'Multinational companies help stop brain drain'

Research and development centers are helping stem exodus of computer experts, engineers and scientists, Ben-Yisrael says.

By JUDY SIEGEL-ITZKOVICH
Google office in Tel Aviv 311 (photo credit: REUTERS/Baz Ratner)
Google office in Tel Aviv 311
(photo credit: REUTERS/Baz Ratner)
A brain drain of Israeli computer experts, engineers and scientists has been ameliorated thanks to numerous international companies establishing research and development centers here. So said Prof. Yitzhak Ben-Yisrael, chairman of the Science and Technology Ministry’s National Council for Research and Development (MOLMOP), who spoke Thursday at the Herzliya Conference.
Ben-Yisrael noted that Israel has one of the world’s highest rates of R&D centers established by multinational companies; 46 percent of all companies here are multinational ones, compared to only 5% in Japan. It was recently announced that Apple would set up an R&D center here, following in the footsteps of Google, IBM, Intel, Microsoft, Hewlett Packard, Texas Instruments and others, he told the audience.
A total of 75% of R&D expenditures in Israel’s business sector come from foreign companies, and as such, Israel has one of the largest concentrations of such centers, he continued.
Eighty percent of multinational companies’ investment goes to business services such as computerization, compared to 20% for various branches of industry.
The foreign companies, said Ben-Yisrael, take advantage of the intellectual property developed by Israeli talent, but prefer to manufacture the products elsewhere. As a result, Israel does not reap the full benefit of its R&D. Nevertheless, there is no doubt that multinational companies contribute to the Israeli market by creating jobs and relatively high salaries, thus reducing the brain drain of creative young people.
In 2009, exports of R&D services totaled $5 billion – an unprecedented amount equal to more than half of the country’s national expenditures on civilian R&D, he said. Over 40% of patents that the business sector in Israel has taken out and that are registered in the US are held by foreign companies.
“Those who enjoy the fruits and income of the Israeli brain are the multinational companies,” Shlomo Hirshkovitz, an adviser to MOLMOP, told the conference participants.
R&D promotes growth in the economy and contributes to technological competition in the world, but in Israel, the process is cut in the middle because the products are manufactured elsewhere, he said, suggesting that this likely harmed economic growth.
While in the early ’90s, Israel was No. 1 in per-capita publication of scientific articles, today it is only 13th in the world. In 2010, according to the Central Bureau of Statistics and MOLMOP, 17% of Israelis who had a doctorate in the exact sciences and engineering from local universities between 1997 and 2008 spent an extended period abroad.
“We have made a sharp turnabout from R&D based mostly on academia, to one based on business R&D,” Ben-Yisrael concluded. “It may be that the time has come to again increase R&D investments in institutions of higher learning.”
Science and Technology Minister Daniel Herschkowitz, who also spoke at the conference, said that the European Union and the rest of the world were concerned with the huge gap between basic scientific knowledge and applying it.
“At the same time we worry about low scores on school tests compared to other countries,” the minister said. “However, we must internalize the fact that we are excellent in thinking outside the box. To a certain degree, this thinking is the antithesis of the education system. We know to produce original thoughts, and this creativity is what separates the excellent from the outstanding.”