Israel High Tech Industry Growth Slowing Amid Manpower ShortageFeb. 21, 2016
Israel’s vaunted high tech sector, for years the main engine of economic growth, is witnessing a slowdown that may have longstanding impact on the country’s global position as the most innovative nation, the Finance Ministry warned in a report this week.
“The high tech revolution, that started in the nineties, led to rapid growth in research and development investment, employment and productivity, making a significant contribution to economic growth,” the report said. “However, in recent years the sector has shown a slowdown,” a trend reflected “in the erosion of Israel’s status as a leader in innovation.”
A 2015 report by the World Intellectual Property Organization ranked Israel 22nd out of 141 countries for innovation. Switzerland was the highest ranked, with the U.S., U.K. and Singapore in the top ten. In OECD rankings for the percentage of GDP spent on research and development, South Korea knocked Israel out of first place in 2013, the ministry said.
Technology, even as it slows, accounts for 40 percent of the country’s exports, which make up about a third of Israel’s GDP, according to government figures. About 12 percent of Israelis employed in the business sector work for technology companies. Technology exits last year were a record $15 billion, according to PwC Israel.
Israel needs to “devise a long-term policy to address core problems, including encouragement of technology education, attracting multinational companies, encouraging investments by institutions, etc,” said Karin Mayer Rubinstein, chief executive officer of Israel Advanced Technology Industries, the umbrella organization for technology and life sciences sectors. IATI in June said about 10,000 engineers are needed on top of the current 20,000 to ensure the sector can grow.
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See also: Israel’s high-tech sector loses ‘innovative’ status on slowing growth - on Toaday Online.