BoI: Hi-tech, human capital drive growth of exports to US

In terms of technological intensity of its exports, Israel ranks fifth among all countries exporting to the United States.

By NADAV SHEMER
March 14, 2012 23:43
1 minute read.
Scientist at work (illustrative)

Scientist 311. (photo credit: Marretao22/Wikimedia Commons)

 
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The share of Israeli exports in the US market has grown in the past decade thanks mainly to an abundance of human capital and advanced technologies, the Bank of Israel said in an excerpt from its annual report Wednesday.

An examination of US import data shows that the composition of Israel’s exports is similar to that of countries with far higher GDP per capita, an index created by the central bank found. The index characterized various industries by the level of development of the exporting countries. It found that in terms of technological intensity of its exports, Israel ranks fifth among all countries exporting to the United States.

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This was because Israel specializes in pharmaceuticals, medical and scientific equipment, and military equipment, all of which are particularly human capital and technology- intensive, the central bank said.

Israel ranked ahead of highly developed countries including Germany, Sweden and Japan, which are characterized by hi-tech-intensive exports but also export goods from industries that are typical of developing countries, it said.

“We choose to interpret Israel’s high ranking on this index mainly as a sign of the robustness of its exporting industries,” the report said. “This is because the weight of exports in Israel’s GDP is high by international comparison, and Israel has a surplus on its current account, while countries that are experiencing difficulties in competing in world markets are characterized in the main by a relatively small export sector and a current-account deficit.”

Looking to the future, the bank predicted the euro zone’s current economic crisis would lead to a reduction in the manufacturing costs of European exports, which also specialize in technology- and human-capital-intensive exports, and to a depreciation of the euro.

It said these these two factors would enhance those exporters’ ability to compete with Israeli exporters for a share of the US market.

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