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.
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
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.
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
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.”
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.”