Governments play a key role in setting ICT agenda for usage and production. Government actors can play a role in a myriad of areas including innovation, financing, usage, facilitation. Perhaps most important is setting the national vision for ICT. We examine these policies for Israel (labeled: informatics policies, ICT policies, or Science & Technology policies).

Based on Lanvin framework Israel can be considered a leader in influencing IT decisions. E-government is central to Israel policy with services on line, procurement, trade facilitation and civil society participation. Israel considers ICT as a national priority and promotes large projects and objectives.

Israel's ICT policy focuses on telecommunication regulation, e-government,  and   innovative incubation schemes especially for start-ups.  Challenges in telecommunications regulation topped the list of ICT priorities for the Israeli government since 1990’s. Privatization of Bezeq, which began in 1989 concluded on September 2005 with the Apax-Saban-Arkin group winning the controlling share of the state-owned telecommunications firm [1]. Other challenges include liberalization of the fixed-line domestic telephony market and design of a regulatory framework that effectively promotes competition[2].

Israel’s e-government initiatives are evident from the coordination of technology activities for major government entities under Ministry of Science and technology. Government web sites look professional with easy navigation and Multi language (Hebrew, English and Arabic) capabilities. The Israel Government Gateway provides a common online access to information, forms, bids, and services, in addition to contact information for ministers, their spokespersons, and senior government executives.

Most Israeli venture capital reaches early-stage companies, particularly start-ups in sectors based on information and communications technology and biotechnology. The Israeli venture capital industry is built through government funding, particularly through the YOZMA group, which leverages financing from foreign corporations and institutions. The YOZMA group was instrumental in 1990's, but less today replaced by venture capitalists[3]

The fundamental ICT policy was/is to gain/sustain competitive advantage in Research and Development (R&D) to develop/maintain a system of innovation[4]. Israel achieved the goal of being ICT innovator through enabling scientific research intensive education system and entrepreneurship encouraging government initiatives.  The country has become an innovative ICT leader in software development through spillover in high technology talent and research from Israeli Military, and strong ties to financial backers in the United States[5]. Government subsidies are also earmarked for commercialization of academic research in Information Technology.

The think tank behind ICT policies is the Ministry of Science and Technology under the office of chief scientist (OCS). Science and Technology Ministry goals are to[6]:

 Some History

The Israeli IT industry owes its beginning to state efforts that started in 1968. The

Israeli state faced with critical security threat, leveraged academic institutions with strong research capabilities for large high-technology-oriented defense industry (amassed around the Elron group and Discount investment) and developed a consensus view of science-based industry as a solution for Israel’s economic future.  The concept around which the Israeli industry developed viewed industrial R&D activities as the focal point of any economic growth, with the state role one of proactively avoiding market failures associated with R&D.

This notion and the specific way it was institutionalized have had a profound impact on business development in Israel. Difficulties in securing capital for business development was mitigated by financial options offered by the OCS and later by BIRD (BIRD is an acronym for Israel-U.S. Bi national Industrial Research and Development. The BIRD Foundation's mission is to stimulate, promote and support industrial R&D of mutual benefit to the U.S. and Israel[7]). Over thirty years entrepreneurs were prompted to think and see their businesses as new-technology-product-development-company. The OCS and its various programs stimulated the development and growth of the Israeli IT industry at the same time that they also primed and trained these companies to view the R&D product development process as the heart of their activities. Israel’s IT industry became intimately connected with the American market following the French embargo, through the establishment of the IPO on NASDAQ path by Elscient and strengthened by the activities of the BIRD foundation[8].

 
Policy Assessment
The core of Israel’s ICT industry success has been its R&D facilitated by the government through research intensive education system and entrepreneurship enabling Technology Business Incubators (TBI’s). The defense industry relied on these capabilities which were then diffused by various state polices throughout the innovation system.

Israel’s Science and Technology industrial polices is built around the notion of diffusing existing top notch domestic R&D and technological capabilities. Developed and developing countries can learn from Israel about how to diffuse capabilities throughout the innovation system. But it might be worthwhile for those states that do not already possess them to look for other models in regard to the question of R&D capability building and foreign technology absorption.

The intimate connection of the Israeli industry to the US is mainly responsible for the tremendous growth of the IT industry in Israel, but it also poses new and growing problems for policy makers. The growing success of Israeli firms in the United States and the influx of American capital to the Israeli IT industry in the 1990s brought Israeli firms more closely to the American market. As a result, Israeli market became less important than American one. This development is apparent in the behavior of the Israeli firms that are attracted by the American market, but also with the growing importance of American MNC's (Multinational Corporations) in Israel and their ability to capture a large percentage of the innovative capacity of Israel.

Israel’s education system, ranging from K-12 through the higher education institutions, faces potential crisis and deteriorating quality and standards in the teaching of math and science. Ironically, this might be caused by Israel’s success in IT industry. The growing success of the IT sector has turned public attention away from the growing problems of Israel’s education system and has opened way for many good researchers to leave educational institutions. There is growing concern over the long-term commitment of the Israeli government to building the academic R&D infrastructure and sponsoring university level research[9].

There is an opinion that close connection with the American market, although leading the ICT industry from success to success, might now prevent Israel’s society from long-term enjoyment of ICT growth. But in my opinion, Israel's ICT is built on exports and in addition has good ranking for ICT usage and readiness inside the country. So Israel's ICT is more balanced compared to India which is tilted towards exports. Israel's ICT policy has been a success as evident from the innovative ICT firms and E-Government initiatives.