The number of Israeli patents registered in the US over the past decade grew faster than those logged by Americans registered, but difficulties in financing research and development activities still constrain the development of new Israeli products.
"Developing the capital market by broadening and deepening it and developing financial instruments that supply the needs of the R&D sector are all important factors in the future success of this sector," Dr. Ohad Bar-Efrat, head of International Affairs at the Bank of Israel said in a report on Israel's standing in the world of knowledge creation.
According to the survey conducted by Dr. Bar-Efrat, the number of Israeli patents registered in the US has doubled over the past decade. Between 1977 to 2004, he said, Israelis registered more than 12,000 patents in the US, of which around 4,500 were put on the books between 2001 and 2004.
Israel rated 11th in the world in terms of patents registered in the US since 1977.
The research entailed a specially commissioned survey of about 100 companies that conduct R&D, while receiving state-funded assistance from the Chief Scientist. About half of the surveyed companies have been established for more than 10 years. More than 50% of the companies were exporters with revenues of up to $10 million in 2005.
Dr. Bar-Efrat attributed the growth rate and success of Israeli patents to the increase in national expenditure on R&D by the business sector. In per capita terms, the number of Israeli patents registered in the US was greater than most European countries, apart from Switzerland, Sweden and Finland.
Nevertheless, the survey revealed that a limiting factor for R&D activities was the issue of financing with half of the companies surveyed reporting funding problems as their major obstacle in creating new products. Because of the size of Israeli companies, which are mostly relatively small, the majority are not able to raise funds on the stock exchange either in Israel or abroad. Only about one- third of the companies that received state assistance from the Chief Scientist had access to venture capital, the study found.
The problem of funding could also be found in older companies as some 50% of the companies reporting financing difficulties were companies that were over 10 years old, although most were small and employed fewer than 50 employees. Many successful companies also reported that they, too, had problems financing their R&D work.
Another major challenge faced by companies that carry out R&D, the survey found, was the shortage of professional workers with about 60% of the companies carrying out R&D reporting difficulties in recruiting professional workers. The percentage of educated workers that worked in R&D was particularly high, but the mobility of professional staff between companies was surprisingly low, the report said.
When analyzing the work force, 39 companies reported that at least 10% of their professional staff graduated abroad and immigrated to Israel after 1989 - the first year of the big wave of immigrants from the former Soviet Union.