Study: Israeli startups innovative but country sluggish in productivity

Google-sponsored study recommends plan to integrate Information and Communications Technology to get ahead.

July 15, 2013 22:25
1 minute read.
Israeli startup Powermat

Israeli startup Powermat 390. (photo credit: Courtesy of Powermat)

Is it possible that the solution to Israel’s economic worries is simply a little more central planning? That’s what a Google Israel-commissioned study by Deloitte and Trigger Foresight, unveiled on Monday in Tel Aviv, argues.

While Israel leads the way in innovation, its stagnant productivity over the years has left it lagging. Among the OECD’s 34 member countries, Israel sputters along in 24th place in terms of productivity.

Part of the reason, the study says, is Israel’s failure to utilize the very Information and Communications Technology that its startups are so good at producing.

“We’re very good at ICT as an industry, but very weak at ICT as a tool,” said Trigger Foresight’s Shally Tshuva at Monday’s presentation of the study, dubbed “e-nnovate.”

Unlike Israel, he said, those states that regularly built and carried out plans to holistically integrate new technology into the government and market were able to boost their productivity levels.

“In 25 years, we have not succeeded in lowering the productivity gap with Europe,” Tshuva lamented.

A plan to incorporate ICT into Israel’s digital infrastructure, incorporate technology as an integral part of its education curriculum, and pave the way for more technology within the government could boost that productivity.

“Countries that successfully implement such plans have a clear vision, through which their citizens will enjoy a higher standard of living,” the study said. Fields ripe for technological upgrades included education, medical services, employment and productivity, and small and medium businesses.

The prime example for comparison was Singapore.

“During the 1980s, while the GDP per capita in Israel and Singapore was similar, Singapore began implementing multi-year ICT plans. As a result, Singapore has become one of the richest countries in the world, with a GDP per capita twice that of Israel’s (with no significant natural resources),” the study found.

Fresh off a trip to China, Economy and Trade Minister Naftali Bennett embraced the studies’ findings, telling the gathering that he had instructed his ministry to formulate an innovation plan for the country.

China’s state-directed economy made an impression on the ardent capitalist and former entrepreneur. Somehow, he noted, they manage to feed 1.3 billion people and keep their economy growing.

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