About the Israeli innovation ecosystem and cooperation opportunities


INNOVATION ECOSYSTEM

Higher education in Israel is of a high standard and the majority of immigrants are also highly educated. Thanks to this, as well as the geological and economic characteristics of the country, technological and economic development is progressing at a fast pace. The country became an OECD member in 2010. It is second in the world in the number of startup companies (the current number is approximately 9,000), after the USA. After the United States and China, Israel has the third largest number of companies listed on NASDAQ.

The past decade has been unprecedented for Israel's innovation and technology ecosystem. Its volume has increased to nearly 100 billion USD in ten years until 2021, and during these ten years the output of the Israeli innovation ecosystem has doubled, accounting for 20% of Israel's GDP. Currently, the GDP per capita is 56,000 USD and the total GDP is more than 500 billion USD. Production also doubled in terms of exports, and today the high-tech sector represents 50% of Israel's technology sector.

Although its natural features are not particularly favourable, Israel is considered one of the most developed countries in the Middle East in terms of economy and industry. Despite the fact that only one-fifth of the country's territory is arable, the state has become almost completely self-sufficient: They need more imports of beef and grain, while thanks to the drip irrigation technology developed in the Na'an Kibbutz, their exports of vegetables and fruits are significant. The poultry sector and the dairy industry which produces the world's leading milk yield, are also worth mentioning.

As a result of the low-precipitation climate, Israel had to use innovative solutions to satisfy its needs of large amounts of residential, industrial and agricultural fresh water use. 86% of the generated wastewater is recycled, mainly for agricultural irrigation. In addition to using natural fresh water sources, Israel obtains fresh water through seawater desalination. There are currently five desalination plants in operation, the Sorek Desalination Plant located near Tel-Aviv is the largest water desalination plant in the world with an annual output of 151.4 billion liters. With the help of these plants, it was achieved that the country struggling with water shortages became an exporter of drinking water: Piped drinking water is sold to Jordan in the framework of trade relations.

Israel is also a pioneer in generating technological innovation. Thanks to its exceptional results, the country of 9+ million has built up the country brand of "Start-up nation" which has recently been replaced by the name "Scale-up nation", referring to the ecosystem that has entered the mature stage. The society as a whole is characterized by an innovative approach, an entrepreneurial spirit, self-confidence and the belief that they can shape the world.

Israel was one of the first to recognize the importance and role of the R&D sector: 45 years ago, the Chief Scientist's Bureau was established within the Ministry of Foreign Affairs. From then on, the government and the business sector made a conscious effort to exploit development opportunities and strengthen the R&D sector. This arose from the realization that the key to sustainable economic prosperity and increasing productivity is the transfer of scientific results to the economy. Israel spends about 6.1% of GDP on R&D, by far the highest figure in the world, about 12% of the Israeli workforce works in the technology sector which is also unprecedented, and almost 48.3% of Israeli exports and 18% of GDP (this figure is 8-9% in the USA, 5-6% in the EU). About 50% of people working in the technology industry work for startup companies, while another 50% work in the R&D centers of large companies.

Israel is an innovation superpower. The development center of many leading companies is located in this country and it has the highest rate of venture capital investment per population in the world, as well as the number of start-ups per capita. The Israel Innovation Authority, established on January 1, 2016, supervises the central funds supporting industrial R&D activities. The authority is a government agency responsible for both direct investment in the innovation ecosystem and policy development. It invests about half a billion USD annually directly in the innovation ecosystem, either in disruptive startups and disruptive innovation, or in building the infrastructure for the next emerging technologies.

Another important support pillar of the Israeli innovation policy system is provided by tax incentives. The most important discount of this kind can be claimed by private individuals after their investments in R&D-based enterprises. The coordinator of the R+D+I relations is the chief scientist of the Ministry of Innovation, Science and Technology of the State of Israel (MOIST), currently held by Prof. Avi Domb. In most Israeli ministries, a separate department is responsible for the development of R&D under the leadership of chief scientists. The work of the academic leaders is coordinated by Prof. Domb. The Israeli Innovation Authority is dedicated to supporting industrial R&D, operating as a background institution of the Ministry of Innovation, Science and Technology. The chief scientist is the ministry's chief scientific authority on all scientific issues managed by the ministry, and he is the president of the ministry's research foundation. The scientific leader is appointed, and is also a scientific advisor to the minister and the ministry's management. S/he creates the budget framework for the development of Israel's scientific and technological infrastructure. On behalf of the Minister of Science and Technology, the s/he coordinates the forum of senior scientific employees in all ministries. It also manages scientific relations with Israeli and international professional institutions on scientific issues. In addition, it initiates and develops new international scientific relations, taking into account Israel's foreign policy. The scientific leader represents the Ministry in matters affecting Israel's international scientific relations at forums and meetings with representatives of the countries, and is responsible for the scientific follow-up of regional research and development centers supported by the Ministry. He is a member of the steering committee of the national program for the development of technologies to reduce the global use of petroleum-based fuels in transport, as well as the national program for strengthening the area's high-tech industries.

In Israel, the Higher Education Authority is responsible for basic research support (BSc and MSc), for which NIS 10 billion is allocated annually, of which NIS 6 billion goes to higher education institutions. The Israeli Science Fund operates under the auspices of the Higher Education Authority with a budget of 2.6 billion NIS/year. The above institutions operate under the ministry responsible for education, but independently of it.

Israel's three higher education institutions (Weizmann Institute of Science, Hebrew University of Jerusalem, Tel Aviv University) are also ranked among the top 200 higher education institutions in the world. With the help of the Israeli tech-transfer or knowledge-transfer institutional system, which is considered exemplary at the international level, the knowledge and technology created in higher education institutions is transferred to the actors of business life, thus ensuring the further development and utilization of research results, through which scientific and technological developments reach a wider range of users.

This is extremely important because the majority of research that makes scientific progress takes place in the academic sector, mainly in the framework of basic research which is typically not linked to industrial or commercial objectives, and does not in itself lead to the development of new, world-changing products or processes.


ISRAEL AND HUNGARY

The capital and trade relations between Israel and Hungary are outstanding. Israel is Hungary's fourth most important foreign economic partner in the Asian region, and the first in the Middle East. The flagship of Israeli capital investments is the pharmaceutical company Teva. Israeli working capital arriving in Hungary mainly affects high-tech investments. To stimulate research, development and innovation cooperation, an industrial R&D co-financing cooperation fund worth 3+3 million euros is available, for which Hungarian-Israeli consortia can apply. Israel is a prominent international player in the development of self-driving vehicles and the defense industry. At the same time, the Hungarian government is making significant efforts to put Hungary on the map of the driverless car industry and the defense industry.


V4-ISRAEL RESEARCH, DEVELOPMENT AND INNOVATION WORKING GROUP

In terms of its research and development system and the successful market utilization of innovative products, Israel is a "model country" for the Visegrad countries. The V4 are the most dynamically developing countries of the European Union which are receptive to innovation, economic reforms and the exchange of experience, thus they can be effective partners of Israel in priority sectors. 
At their meeting on July 19, 2017, the Prime Ministers of the Visegrád countries and Israel decided to deepen their partnership aimed at building their innovative and creative economy in the fields of research and development, science and technology, innovation, startups, and the digitalization of industry and service sectors by increasing their cooperation. They also underlined the need to promote researcher and student mobility on a bilateral and regional basis, as well as in the framework of EU-Israel cooperation. The importance of cooperation and knowledge sharing between V4 and the high-tech industries of the Visegrád region was particularly highlighted, and in this context, the launch of programs to help the students, entrepreneurs and experts of the Visegrád region specialize.

 

COOPERATION POSSIBILITIES

In general, it can be said that the Israeli partners are open to R+D+I cooperation for business purposes but the two countries are receptive markets for each other's products in only a few areas, while differences in price and wage levels also make technology transfer extremely difficult.
Israeli organizations can participate as full-fledged consortium partners in cooperation programs managed and financed by Horizon Europe, ERASMUS+ and certain other programs financed by the European Union. These application systems are well known by successful applicants and implementers. In the Hungarian-Israeli relationship, tender collaborations are considered fundamentally attractive.
The foreign representation is involved in the development of relations between research institutes and researchers by organizing professional workshops.
In interstate innovation relations, the priority cooperation project of the bilateral relationship is the ecosystem around the ZalaZONE Automotive Test Track. The goal of the foreign representation was to further popularize the ELI Science Park and the ELI-ALPS in Szeged.
In multilateral relations, training programs are announced as part of the innovation cooperation between the V4 and Israel, and the V4 foreign missions implement several projects together, for example technology and knowledge transfer training and/or joint appearances at innovation festivals.

 

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For more information or if you wish to get in touch with us, please contact our Embassy at: Trade.science.tlv@mfa.gov.hu

Science and Technology Attaché: Ms. Mária HOFFMANN