Government Policies
The Information Technology Landscape in Israel
Government Policies
The Ministry of Communications in Israel boasts that since the mid-80's
they have turned an ailing Government served market into a customer
focused market of high service standards. (32) This has been a
result of liberalization, privatization, and re-regulation as discussed in
the previous section.
Government Investments in IT
The government invest substantial amounts into R&D, including large tax incentives and grants in to help cover equipment and production cost for new ventures. The Israeli government spends about $367M annually on R&D - the largest investment in the world. (32)
The Israeli Government has implemented a number of policies to aid in the development, success and expansion of the Information Technology sectors.
Telecommunications:
Please refer to the Privatization and Regulation section of this paper for more information on Telecommunications policies in Israel.
The Israeli government has R&D agreements with the following countries that sets guidelines for granting support to joint R&D projects: Austria, Belgium, Frank, German, Holland, Ireland, Italy, Portugal, Spain Sweden, China, Hong Kong, India and the United States. (24)
The purpose of the Law is to encourage and support industrial research and development in order to:
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Enhance the development of local science-based industry through utilizing and expanding existing technological and academic infrastructure. |
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Improve Israel’s balance of trade by increasing the manufacture and export of high-tech products developed within Israel and reducing imported goods of this type. |
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Create employment opportunities in industry and exploit Israel’s highly capable scientific and technological labor force. |
The Office of the Chief Scientist in the Ministry of Industry and Trade has created a program to support entrepreneurial firms develop high-tech innovations for commercial purposes. Projects are accepted on the basis of innovative technology, goals and market potential. Projects are based on a two-year incubator stay with a US$350,00 per year budget. Ministry grants are offered for up to 85% of the approved budget.
The goal of the incubator program is to aid firms at the development stage in order to decrease the fear of risk thus encouraging innovators and entrepreneurs to pursue business and R&D endeavors. The Incubator Program provides the following services:
1. “Assistance in determining the technological and marketing applicability of the diea and drawing up an R&D plan;
2. “Assistance in obtaining the financial resources needed to carry out the project;
3. “Assistance in forma and an R&D team;
4. “Professional and administrative counseling, guidance and supervision’
5. “Secretarial and administrative services, maintenance, procurements, accounting and legal advice;
6. “Assistance in raising capital and preparing for marketing.” (Ministry of Industry and Trade)
After the two year incubator stay ownership rights of the project are as follows”
Ø At least 50% of the project is owned by the developer
Ø At least 10% of the project is owned by the key staff members other than developers
Ø Up to 20 % is owned by the financier of the project (additional to the State grant)
Ø Up to 20% is owned by the incubator (24)
As noted in other sections throughout this paper, men and woman over 18 years old are obligated to serve a mandatory service in one of the Israeli security organizations. Men have to serve three years, while woman serve 18-21 month although the woman mandatory service is much more loosely enforced. (IDF) This compulsory military service provides “practical technical experience and stresses the importance of effective teamwork.” Many of the high-tech and entrepreneurial teams previously served together in IDC units. (8)
