Israel has lost more than 25,000 hi-tech workers to electronics and software companies in the US over the past seven years as the government continued to cut down the budget for research and development programs, a study by the Manufacturers Association of Israel revealed Monday.
"The gradual squeeze of NIS 4.5 billion, since 2000, in research and development budgets has been the cause for a number of factories to transfer their research and development activities to different countries around the world, where they receive much better conditions, which in turn has hurt the Israeli industry," said the Association's president Shraga Brosh.
Economists at the Association estimated that the loss of knowledge from human resources has cost the economy approximately NIS 6.5b. each year, calculated according to average salaries in the hi-tech industry.
Brosh added that the cut in research and development budgets had led to a loss of more than $10b. in exports, of which each billion dollars, he claimed, could have created employment for 15,000 people.
Brosh called upon Finance Minister Ronnie Bar-On to raise the budget for research and development from the current NIS 1.2b.to NIS 2b. in 2008, including NIS 300m. that should be allocated to develop traditional industry.
According to the research findings conducted by the association's economists, the rate of government support for research and development in the business sector in Israel was relatively low compared to other developed countries.
The data showed Israel currently supported only five percent of research and development activities, in contrast with the 20% support from 1990 and 1996. In international comparison, Israel was ranked 17th among developed countries for the extent of its R&D support after countries such as Poland (12.6%), Italy (12.2%), the Czech Republic (12.1%) and France (10.3%), as well as the US, Great Britain, Norway, New Zealand, Mexico, Belgium, Germany, Sweden, Austria, Korea and Portugal.
The situation in hi-tech is not much different from higher education where budget cutbacks of more than $1.2b. over the past five years have led to a severe brain drain in Israeli academia as the country's universities have been forced to cut their teaching staffs by 22%, according to the latest figures published by the Knesset Education Committee. As a result, many Israelis who earn their doctorates in the US choose to stay there; the percentage of those who do so is rising, passing the 60% mark in the past couple of years.
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