Local Government — an International Player

On December 2016, the World Economic Forum published an article saying that it has always been that regional governance was based on nation states in geographical proximity collaborating mostly for mutual security. Best examples being the European Union, Gulf Cooperation Council and ASEAN. That premise has changed dramatically. Trans-national cooperation is being motivated more and more by economic considerations. In the age of digital connectivity, along with an increased ease in traveling, nation states tend to connect more on the base of mutual interest and ideology rather than security.

An additional significant change that is taking place in recent years is the change of the “unit” of connectedness. Nation states are getting less dominance at the international arena in comparison with sub-national entities such as cities and states. That happens as our sense of identity seems to be becoming more tribalistic.

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The concept describe above can be demonstrated in multiple examples from all over the world and particularly in Israel’s future economic trade relations.

In recent years we see different forms of local governments interact with each other globally and become prominent players in the international arena. Cities and states are signing independent trade agreements, building cultural and academic bridges, forming global institutions such as C40 and UCLG, and even executing international agreement regardless of the decisions made at the national level (e.g. Paris Agreement on climate change). Such international activity by local governments created a need for international liaisons, ambassadors for the local government level.

Indeed, the phenomena of representatives for the local government level is slowly rising. London and Chicago have offices in Shanghai; Singapore and Hong Kong have offices in Europe and North America; the Canadian Province of Alberta has Offices in the US, Mexico and the Far East and the Australian state of Victoria has 22 offices around the world. With such great volume of international activity, two questions arise: what kind of representative local governments need and what kind of activity are they looking for.

Understandably, local governments’ main interest is to provide better services to their citizens and upscale the well-being within the city limits. Coming from such premise, one must ask himself what are the topics on which cities and states collaborating on in the international arena. Security and international politics affect local government surely, but in an indirect fashion, hence it is not a field that governments on the sub-national level engage with; culture differs greatly between regions and though it is a sector of interest in most western countries, it is doubtful that cities will have constant representatives solely for culture affairs; International academic collaboration is highly encouraged by all but does not require a pro-active assistance by governments. It seems that the true reason for local governments to interact globally is – economy.

Most states and cities send economic attachés or hire a local consultant to do business development for them and to promote FDIs (foreign direct investments). As it comes to Israel, the “Startup Nation” it is clear what kind of business and FDIs local governments are looking for, in a word – INNOVATION.

While Israel’s booming innovation ecosystem attracts governments, institutions, corporations and investors from all over the world, local governments are looking for three main things:

1. Attracting Israeli startups to scale-up in their cities. By opening an HQ in a different city, the company (startup) provides jobs, tax money and support the brand name of the city as innovative and a good place for business.
2. Learning Israel’s “secret sauce” and develop a similar innovation supportive environment.
3. Partnering with Israeli players and build a joint ecosystem in a specific industry.

The state of Michigan is a great example of a local government wishing to interact with Israel. The two have two R&D agreements (2008, 2014), flourishing trade relations (+16.75% between 2016-2017), multiple visits of leaders from all sectors including Governor Snyder (2017) and Mayor Duggan of Detroit (2018). The main purpose of those delegations was to learn how to develop an innovation ecosystem in Michigan.

At the end of 2018, the Israeli Innovation Authority together with PlanetM issued a call for proposal supporting Israeli startups in the automotive industry to do the piloting and testing for their technology in Michigan’s facilities such as the American Center for Mobility (ACM) and MCity. The purpose of this agreement goes twofold, first to attract Israeli startup to Michigan, second, this is a part of a larger plan to build a mutual ecosystem in the automotive and mobility industry.

While Michigan is a great example, it is surely not the only one. Brief glance at the last OurCrowd conference’s audience was enough to see the massive amount of local governments’ delegations and their interest in the Israeli innovation. From Spain alone arrived separate delegations from three different regions looking for collaboration in key industries – Murcia (FoodTech), Galicia (Industry 4.0) and Madrid (Smart City). There were many more officials from various countries  and states looking to do the same- as of today there are 20 official representatives of 20 different states from the US alone.

It seems that the tendency of international activism of local government is enhanced by the year, and that Israel’s innovation in the different sectors is growing rapidly and constantly. We can only assume that sooner rather than later, we will see mutual sub-ecosystems between Israel and foreign local governments. Whether in the field of water technology, agriculture technology, foodtech, biotech, automotive technology, etc. This phenomenon will surely be a prominent part of the Israel’s economy and International relations.