Hey! What about me? Spreading innovation across the Israeli economy

There has been so much reporting lately of Israel’s many successes in high-tech. IPOs, exits, acquisitions, deals, multinational companies, you name it. A genuinely tremendous achievement for our tiny country, the result of 65 years of blood, sweat and tears.

However, we need to put things in context. Most of the country, most of our labour force is left untouched by these developments. The percentage of our labour force in high technology ranges from 10-15%, depending on how you measure it. Our challenge is to bring innovation to the 85% of the economy.

The first step is to acknowledge that we have a dual economy, and to resolve to act with determination, with passion and with commitment to change that situation. And not to depend solely on the government. Or to think about “quick fixes” — they don’t exist in economics. The private sector, civil society and organizations must take its future into its own hands and partner with government on a thorough nation-wide economic development effort.

Modernizing the parts of our economy so far relatively untouched by innovation and globalization will be tough. Perhaps tougher than what we have done in high technology. And perhaps “less sexy”. But the benefits can be huge, for example in terms of rising productivity — and therefore rising incomes — for large numbers of people in Israel — all over the country, in all walks of life. In industry, in services, in education, in commerce, in local government and public services — you name it. THAT achievement will be truly remarkable, as the benefits of innovation will be diffused more widely than those of our high-tech achievements.

Unfortunately things do not look too good at the moment. An example? I would argue that the huge light rail development in Tel Aviv which has just been started is an investment in 20^th century technology at a time when Israel dearly needs to make huge investments in 21^st century technology — namely, education and vocational education, higher education, internet infrastructure and so on. We do not have money for both — so the essential investment in 21^st century technology will not take place anytime soon, and we will fall further and further behind the nations with whom we compete in the global market.

The fate of the Greek economy, which we have seen in all its gory detail over the last few months, should serve as a stark warning to us of the dramatic consequences of economic mis-management. Let us not kid ourselves — we have been extremely successful in high technology, but most of the economy, most of our people, do not benefit. We need to put our own house in order, and the sooner the better.