Israeli subsidiaries of multinational corporations drastically reduced research
and development (R&D) spending in the middle of the global financial crisis,
the Central Bureau of Statistics revealed Wednesday.
foreign-controlled affiliates, including the local branches of Intel, Microsoft
and IBM, spent $4.7 billion dollars on R&D activities in 2009, an 8 percent
decrease from the previous year, but 36% increase from 2006. They contributed
62% of the Israeli business sector’s total R&D expenditure in
R&D data is published with a lag as the CBS gives companies
time to complete their financial reports before surveying them.
companies, as the Israeli foreign- controlled affiliates are known, directed
just 14% of overall spending toward R&D in 2009, a 1% drop from 2008.
Similarly to previous years, 64% of their R&D expenditure went toward paying
wages and other employment costs, and 23% of their workforce was involved in
They continued to dominate exportation, making $3.4b.
in R&D-related sales abroad, which constituted 92% of total Israeli R&D
exports. Naturally, they had an advantage: 90% of their exports went directly to
their foreign parent companies, and 72% of their exports were directed to the
The study also surveyed Israeli parent companies with
foreign subsidiaries, also known as “OUT” companies, and found that they spent
$3.5b. on R&D in 2009. Unlike the IN companies, which concentrated most of
their R&D spending in the area of computing services, the OUT companies
focused mainly on industry.