Israel's R&D outlay grows to 4.7% of GDP [p. 17]

Israel's national spending on civilian research and development rose to 4.7 percent of gross domestic product in 2005, the Central Bureau of Statistics said last week. It noted that the national investment in R&D came to NIS 27.4 billion, representing growth of 8.3% over 2004 based on fixed prices, when R&D expenditure was 4.4% of GDP. Despite the rise last year and Israel's leading position compared to other countries, Rina Pridor, manager of the government's incubator program, which helps start-up companies set up their R&D activities, said the country's investment was still not enough and had room for growth. "It's not sufficient because Israel is small," Pridor said. "When you talk about a lower US investment [of R&D as a percentage of GDP], their GDP is very high and it's a significant number. Israel is small, that's why the final result is not sufficient and we need to do better." Still, CBS said that in 2003, the most readily available data, Israel had a higher ratio than that of any nation belonging to the Organization for Economic Co-operation and Development (OECD), where the average was just over 2%. That year, Israel had an investment ratio of 4.5%. Meanwhile, in 2005, the business sector accelerated its R&D financing by 11% to NIS 20.8b., making up 76% of the country's total outlay. Higher education invested 1% less in R&D and private non-profit organizations raised their spending by 2.8%, while the government added 1.3% to its R&D budget. Looking at 2006, Pridor said that while the business sector had increased its R&D spending even more in the first half of the year, it was unclear how the government would allocate its spending given the higher defense budget resulting from the war in Lebanon. "The budget of the government was supposed to increase for 2006," she said. "But now we cannot tell if that will go through as it is too soon after the war. It may even be cut." Pridor hoped this would not happen since government investment in R&D has served as a stimulus for the private sector's activity. "They should really see it as an investment rather than an expense," Pridor said. "You see that where there is government investment it brings a few times more private investment."