
biotechnology.
Israel is third in the world in terms of its number
of biotechnology start-up companies, according to
theSouthern-California–IsraelChamberofCommerce
(SCICC).Salesfromthebiotechnologysectorgenerated
$1.8-2.3billionin2004.AccordingtotheIsraeliMinistry
ofScience,Israel'sshareoftotalworldbiotechnologysales
Figure �.�>
Belgium
Singapore
Israel
China
Poland
Australia
UK
Brazil
Ireland
SouthAfrica
Canada
U.S.A.
France(24)
Germany(27)
Japan(28)
Source: OECD, 200�
9.3
9.2
8.9
3 72 65410 98
7.4
7.0
7.0
5.3
5.0
4.7
3.7
1.1
0.6
0.5
5.6
5.9
10
EPOpatentapplications(ownedbyuniversities,2001-03)
Figure �.�>
Finland
Ireland
Israel
Japan
Korea
China
U.S.A.
Canada
Sweden
UK
France
Australia
Germany
Source: OECD, 200�
53.8
42.0
41.8
20100
40.5
39.2
38.3
34.9
34.4
31.1
30.2
27.5
35.3
36.8
30 40 50 60
ICT-relatedpatents(asapercentageofnationaltotalPCTfilings,2001-03)
Figure �.�>
U.S.A.Japan
TaiwanFinland
IsraelSwitzerland
SwedenGermany
KoreaCanada
SingaporeIceland
DenmarkUK(17)
France(20)
Source: The Global Competitiveness Report 200�-�
250.3
100500 150 200 250 300
236.9
226.9
138.5
137.9
136.3
124.8
109.0
91
89.6
80.5
66.7
66.3
52.7
47.4
Utilitypatents(permillionpopulation,2005)
< 29
accountwhencomparingIsraeltocountrieswheresecurity-
related research and development is low. Despite this
difficulty,Israel was ranked first out of all developed
countries in terms of national expenditure on civilian
research and developmentasapercentageoftheGDP,
whichinIsraelstandsat4.55%.
Foreign Investment in IsraelIsraeli economic policy has created a climate that is
conducive to venture capital investment by liberalizing
foreigncurrencyandbyofferingsignificantgovernment
incentivesandtaxbreaksforinvestors.
In1991,therewasonlyoneventurecapitalfundinIsrael;
today,thereareover65venturecapitalfundsinvesting
in young companies. Israel-based venture capitals
haveapproximately$2billionat theirdisposal fornew
investments.
Israel is attractive to foreign investors because of its
excellence in technology, particularly in the software,
communications,security,andbiotechsectors.Asisshown
intheIVCdata,mostinvestmentsinIsraelaremadein
thehigh-techsectorswithcommunicationsreceiving35%
andsoftware18%.
"Outside of the US, we invest in only one other
country, that's Israel."
Julien Nguyen, Managing Partner Applied Materials
Ventures, September 2003
isabout2.5%.TheOECDreportranks Israel 7th among
countrieswithmorethan250patentsfiledunderPCT
between2001and2003.
National Expenditure on Civilian Research and DevelopmentOver the past few years, research and development
institutionsandstart-uphigh-techcompanieshavebeen
consideredthepioneersofIsrael’sgrowthandhavecome
tobeviewedasnationalsymbols.Infact,thisprocesshas
beeninthemakingforthepast30years.Inthelastthree
decades,investmentinresearchanddevelopmenthasledto
a30%increaseintheGDP.Research and development
is the key success factor in Israel’s economic growth
and the country's integration into the globalized
world.
Researchanddevelopmentisavital,ongoingprocessin
aknowledge-basedindustry.Thisprocessiscapableof
transformingnewideasintoproductsofhighaddedvalue
withinashortperiodoftime.Thisinnovationdynamichas
thepotentialtoshrinkthebalanceofpaymentsdeficit,thus
acceleratingprogresstowardseconomicindependence.
Thanks to research and development, Israel enjoys a
competitiveedge in theworldmarketdespite its small
size. The degree of innovation indicator is a reflection
ofexpenditureoncivilianresearchanddevelopment.It
doesnot,however,includesecurity-relatedresearchand
developmentbecausethetop-secretnatureofsuchdata
makes it inaccessible. This factor should be taken into
Figure �.�>
Denmark
Canada
Belgium
U.S.A.
NewZealand
Australia
Israel
China
Spain
UK
India
Japan
Switzerland
France(16)
Germany(17)
Source: OECD, 200�
12.7
10.8
10.4
420
9.4
9.2
8.6
7.6
7.5
7.1
6.7
6.2
6.0
5.6
7.8
8.3
6 8 10 12 14
Biotechnologypatents(asapercentageofnationaltotalPCT
filings)
Figure �.9>
210 3 4 5
Israel
Sweden
Finland
Japan
Iceland
U.S.A.
Korea
Denmark
Switzerland
Germany
Taiwan
Austria
France(16)
Canada(17)
UK(18)
Source: IMD World Competitiveness Yearbook 200�
4.55
3.95
3.48
3.2
2.87
2.66
2.57
2.49
2.42
2.26
2.16
2.61
2.63
1.9
1.88
TotalExpenditureonR&D(asapercentageofGDP2004)
30 >
Start-up companies and entrepreneurs with innovative
butriskyprojectsinIsraelcaneasilyfindventurecapital.
According to the survey conducted by the Global
Competitiveness Report on venture capital availability,
Israel was ranked 2nd in venture capital availability,
precededonlybytheUS.
ItistheaimofIsrael'sOfficeoftheChiefScientist(OCS)
oftheMinistryofIndustry,TradeandLabortoleverage
technologyinIsraelasameansofboostingtheeconomy,
supporting innovationandR&D,utilizing Israel'sskilled
resources,enhancingtheknowledgebaseofIsraelihigh-
techindustries,andpromotingcooperationinR&Dboth
locallyandinternationally.Inthelastfewyears,Israelhas
recognizedtheneedtoestablishasystemthatincludes
entrepreneurs,venturecapitalfunds,investorswhofurnish
capital,andacapitalmarketinordertosuccessfullyattract
venturecapital.
Inthefigure,onecanclearlyseethedifferencesbetween
thesituationin2000whenthehigh-techindustryflourished
andthesituationbetween2001and2003-whenthe
amountofcapitalraisedinthehigh-techsectordipped.
ThefigurealsoshowsthattheIsraelieconomyrecovered
in2004,onceagaininducingapositivetrendinthehigh-
techsector.
Therefore, professional investors are keen on investing
fundsinIsraelicompanies,andmulti-nationalcompanies
seektoacquiretechnologiesandcompaniesinIsrael.
Entrepreneurship and Start-Up CompaniesPriortothe1980's,theIsraelieconomywasfocusedaround
traditionalindustries.Sincethe1980's,however,thehigh-
techexplosionhas transformed the Israelieconomy. In
2006, high-tech exports comprised 48% of Israel's
industrialexports.
The government supports more than 200 projects in
government-fundedincubators.Thereare24technological
incubators inoperation.1000projectshavegraduated
from these government incubators in the last decade,
ofwhich57%havereceivedfurtherprivateinvestment.
Thegovernmenthasalsosetup technologyparksand
implementedsoftwaredevelopmentprojects.
Figure �.10>
Source: IVC, Israel Venture Association, 200�
Communications35%
Internet5%
OtherTechnology11%s
Semiconductors8%
LifeSciences
15%s
Sofware18%
VCInvestmentsbySector,2006
Figure �.11>
U.S.A.
Israel
Finland
Netherlands
Norway
UK
Luxemburg
Ireland
Denmark
HongKong
Sweden
Germany(16)
Japan(23)
Canada(4.5)
France(28)
Source: The Global Competitiveness Report, 200�-0�
5.6
5.5
5.4
210
5.4
5.2
5.2
5
5
5.0
4.8
4.5
5.1
5.1
3 4 5 6
4.5
4.2
VentureCapitalavailability
Figure �.12>
3500
3000
2500
2000
1500
1000
500
0
Source: IVC, Israel Venture Association, 200�
1999 2000 2001 2002 2003 2004 2005 2006
1013
3092
1986
1138 1011
14651337
1622
CapitalraisedbyIsraelihigh-techcompanies($m)
< 31
Figure �.13>
Germany
Sweden
Japan
Denmark
Switzerland
Finland
France
Israel
U.S.A.
Austria
Netherlands
UK
Korea
Belgium
Canada(19)
Source: The Global Competitiveness Report, 200�-0�
6.0
5.8
210
5.8
5.7
5.6
5.4
5.4
5.2
5.1
4.8
5.4
5.5
3 4 5 6 7
6.1
5.8
6.0
CapacityforInnovation
Figure �.1�>
Source: IMD World Competitiveness Yearbook, 200�
HongKong
Iceland
Colombia
Austria
Israel
U.S.A.
Taiwan
Estonia
Denmark
Chile
Canada(14)
France(38)
Germany(47)
U.K.(52)
Japan(57)
7.86
7.13
210
6.84
6.83
6.67
6.38
5.63
5.28
5.06
4.75
6.59
6.64
3 4 5 6 7
8.35
7.07
7.19
8 9 10
Enterpreneurship
Israel has the third largest concentration of start-up
companies in the world, preceded only by Silicon
Valley and the metropolitan Boston area.Thesestart-
upcompaniesprovideIsraelitsmainpotentialforfuture
economicgrowth.
ItappearsthatthesecrettothesuccessofIsraelistart-
up companies lies in a quintessential characteristic of
Israeli society– theability tooperateunder conditions
of uncertainty and rapid changes, long a necessity of
lifeinIsrael.Israelientrepreneursareblessedwithtraits
vitaltotheirtrade,suchaswillingnesstotakerisks,the
abilitytomakequickdecisions,theabilitytolearnquickly,
andatremendousdesireforsuccess.Assuch, it isnot
surprising that Israeli companies are known for being
innovative.AccordingtoasurveyconductedbytheGlobal
CompetitivenessReport,Israel was ranked 8th in terms
of its companies’ capacity for innovation.Onhow
companiesobtaintheirtechnology,Israelscored5.6ona
scalefrom1to7(1=exclusivelyfromlicensingorimitating
foreigncompanies,and7=byconductingformalresearch
andpioneeringtheirnewproductsandprocesses).
Israel ranked 5th in entrepreneurship. It is clear
fromtheserankingsthatasubstantialnumberofIsraeli
companieshaveareputationasleadersintheirfields.In
addition,aconsiderablenumberofsmall,andmedium-
sizedIsraelicompanieshavesucceededintheinternational
stockmarket.
32 >
This3rdpublicationoftheIntellectualCapitaloftheStateofIsraelisaspecialedition,becauseitsummarizestheachievementsofthecountryinitscelebrationofits60thyearofindependence!
ThisdocumentpresentsaholisticandorganizedpictureoftheknowledgeandintellectualassetsthatIsraelhasachieved.Itpresentsthehiddenvaluesthatwillleadtoeconomicgrowthandtothecountry'sincreasedintegrationintheglobalmarket.
Overthepastfewdecades,theIsraeligovernmenthasledaveryclearstrategicpolicyofencouraginginnovationandenhancinginternationaltradeco-operationbetweenIsraelandothercountries.Thankstothispolicy,Israelbecameattractivetoforeigninvestorsandmultinationalcorporations.Researchanddevelopmentinstitutions,start-up,andhi-techcompaniesinIsraelhavebeenconsideredpioneersofgrowthandanationalsymbol.Infact,thishasbeenanongoingprocessforthepast30years!Thecountry’sexcellenttechnology,particularlyinthesoftware,communications,security,andbiotechsectors,attractsforeigninvestors,mainlyfromtheUSandfromEurope,whoareawareofthegreateconomicpotentialforinvestinginIsrael.
Thisstudyshowsthat,sinceitsestablishment,Israelhassucceededinaccomplishinggreattechnological achievements.Israelisleadinginvariousfieldssuchasagrotechnology,biotechnology,computer-aidededucation,anddatacommunication.Furthermore,thecountry’scompetitiveedgeisexcellent human capitalintheformofahighlyeducatedworkforcethatiswellintegratedinthehi-techsectorandinresearchandscientificactivity.Inaddition,Israelprovidesa modern infrastructure-asupportivebusinessenvironmentwhichincludesahighlyadvancedbankingandfinancialsectorandlegalprotectionofforeigntrademarksandpatents.
TheprofileofIsraelthatemergesfromthiscomparativestudywithotherdevelopedcountries,isclearlyoneofanationthatisasuperiorpartnerforglobalbusinessandworldwidecollaboration.InaccordancewithIsrael'svisionforthefuture,thisreportpresentsIsrael'sstrategicassetswhichwillenhanceIsrael'sfutureeconomicgrowth.
Summary
3� >
IntroductionIsraelderivesgreatstrengthandtechnologicalexcellencefromitshumancapitalalongwiththeacademicandtechnologicalinfrastructureithasdeveloped.Inordertomaximizetheexploitationofthishumanpotentialandconvertitintoacompetitiveadvantage,thereisapressingneedtoinvestinindustrialresearchanddevelopment.SuchaninvestmenthasbothdirectandancillaryeffectsonthemarketandbecomestheenginethatdrivestheIsraelieconomy.TheOfficeoftheChiefScientist(OCS)withintheMinistryofIndustry,TradeandLaborisresponsibleforexecutingthegovernmentpolicyrelatingtoindustrialR&Dsupport.TheOCSobjectivesaretosupportindustrialR&D,encourageentrepreneursinhigh-techstart-upcompanies,leverageIsrael'shighlycapablescientificandtechnologicallaborforce,facilitatetheacademicindustrialinterfaceforthetransferscientificknow-howandtechnology,and,ingeneral,tostimulatecooperationinstateoftheartR&Datnationalandinternationallevels.TheLawfortheEncouragementofIndustrialResearchandDevelopment–1984constitutesthegeneralmandateoftheOCS.TheOCSalsooffersarangeofadditionalsupportprogramswithintheframeworkofdirectivesfromtheDirector-GeneraloftheMinistryofIndustry,TradeandLabor.The revised lawallows,butdoesnotencourage, the transferofbothknow-howandmanufacturing rights abroadunder clearlydefinedcosts andconditions.
International ActivitiesTheGovernmentofIsrael,throughtheOCS,hassignedagreementsandcreatedfundstogetherwithothergovernmentstoactivelysupportandencourageindustrialR&DcooperationbetweenIsraelicompaniesandindustriesoverseas.MutualbenefitsofinternationalcooperationinindustrialR&Darebasedonthestrengthofeachofthecooperatingcompanies.Itwillusuallyincludeaccesstoknow-how,R&Dinfrastructure,andtechnologiesthatarenototherwisereadilyavailabletotheparticipantsaswellasaccesstonewmarketsandtheneedsofthecaptivemarketofeachindustry.Potentialstrategicpartnerscanbeidentified,resultinginheightenedawarenessofmarketopportunitiesinpartneringcountries,andenhancedidentificationofpotentialtradestrategies.IsraelcanactasatradebridgeforcompanieswishingtoexpandtheiractivitiesintothesemarketsviaitsfreetradeagreementswithNorthAmerica,theEU,andothercountries.Thegovernment'spoliciesandOCSactivitieshavecreatedanenvironmentofgoodinvestmentopportunitiesandsupportthathasattractedhundredsofinternationalcompaniesincludingwell-knownmultinationals,tosetupresearchcentersandenterprisesinIsrael.
< 3�
MATIMOP – Israeli Industry Center For R&DMATIMOPisagovernmentalnon-profitorganizationaimingtopromotethedevelopmentofadvancedtechnologiesinIsraelandtocreatefruitfulinternationalpartnershipsthroughindustrialcooperationandjointventures.MATIMOPactsonbehalfoftheOCSasthenationalagencyinchargeofencouragingandassistingparticipationofIsraelienterprisesininternationalbi-lateralormulti-lateralcooperationprogramsforindustrialR&D.MATIMOPimplementsmostofthebi-Lateralandmulti-LateralR&DcooperationagreementsonbehalfoftheOCSandthusservesasacontactpointforvariousagreements.Assuch,MATIMOPisinconstantcontactwithmostIsraeliHiTechcompaniesandmaintainsadatabaselistingmorethan3,000companiesofallsizes,interestedininternationalcooperation.Onemaysearchthedatabasebytechnology,application,keyword,oralphabeticallyat:http://www.matimop.org.il/newrdinf/company/compsrc.htm
a. Bi-National FundsTwonationscontributeapre-determinedsumtoabi-nationalfundintendedtosupportcooperativeprojects.Intheprovenmodel,eachfundestablishesitsowncriteriaandprocedures,usuallywithinasimilarframework.Aboardofdirectorsisappointedbythetwogovernments,whichissovereigninitsdecisionmaking.Thefundsaremanagedandgrantpaymentsareadministeredbyanon-profitorganization.Itrequiresnoequityinthecompaniessupportedandnointellectualpropertyrightsintheirproducts;nordoesitinterfereinformulatingorrunningtherelationshipsbetweenthepartneringcompanies.BesidesfinancialsupportforR&Dprojects,thefoundationsalsoengageinsearchesforbusinesspartnersinbothcountries,forthepurposesofcollaborationintechnologydevelopmentprojects.
Contact persons:Mr.YairAmitay,ManagingDirectorE-mail:amitay@matimop.org.ilWeb:www.matimop.org.il
Ms.MinaGoldiakInternationalRelationsandCooperationTel:972-3-5118175Fax:972-3-5177655E-mail:minag@matimop.org.il
3� >
a. 1. BIRD Israel-U.S. Binational Industrial R&D FoundationIntroduction:For30years,BIRDhasbeenacatalystforjointResearch&DevelopmentbetweenU.S.andIsraelicompanies.BIRDbringstogetherpromisingIsraelicompanieswiththeirmedium-to-largeU.S.counterparts.BIRDsupportsU.S.companiesintheirsearchforinnovationoutsidethecompanyborders,byexposingthemtoemergingIsraelicompaniesandnoveltechnologies.BIRDisconstantlyseekingnewopportunitiesandmonitoringemergingindustries.Lately,BIRDhasemphasizedtheemergingCleantechsector,specifically,renewableenergyandwatertechnologies.TheapprovaloftheBIRDFoundationBoardofGovernorsisbasedonareviewbytheU.S.NationalInstituteofStandardsandTechnology(NIST)andtheOfficeoftheChiefScientist(OCS)ofIsrael’sMinistryofIndustryandTrade,andLabor.Criteria:Anypairofcompanies,oneIsraeli,oneAmerican,mayjointlyapplyforBIRDsupportsolongastheyhavethecombinedcapabilityandinfrastructuretodefine,develop,manufacture,market,sell,andsupportaninnovativeproductbasedonindustrialR&D.Inmanycases,theIsraelicompanyisinvolvedinthedevelopmentofcutting-edgetechnologies,whiletheAmericancompanyofferslarge-scaleproductdevelopmentandcommercialization.EstablishedIsraelicompaniesmayteamwithU.S.start-upsaswell.The“BIRDModel”hasbeenadaptedtodealwithlongtermbiotechnologyprojects.Details:TheBIRDFoundationoffersconditionalgrantsforjointdevelopmentprojectsonarisk-sharingbasis.TheFoundationfundsupto50%ofeachcompany’sR&Dexpensesassociatedwiththejointproject.Royaltiesaredueonlyifcommercialrevenuesaregeneratedasadirectresultoftheproject.Iftheprojectfails,BIRDclaimsnorepayments.Inthecaseoflonger-termPharma/Biotechprojects,therepaymentsmaybebasedonmilestones.BIRDrequiresnoequityinthecompaniessupportedandnointellectualpropertyrightsintheirproducts,nordoesBIRD interfere informulatingorrunningtherelationshipbetweenthepartneringcompanies,includingtheiragreementsonco-developmentandco-manufacturing.Since its inception30yearsago,BIRDfundedover740projectswith leadingcompanies intheU.S.,including:GeneralElectric,AppliedMaterials,Motorola,Bayer,Johnson&Johnson,Guidant,AmericanRedCross,Bio-Rad,TexasInstruments,Molex,Telcordia,Spansion,SanDisk,EastmanKodak,andmanyothers.BIRDisconsideredagreatsuccessbyboththeU.S.andtheIsraeliestablishmentshavingbeeninstrumentaltothedevelopmentoftheIsraelihi-techsector,andtotheU.S.-Israelitechnologyrelationship.BIRDprojectshaveproducedbillionsofdollarsinsalesandeachyear20to25newprojectsareapprovedinallsectors.The BIRD team also manages TRIDE – a Trinational Fund, bringing together Israel-Jordan and U.S.companiestoperformprojectsfollowingtheBIRDmodel.InadditiontoNISTandOCSreviews,projectsarereviewedbytheJordanianRoyalScientificSociety,throughtheJordanianMinistryofIndustryandTrade.
Contact person:EitanYudilevich,Ph.D.,ExecutiveDirector(BIRDandTRIDE)Tel:972-3-6470710Fax:972-3-6498341E-mail:eitan@birdf.com,eitan@tride-f.comWebsites:www.birdf.com,www.tride-f.com
< 3�
a. 2. CIIRDF – Canada-Israel Industrial R&D FoundationIntroduction:TheCanada-IsraelIndustrialR&DFoundation(CIIRDF)wasestablishedin1994topromoteandsupportcollaborativeR&Dbetweenfirmsinbothcountries.TheFoundationoffersgrantsforjointR&Dprojects,aswellasengaginginsearchesforR&DpartnersinCanadaandIsraelforthepurposesofcollaborationintechnologydevelopmentprojects.Criteria:EligiblecompaniesforCIIRDF’sfundingarefirmsoperatingandheadquarteredinCanadaandIsrael.Atleast30%oftheR&DworkmustbedoneineitherCanadaorIsrael.CIIRDFisalsoentrustedwiththeimplementationoftheOntarioagreementandthefocusofOntarioprojectswillbeonConvergentHealthandCleantectechnologies.Details:CIIRDF’ssupportincludesfundingofbothfeasibilitystudiesandfullprojects.Supportcanreachamaximumof50%oftheeligibleR&DcostsofjointprojectsuptoaceilingofC$800,000.CIIRDFrequiresnoequity in thecompaniessupportedandno intellectualproperty rights in theirproducts. It requiresonlythatthenominalgrantispaidbackinterestfreeonthebasisofroyaltiesifcommercialrevenuesaregeneratedasadirectresultoftheproject.
a. 3. KORIL-RDF - Korea-Israel Industrial R&D Foundation Introduction:TheKorea-Israel IndustrialR&DFoundation(KORIL-RDF)wasjointly incorporatedbytheKoreanandIsraeligovernmentsin2001basedonanagreementconcludedin1998.KORIL-RDF aims to advance Korea-Israel science and technology, business-to-business, and ultimatelyoveralleconomicandtraderelationsbypromoting,facilitating,andsupportingjointindustrialR&DprojectsbetweenKoreanandIsraelihigh-techcompanies.TheFoundationoffersgrantsforjointR&Dprojects,aswellasengaginginsearchesforbusinesspartnersinKoreaandIsrael,forthepurposesofcollaborationintechnologydevelopmentprojects.Criteria:At least30%ofR&Ddevelopmentmustbedone ineitherKoreaor Israel. Joint technologydevelopmentcanrangefromafewweeks,inthecaseofafeasibilitystudy;uptoamaximumofthreeyearsinthecaseofafullscaleproject.Details:FinancialsupportforthejointR&Dprojects isdividedintothreecategories–feasibilitystudy;mini-project,andfullscaleproject.Inthecaseofafull-scaleproject,supportcanreachamaximumof50%oftheallowedjointR&Dexpenditure,uptoaceilingof$1,000,000.
Contact persons:CIIRDF-CanadaDr.HenriRothschild,PresidentTel:613-7241284Fax:613-7241134E-mail:HRothschild@ciirdf.ca
CIIRDF–IsraelMr.LesAbelson,FoundationManagerTel:972-9-7494043Mobile:972-50-2163144E-Mail:les@ciirdf.caWebsite:www.ciirdf.ca
Contact persons:KORIL-RDFKoreaDr.JohngIhlLee,ChiefExecutiveTel:82-2-60098250Fax:82-2-60098254E-Mail:jilee@kotef.or.kr
Mr.HughKim,Program&PlanningCoordinatorKORIL-RDFE-Mail:shkim@kotef.or.krWebsite:www.koril-rdf.or.kr
KORIL-RDFIsraelMs.DeborahSchabes,ManagerTel:972-3-5118183Fax:972-3-5167052E-Mail:dvora@matimop.org.il
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a. �. SIIRD – Singapore-Israel Industrial R&D FoundationIntroduction:SIIRDwasestablishedin1997topromote,facilitate,andsupportjointcommerciallyviableindustrialR&DprojectsbetweenSingaporeanandIsraelihigh-techcompanies.TheEconomicDevelopmentBoard(EDB)ofSingaporeandtheOfficeoftheChiefScientist(OCS),MinistryofIndustry,TradeandLaborofIsraelarethetwoco-operatinggovernmentagenciesresponsibleforsettingupofthisjointnon-profitfoundation.Criteria:Jointtechnologyprojectsmayincludetechnologyandknowledgeapplications,product'sdevelopmenttowardsbeta-sitetestingandinnovativesystemsintegration.EligiblecompaniesforSIIRD’sfundingarefirmsoperatingandheadquarteredinSingaporeandIsraelwithatleast30%oftheR&DworkhandledineitherSingaporeorIsrael.Details:FinancialsupportforthejointR&Dprojectsisdividedintothreecategories–feasibilitystudy,mini-project,andfullscaleproject.Inthecaseofafull-scaleproject,supportcanreachamaximumof50%oftheallowedjointR&Dexpenditures,uptoaceilingof$750,000,andnotmorethan$500,000inoneyear.Jointtechnologydevelopmentispreferablyunder24monthsandgearedtowardscommercializationofthedevelopedtechnologies.
b. Bi-National Cooperation AgreementsIntroduction:TheseagreementsprovideaframeworkforencouragingBi-NationalIndustrialR&DCooperationthroughfinancialsupporttojointR&Dprojects.Thenationalfundingauthoritiesintherespectivecountriesparticipatingintheprojectimplementtheapprovalprocess.Details: InIsrael,theOCSisinchargeoftheoperatingmethodsandapprovalproceduresandMATIMOP,operatingon itsbehalf , is inchargeof implementing theseagreements,by raising theawareness forinternationalcooperationamongIsraelienterprises,byassistingtoidentifyforeignpartnersandbyassistingincreatingandqualifyingjointR&DprojectsbetweenIsraeliandforeigncompanies.MATIMOPisfacilitatingeachyearalargenumberofjointR&DventuresthroughtheEurekaFrameworkandthrough14cooperationagreementswithEuropeancountries,includingDenmark,Finland,Holland,Italy,Slovenia,Belgium,Portugal,France,Spain,Turkey,Germany,Ireland,SwedenandGreece.MATIMOPhasrecentlylaunchedtwonewcooperationprogramswithArgentinaandBrazail.TheseprogramsarethefirstonesgeneratedwithLatin-Americancountries.TheOfficeoftheChiefScientistandMATIMOPhasrecentlydecidedtoputspecialemphasisandtoinvesttheireffortsinpromotingindustrialR&DcollaborationwithAsia,andspecificallywithIndiaandChina,bothattheFederallevelandattheregionallevel.AdditionalBi-Nationalagreementsareavailablewiththefollowingcountries/states:Hong-Kong,Taiwan,Maryland(USA),Victoria(Australia),Ontario(Canada).
Contact persons:Ms.HayaMiller,DeputyManagingDirector(AmericasandAsia-Pacific)E-mail:hmiller@matimop.org.il
Mr.IsraelShamayExecutiveDirectorIndustrialCooperationPrograms(Europe)E-mail:i_shamay@matimop.org.il
Ms.MinaGoldiakInternationalRelationsandCooperationTel:972-3-5118175Fax:972-3-5177655E-mail:minag@matimop.org.il
Contact persons: SIIRD-SingaporeMr.ChanEngChye,GeneralManagerE-Mail:ecchan@edb.gov.sg
Mr.JacksonPhang,ManagerE-Mail:jackson_phang@edb.gov.sg
Ms.RachelChan,ExecutiveE-Mail:rachelc@edb.gov.sg
SIIRD-IsraelMs.ShirleyRefuah-Hasson,Adv.,ManagerTel:972-3-5118170Fax:972-3-5167052,5165090E-Mail:shirleyr@matimop.org.ilWebsite:www.siird.com
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c. The Global Enterprise R&D Cooperation Framework Introduction:TheGlobalEnterpriseR&DCooperationFramework,recentlyestablishedwithintheOCS,isattractingprestigiousmultinationalcorporations(MNC)toforgecooperationdealsforinvestmentinIsraelistartups.PartnershipsbetweentheIsraeligovernmentandmultinationalcompanieshavethepotentialtopropelR&Dprojectsdirectlyontotheworldmarket.Thiscooperationformatoffersalotofadvantagesforbothparties.Israelistartupsthataretargetingamultinationalasaclient,benefitbyinvolvingtheirfuturepartnerinthedevelopmentstagesandtherebyboostingtheirchancesofsuccess.ThecooperationwithmultinationalsalsoopensestablishedexportmarketsfortheIsraelicompany.ThemultinationalsgainachannelviatheOCStoalargenumberofIsraelistartupsandbenefitfromsharingtheriskofR&DinvestmentwiththeOCS.AmongtheMNC‘Sparticipantsintheprogramare:ALCATEL,IBM,MICROSOFT,ORACLE,SUNMICROSYATEMSandDEUTSCHETELECOM.Details:Theprogramtapsintotheindependentworldpowerofmultinationalcorporationswithatleast$1billioninannualsalesandsignificantinvestmentinR&D.Israelicompanies,whoseannualrevenueshasn'texceeded70millionUSDduringthelast3years,arequalifiedtoapplyfortheOCSgrantofupto50%oftheapprovedjointproject'sbudget.TheMNCwillprovidetheIsraelicompanyanequalamountthatmayconsistofcashinvestmentand/orotherassistance:borrowingequipment,discountedsoftwarelicenses,usinglabs,technologicalguidance,businessmentoring,etc.
d. US-Israel Science & Technology CommissionIntroduction:Thisprogramwasajointinitiativelaunchedin1994byUSPresidentBillClintonandthelatePrimeMinisterYitzhakRabin.TheCommissionprovidesauniqueandhighlybeneficialenvironmentforpromotingbi-nationalcooperationatthehighestlevelsofgovernmentandindustry.Togetherwithitsimplementationarm,theU.S.-IsraelScienceandTechnologyFoundation,theCommissionfocusesonareasofbi-nationalstrategicimportance,suchasLifeSciences,HomelandSecurity,andRenewableEnergy.TheCommissionperformsthetaskasacatalystforprogressbyidentifyingandremovingimpedimentsandbuildingthebi-nationalinfrastructureformutuallybeneficialeconomicandtechnologicalcooperation.
Contact persons:Ms.MinaGoldiakInternationalRelationsandCooperationTel:972-3-5118175Fax:972-3-5177655E-mail:minag@matimop.org.il
Mr.JacobFisher,Director-TnufaTel:972-3-5165044Fax:972-3-5165090E-mail:mail@tnufa.org.il
Contact persons:US-IsraelScience&TechnologyFoundation,U.S.AMs.AnnLiebschutzTel:202-419-0430Fax:202-419-0435E-mail:ann@usistf.orgWebsite:www.usistf.org
US-IsraelScience&TechnologyCommission,ISRAELMr.DavidMiron-Wapner,ExecutiveDirectorTel:972-3-5118111Ext.61Fax:972-3-5174617E-mail:david@usistc.org
Ms.EdithEven-Chen,OperationsManagerTel:972-3-5118188Fax:972-3-5174617E-mail:edith@usistc.orgWebsite:www.usistc.org
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e. Multinational Agreements
e. 1. The European Union's Framework Programs for R&D (FP)TheEuropeanUnion'sFrameworkPrograms(FPs)arethemainfinancialtoolsthroughwhichtheEuropeanUnionsupportsresearchanddevelopmentactivitiesthatcoveralmostallscientificdisciplines.Itisthelargestprogramintheworld,bringingtogetherindustryandacademia.Israelistheonlynon-EuropeanassociatedstatefullyparticipatingintheFrameworkprograms.ISERD–TheIsrael-EuropeR&DDirectorateforEUFP,operatingthroughtheOfficeoftheChiefScientistoftheMinistryofIndustry,TradeandLabor,aimstopromotejointIsraeli-EUR&DventureswithintheEU’sR&DFrameworkProgram.ISERDisaninter-ministerialdirectorateestablishedbytheMinistriesofIndustry,Trade&Labour,ScienceandTechnology,ForeignAffairsandFinance,andthePlanningandBudgetCommitteeoftheCouncilforHigherEducation.
ISERD• ActivelyassistsacademicandindustrialentitiesinpreparingandsubmittingtheirEU-RTDprogramproposals.• Provideshelpidentifyingvariouspartnersandbusinessopportunities.• Offersassistance,training,andsupportingservicestointerestedparties.• WorksoninformationdisseminationandraisingawarenesswithinIsrael.• Organizeseventssuchastrainingsessions,seminars,conferences,andnewsletters.
ISERDrepresentsIsraelintheFrameworkProgram’smanagementcommitteesattheEuropeanCommission.ItisalsoresponsibleforthepromotionofIsraeliinterestsintheFrameworkProgram’skeyorganizations,suchasresearchinstitutionsanduniversities,aswellasforpromotingandraisingawarenessoftheprogramamongindustrialandacademiccommunitiesinIsrael.Morethan2000IsraelientitiesparticipatedinvariousR&Dprojects,inthe4th,5th,and6thFrameworkPrograms.ThisispartofthecommitmentbyIsrael’sacademicandbusinesscommunitiestointernationalcooperationasthebestwaytoachievesocial,economic,andscientificprogressandunderstanding.
ThecurrentFrameworkProgram-FP7-isoperatingduringtheyears2007-2013withabudgetof€50billion.
Contact person:Mr.MarcelShaton,GeneralManagerTel:972-3-5118122Fax:972-3-5170020E-mail:marcel@iserd.org.ilWebsite:www.iserd.org.il
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e. 2. EUREKA Introduction:EUREKAisaninitiativebynearly40Europeangovernments(includingIsrael)andtheEUtocreateapan-Europeannetworkformarket-oriented,industrialR&D.Theobjectiveistobringhigh-qualityR&Deffortstothemarketandtousethemultiplyingeffectsofcooperation.EUREKAisthelargestEuropeanplatformforindustrialinnovationprojectsthatarefundedthroughnationalandregionalschemesintheparticipatingcountries. In Israel,theOfficeoftheChiefScientistsupportsIsraelicompaniesparticipatinginEurekaprojects.Details:Eurekaisaverynon-bureaucraticand“SMEfriendly”framework:over40%ofEurekaprojectparticipantsareSME’s.AmongEureka’sactivitiesaretheEurekaClusters,industry-ledthematicinitiativesinaparticularareaofstrategicinterestfortransnational,cooperativeR&D.Clusterprojectsareinitiatedbymajorcompanieswhichfirstdeveloproad-mapstolayoutfuturedirectionsforindustrialR&Dinselectedareas.MostclustersareactiveinICTfieldsandamongtheirinitiatorsarePhilips,Siemens,Alcatel,Thomson,Ericsson,Nokia,FranceTelecom,Telefonica,DeutscheTelekom,andothermarketleaders.IsraelisamongthemostactiveEurekamembersandcurrentlyIsraeliCompaniesparticipateinmorethan10%ofALLEurekaprojectsandinmorethan20%ofALLEurekaClusterprojects.MATIMOPistheNationalCoordinatorforEUREKA-visitwww.matimop.org.il
e. 3. EUROSTARSTheEurostarsProgrammeisthefirstEuropeanfundingandsupportprogramspecificallydedicatedtoR&DperformingSMEsandstart-ups.Eurostarsaimstostimulatethemtoleadinternationalcollaborativeresearchandinnovationprojectsbyeasingaccesstosupportandfunding.Eurostarsprojectscanaddressanytechnologicalarea,butmustbemarket-driven,haveacivilianpurpose,andbeaimedatthedevelopmentofanewproduct,process,orservice.AEurostarsprojectiscollaborative,meaningitmustinvolveatleasttwoparticipants(legalentities)fromtwodifferentEurostarsparticipatingcountries.Inaddition,themainparticipantmustbeaR&D-performingSMEfromoneofthesecountries.EurostarsisjointlyoperatedbytheEUREKAnetworkandtheEuropeanCommissionandprojectsarefundedthroughdedicatednationalfundingschemes,whicharetoppedupbytheEU.
Contact person:Mr.IsraelShamay,ExecutiveDirectorIndustrialCooperationPrograms–EuropeTel:972-3-5118111E-mail:i_Shamay@matimop.org.il
Contact person:Mr.IsraelShamay,ExecutiveDirectorIndustrialCooperationPrograms–EuropeTel:972-3-5118111E-mail:i_Shamay@matimop.org.ilWebsite:http://www.eurostars-eureka.eu
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e. �. GALILEO and SESARIntroduction:Europe’sflagshipProgramfor thedevelopmentofaGlobalSatelliteNavigationSystemcomposedof30satellitesandnearly50groundstationsallovertheworld.TheprogramismanagedbytheEuropeanCommissionandtheEuropeanSpaceAgency.IsraelandChinaaretheonlynon-Europeanfullmembersintheprogram.MATIMOPhasbeennominatedtofacilitatetheIsraeliparticipationinGalileoandisamemberintheGalileoJointUndertaking-visitwww.matimop.org.il,www.gsa.europa.eu
SESAR (the Single European Sky ATM Research Programme) is the first European ATM improvementprogramme,involvingtheAviationPlayers(civilandmilitary,legislators,industry,operators,users,groundandairborne)fordefining,committingto,andimplementingapan-Europeanprogram,andtosupporttheSingleEuropeanSkylegislation.MATIMOPfacilitatestheIsraeliparticipationinSESARvisitwww.matimop.org.il,www.eurocontrol.int/sesar/
e. �. IRC – Innovation Relay Centers Introduction: TheIsraeliInnovationRelayCenter(IRCIsrael)advisesprimarilysmallbusinessesontechnologyandinnovation.Italsohelpsthemidentifytechnologyneeds,suitabletechnologiestomatchtheseneeds,giveassistanceonexploitationandadviseontheEUResearchandTechnologyprograms.EachRelayCentreisanindependentofficebackedbyfundingfromtheEuropeanUnion'sInnovationProgram.Througheachcenter,companiesandinstitutionsestablishlinkstomanyotherrelaycenterslocatedacrossEurope.TheprimarygoalofallInnovationRelayCentersistocreateanexchangeofinformationbetweenorganizationsacrossEurope.Thisgivestheorganizationadirectlinktopartnersandpotentialbuyersofthetechnologiesdeveloped,orpotentialsellersofthetechnologiesthecompanymayneed.
Contact person:Mr.IsraelShamay,ExecutiveDirectorIndustrialCooperationPrograms–EuropeTel:972-3-5118111E-mail:i_Shamay@matimop.org.il
Contact person:Ms.SharonZimmerman,ProjectCoordinatorTel:97235118186Mobile:972545587910E-mail:Sharonz@matimop.org.il
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Activities in Israela. Competitive R&D a. 1. The R&D Fund:Introduction:TheR&DFundisthemainsupportchanneloftheOCS,intermsofbudget,anditisopentoallIsraeliregisteredfirmswishingtoengageintechnologicalresearchanddevelopment.TheproposalsareevaluatedbyexpertswithfinalapprovalbeingthatoftheResearchCommittee,chairedbytheChiefScientist.Theannualbudgetof$250millionisspentonabout800projectsbeingundertakenby500companies.Details:Grantsareprovidedasapercentage(upto50%)ofthetotalapprovedR&Dexpenditures.Thegrantsarea'conditionalloan'–incaseofatechnologicalandcommercialsuccess,itissubjecttoroyalties(3%–5%ofthesales);incaseofnon-commercializationnorepaymentisrequired.TheLawstipulatesthattheroyaltiesreceivedwill,inturn,bereturnedtotheR&DFund-inotherwords,usedtofundfuturegrantstoencourageandsupportindustrialR&D.Criteria:AnapprovedR&Dprogramisonewithtechnologicalnoveltyandeconomicjustification,resultinginthedevelopmentofanewproduct,orprocessorasignificantimprovementtoanexistingproductorprocess.ThereisnolimitationastothescientificfieldoftheR&D,proposalsareacceptedfromtheentiretechnologicalspectrum,suchascommunications,IT,biotechnology,etc.
Contact person:Dr.ShaulFreireich,DeputyDirectorOCSTel:972-2-6662490Fax:972-2-6662928E-mail:shaulf@ocs.moital.gov.ilWebsite:www.moital.gov.il/madan-english
Source: OCS, Ministry of Industry, Trade & Labor, 200�
500.00
450.00
400.00
350.00
300.00
250.00
200.00
150.00
100.00
50.00
0.00
345.6
396.6
348.2
397.3
279.6
400.0428.0 440.4
278.2
430.7
383.0
255.1
OCSAnnualBudjet(million$)
Source: OCS, Ministry of Industry, Trade & Labor, 200�
OCSGrantsbyTechnologicalSector,2006
Communications34% Electro-Optics
9%
Other6%
Electronics9%
LifeSciences
27%
Software12%
Chemicals3%
Source: OCS, Ministry of Industry, Trade & Labor, 200�
160.0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
1995
199
6
1997
199
8
199
9
200
0
2001
2003
200
4
2005
200
6
2002
117.0
139.0134.2
145.0 146.5
134.0
115.0
56.0
78.7
102.3
132.0
100.0
OCS-AnnualRoyaltiesofSales,millionUS$(derivingfromoscsupportedprojects)
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a. 2. Technological Incubators:Introduction:TheTechnologicalIncubatorsprogramwasintroducedinthebeginningofthe'90s,inviewofthegreatAliyafromtheSovietUnion.Sincethen,andupuntilnow,theprogramhasbeenopentoallbeginningIsraelientrepreneurs.Theincubators,withanannualbudgetof$30million,aresupportiveframeworksthatenablenoviceentrepreneurs,withinnovativeconcepts,totranslatethoseideasintocommercialproductsandtoestablishtheirowncompany.Theincubatorssupporttheearlieststagesoftechnologicalentrepreneurshipthatarenotyetreadyforprivateinvestors,suchastheVCfunds,therebypreventingcommerciallyviabletechnologicalideasfromgoingtowasteduetolackofresources.Thetechnologicalincubatorsprogramprovidesentrepreneurswiththefollowingbenefits:•R&Dgrant•R&Dinfrastructure•Businessguidance•Administrativeassistance•LogisticsupportStatus:Currently,thereare24TechnologicalIncubatorsinIsrael,15ofthemlocatedinperipheralareas,withapproximately200R&Dprojectsbeingcarriedoutatanygivenmoment.In2002,theprograminitiatedaprivatizationprocessandsincethen,manyinvestmentgroupsandVC’s(foreignandlocal)haveinvestedin,andtakenownershipover,theincubators.Details:TheR&Dgrantprovides85%oftheapprovedR&Dexpenditures(budgetof$350,000-$600,000fortwoyears),withtheremaindertobeinvestedbytheincubatoritself.Thegrantsare,ineffect,softloanstobegivenbackbytheincubators,incaseofcommercialsuccessonly.Results:AsofJuly2007,thetotalcumulativeprivateinvestmentingraduateincubatorcompaniessurpassed1.8BillionDollars.Moreover,inrecentyears,incubatorprojectshavesuccessfullybeenabletoraiseinroundAmorethantwicetheinitialinvestmentmadebythegovernment,withintwoyearsoftheiradmittanceintotheincubators.
Contact person:Mrs.RinaPridor,ProgramDirectorTel:972-3-5118127Fax:972-3-5173734E-mail:hamamot@ocs.moital.gov.ilWebsite:www.incubators.org.il
GovernmentInvestmentsVS.PrivateFundsRaisedinIncubatorCompanies
1.800.000
1.600.000
1.400.000
1.200.000
1.000.000
800.000
600.000
400.000
200.000
0
1991
–
1992
–
1993
–
199
4–
1995
–
199
6–
1997
–
199
8–
199
9–
200
0–
2001
–
2002
–
2003
–
200
4–
2005
–
200
6–
GovernmentInvestmentsVS.PrivateFundsRaisedinIncubatorCompanies
Thousanddollars
500000
400000
200000
0
1995
199
6
1997
199
8
199
9
200
0
2001
2003
200
4
2005
200
6
2002
199
4
1993
1992
1991
GovernmentInvestmentsRoundAFundsPrivateFunds
Source: MATIMOP, 200�
Source: MATIMOP, 200�
GovernmentinvestmentsPrivateFunds
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a. 3. Pre-seed Fund – the TNUFA Program:Introduction:TNUFAencouragesandsupportstechnologicalentrepreneurshipandinnovationbyassistingindividual inventors and start-up companies during thepre-seed stage. Support includes assistance inevaluatingtheconcept'stechnologicalandeconomicpotential,patentproposalpreparation,prototypeconstruction,businessplanpreparation,establishingcontactwiththeappropriateindustryrepresentative,andattractinginvestors.Details:Grantsareupto85%ofapprovedexpensesareavailabletoamaximumof$50,000foreachproject.
b. Generic R&Db. 1. The MAGNET Program: Introduction:TheMAGNETprogramisintendedtoprovideacompetitivepositionforIsrael’sindustrywithregardtostate-of-the-arttechnologiesofglobalinterest.Thenewtechnologiesaretobedevelopedinacooperativeventurebetweentheindustryandleadingacademicscientificresearchinstitutionsinthefield,andwillprovidethebasisfornewhigh-techproductsandprocesses.Criteria:TheR&DprogramsentitledtosupportfromtheMAGNETfundmustbeofagenericnature.Genericpre-competitivetechnologiesrefertoabroadspectrumofcommontechnologies,components,materials,design,andmanufacturingmethodsandprocesses,standardsandprotocols-whichhavewide-rangingapplicationsinnumerousindustries.Details: TheMAGNETprogramconsistsofabout12consortiaannually,whileeachofthemisactivatedfor5years.Aconsortiumincludesseveralindustrialcompaniesandacademicinstitutes.Grantsofupto66%oftheapprovedbudgetareavailablewithnoroyaltypaymentsdue.MAGNET'sannualbudgetisabout$50millionperyear.
b. 2. The MAGNETON ProgramTheMAGNETONprogrampromotesthetechnologytransferfromacademiato industryviathemutualcooperationofindividualcompaniesandspecificacademicresearchgroups.Aprojectperiodisupto24monthsandbudgetupto$800,000.Grantsofupto66%oftheapprovedbudgetareavailablewithnoroyaltyrepayments.
Contact person:Mr.JacobFisher,DirectorTel:972-3-5165044Fax:972-3-5165090E-mail:mail@tnufa.org.ilWebsite:www.tnufa.org.il
Contact person:
ForalltheMagnetPrograms(B1-3)Mr.IlanPeled,DirectorTel:972-3-5118110Fax:972-3-5100622E-mail:info@magnet.org.ilWebsite:www.magnet.org.il
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b. 3. The NOFAR ProgramTheNofarprogramaimstobridgethegapbetweenthebasicresearchandtheappliedresearch-aproblemthat characterizesbiotechnologyandnanotechnology.ANofarprojecthas12-15months toachieveaprojectmilestonethatmakessensetoanindustrialcompanywhichcandecidewhethertocarryonorleave.Grantsofupto90%willbegiventobiotechnology&nanotechnologyprojectswiththeremaining10%comingfromindustrialcompanythatisaplayerinthismarket.Themaximumgrantisapproximately$100,000perproject-noroyaltiesarerequired.
b. �. Support for Research InstitutesIntroduction:Thisprogramisdesignedforresearchinstitutionswithclearlinkstoindustry,tostrengthentheirtechnologyinfrastructureanddeveloprelevanttechnologiesandproductsforindustry.Aresearchinstituteentitledtosupportmustbeanindependentlegalentity,employateamofresearcherswithaprovenscientific&technologyabilities,haveequipmentforconductingandtestingR&Dinindustry,andearn30%ofitsrevenuefromindustry.Details:Grantsareupto90%ofapprovedbudgetanduptotwoyears.Atleast10%ofthebudgetmustbeprovidedbyindustry.
Contact person:Dr.ShaulFreireich,DeputyDirectorOCSTel:972-2-6662490Fax:972-2-6662928E-mail:shaulf@ocs.moital.gov.ilWebsite:www.moital.gov.il/madan-english
InthispartweprofiledsomeinnovativeIsraelihigh-techcompaniesfromvariousareas thathavemade significant contributions to theworldofinnovation.Weareproudtointroducethesefourleadingcompanies,twoofwhichhavecontributedtothemedicalsector,thethirdtothecommunicationsectorandthelastprovidessophisticatedwatersolution.
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A new paradigm of surgeryExAblate®2000–ANovelSurgicalSystemdevelopedbyInSightecLtd.RecipientoftheEuropeanInformationSocietyTechnologiesGrandPrizeforInnovationandPotentialtoServeMankindandWallSt.JournalTechnologyInnovationBronzeAwardandAdvancedImaging’s2005SolutionsoftheYear,andRedHerring100Europe2007Award.
TheExAblate2000isthefirstsystemtousethebreakthroughMRgFUStechnologythatcombinesbreakthroughtechnologywhichcombineshighintensityfocusedultrasoundthatheatsanddestroystargetedtissue,non-invasivelyandMagneticResonanceImaging(MRI)whichvisualizespatientanatomy,andcontrolsthetreatmentbymonitoringthetissuetemperatureinrealtime.
ExAblatewasapprovedbytheU.S.FoodandDrugAdministration(FDA)inOctober2004totreatsymptomaticuterinefibroidsandtodateover3000womenhavebeentreatedworldwideforsymptomaticuterinefibroids.InSightechasbegunclinicaltrialstostudythetechnology’suseinotherindicationsincludingbreast,bone,liver,andbraintumors.
Advantages Outpatientprocedure-saveshospitalstaycosts,reducesrisksofinfectionNoionizingradiationLowornoadverseaffectsQuickrecoverytime–returntonormalactivitywithin1–3daysImprovedqualityoflifewithoutdistressingsymptoms
About InSightecInSightecLtd.isaprivatelyheldcompanyownedbyElbitMedicalImaging(EMI),GeneralElectric,MediTechAdvisors, LLC and employees. It was founded in 1999 to develop the breakthrough MR guided FocusedUltrasoundtechnologyandtransformitintothenextgenerationoperatingroom.HeadquarterednearHaifa,Israel,thecompanyhasover135employeesandhasinvestedmorethan$100millioninresearch,development,andclinicalinvestigations.ItsU.S.headquartersarelocatedinDallas,Texas.Formoreinformation,pleasegoto:www.insightec.com
www.insightec.com
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Company OverviewGivenImagingisredefiningthefieldofgastrointestinal(GI)diagnosisbydeveloping,producing,andmarketinginnovative,patient-friendlyproductsfordetectingGIdisorders.GivenImagingpioneeredPillCamcapsuleendoscopyandtodayoffersarangeofPillCamTMvideocapsulesandrelatedproducts.
ThePillCamTMvideocapsuleisadisposable,miniaturevideocameracontainedinacapsulethatcanbeeasilyingestedbythepatient.ThecapsuletransmitshighqualitycolorimagesoftheGItractthatenablephysicianstovisualizethesmallintestineandesophagus.PillCamTMSB,theonlyingestiblediagnostictoolthatallowsdirectvisualizationoftheentiresmallbowel,becameavailablein2001andhasdemonstratedsuperiordiagnosticefficacy.PillCamTMESOwasclearedforuseintheU.S.inNovember2004andprovidesapatient-friendlyalternativeforesophagealimaging.ThePillCamTMCOLONvideocapsuleforvisualizationofthecolonhasbeenclearedformarketingintheEuropeanUnionandmulti-centerclinicaltrialsareunderwayinEuropeandtheU.S.
GivenImagingisledbyaninternationalmanagementteam,withextensiveexperienceinendoscopy,medicaltechnologiesandimaging,globalmarketingandoperations,regulatoryaffairs,andfinance.TheCompany’scorporateheadquarters,researchanddevelopmentlaboratories,andmanufacturingfacilitiesarelocatedinYoqneam,Israel.NorthAmericanheadquartersarelocatedintheUSAinDuluth,GA.EuropeanheadquartersareinHamburg,Germany.AdditionalsalesandmarketingofficesarelocatedinParis,Madrid,SydneyandTokyo,andasecondproductionfacilityislocatedinIreland.GivenImaging’stechnologyiscurrentlymarketedintheUnitedStatesand60othercountries.
GivenImagingispubliclylistedonTheNASDAQStockMarket(GIVN)andontheTelAvivStockExchange.
www.givenimaging.com
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Withmorethan3millionunitsdeployedinover150countries,Alvarionwww.alvarion.comistheworld’sleadingproviderofinnovativewirelessbroadbandnetworksolutionsenablingPersonalBroadbandtoimprovelifestylesandproductivitywithportableandmobiledata,VoIP,videoandotherservices.LeadingthemarketwiththemostwidelydeployedWiMAXsystemintheworld.
AlvarionisleadingthemarkettoOpenWiMAXsolutionswiththemostextensivedeploymentsandprovenproductportfoliointheindustrycoveringthefullrangeoffrequencybandswithbothfixedandmobilesolutions.Alvarion’sproductsenablethedeliveryofpersonalmobilebroadband,businessandresidentialbroadbandaccess,corporateVPNs,tollqualitytelephony,mobilebasestationfeeding,hotspotcoverageextension,communityinterconnection,publicsafetycommunications,andmobilevoiceanddata.
Asawirelessbroadbandpioneer,Alvarionhasbeendrivinganddeliveringinnovationsforover10yearsfromcoretechnologydevelopmentstocreatingandpromotingindustrystandards.LeveragingitskeyrolesintheIEEEandHiperMANstandardscommitteesandexperienceindeployingOFDM-basedsystems,theCompany’sprominentworkintheWiMAXForumisfocusedonincreasingthewidespreadadoptionofstandards-basedproductsinthewirelessbroadbandmarketandleadingtheentireindustrytoOpenWiMAXsolutions.
www.alvarion.com
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IDE Technologies Ltd. is a pioneer and leader in delivering sophisticated water solutions. IDE develops, designs, installs and maintains environmentally-friendly and economical plants for saline water desalination, industrial streams purification and effluent concentration. IDE’s product line also includes a range of heat pumps and ice machines.IDEisownedinequalsharesbyIsraelChemicalLtd.(ICL)andtheDelekGroup,bothmulti-nationalmulti-disciplinecompanies.Sinceitsinceptionin1965,IDEhasinstalledover380plantsofvarioustechnologiesandcapacitiesinnearly40countries.IDE’sstate-of-the-artinstallationshavegainedworldwidereputationinperformance,reliabilityandavailability,resultingexceptionallowcostproductwater!
Main Desalination ProductsMechanical Vapor Compression- MVC -Thesetypesofplantshaveacapacityofupto3,000m3/day,operatingwithanelectricallydrivenmechanicalcompressor,developedandpatentedbyIDE.Theyhavearemarkablerecordofreliableoperationatlowelectricalconsumption.TheMVCplantsareidealforthehighqualitywatersupplytopowerstations,refineries,petrochemicalindustries,ports,municipalities,andtouristresorts.Multi-Effect Distillation (MED) - Thermal Vapor Compression (TVC) - Thesehighlyefficientplantswithsingleunitcapacityofupto25,000m3/dayutilizelow-gradeheatsourcessuchaslow-pressuresteamorindustrialprocessstreamsat65Corabove.Throughcogenerationschemes,MEDunitscanbecoupledtopowerstationsortochemicalandindustrialplants,recoveringtheirsourcesofwasteheatfortheproductionofdesalinatedwater.MEDplantsaretheoptimalsolutionforsupplyingsubstantialquantitiesofwatertoindustrialcomplexes,largemunicipalinstallations,andpowerstations.Reverse Osmosis (RO) Desalination - IDE’sROdesalinationsystemsareavailableforawiderangeofcapacitiesandapplications,includingindustrialfeedandprocesswater,andpotablewaterproduction.BysupplyingtheseawaterROplantsinLarnaca,Cyprus,AshkelonandHadera,Israel,IDEhasclearlymarkeditspositionasthegloballeaderindesalination.Industrial Evaporators - Theseareaspeciallineofbrineevaporators,usedforconcentrationofindustrialeffluents,recoveryandrecyclingofvaluablematerials,andreductionofeffluentdisposalproblems.Thesesystemsutilizeascale-controltechniqueinordertohandleenvironmentalandprocessproblems.Heat Pumps - HeatPumps,suchastheVacuumIceMachine(VIM),EcologicallyFriendlyVacuumIceMachines(ECO-VIM)andChillers(Eco-Chillers),utilizelow-levelsourcesofthermalenergyforspaceheating,coolingandthermalenergystorage,aswellastheproductionofice,atsubstantiallyreducedenergies.Business Concepts – Water Sale (BOOT) -IDEhasalsoenteredintowatersaleprojects(BOOT/BOTscheme),operatinglargeReverseOsmosisPlants.Underthisconcept,thedeveloperfinances,builds,ownsandoperatesthefacilityasaprivateenterpriseforanestablishedtimeperiod,andforanagreedwaterfee.Attheendoftheperiod,thefacilityownershipistransferredtotheclient.InMay2001,IDEinstalledandsuccessfullystartedoperatingthemodernSeawaterReverseOsmosis54,000m³/dayplantinLarnaca,Cyprus,undera10yearwatersaleconcept.
www.ide-tech.com
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