Israel Is 'Epicenter of World Innovation,' Netanyahu Says

Prime minister urges foreign investment in Israel's economy at World Economic Forum in Davos.

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Prime Minister Benjamin Netanyahu called on companies and investors to use Israel as a global research and development center, pointing to the country’s prowess in science and technology.

“We can be your science and technology incubator,” he told the World Economic Forum conference in Davos, Switzerland on Thursday. “I think for countries and companies alike the ability to partake in this Israeli incubator in your specific field is something that will enhance your competitive advantage.

Israel is leader not in science and technology but in entrepreneurship, calling the country the “epicenter of world innovation right now,” he said.

“Israel is often called the Startup Nation; I call it the innovation nation. The future belongs to those who innovate. Those who don’t innovate, whether in companies or countries, will fall behind,” Netanyahu said, in an address that also touched on the Palestinian issue and Iran.

“I think this will not only be good for you and for us but for peace,” he said. “The investment in the growth of Israeli economy is not only good for our society but is also good for our neighbors whether they realize it or not.”

The prime minister’s remarks, however, came as Bloomberg ranked Israel 30th most innovative among 50 countries in a survey released on Thursday behind Portugal.

Although the country was ranked first for research and development intensity, it was ranked 60 for manufacturing and 25th for productivity.

Netanyahu cited five other factors that have enabled Israel to become a hothouse for high technology, the first being the army, which he called a “perpetual [motion] machine that produces knowledge workers and knowledge entrepreneurs who are very, very gifted.”

Netanyahu also cited Israeli universities and research institutions as a major factor as well as the high proportion of GDP spent on R&D, approaching 5%.

“There is a special culture,” he said. “From the Talmud to Einstein, the Jewish people were always asking questions. Truth wasn’t finite … That questioning mind is something in our culture and I think adds very much to our capacities.”

Israel’s smallness also enhanced to Israel’s innovative capacity, encouraging networking and sharing. An example he cited was Give Imaging cameras in a pill, used to diagnose digestive ailments, which was originally based on guided-missile technology.

The final reason, the prime minister cited, was that “we have no choice … We didn’t have abundant natural resources, we were outnumbered, we were facing constant threats. Our neighbors even imposed on us an economic boycott. Some world powers imposed upon us a weapons boycott. We had to innovate to survive.”

Israel’s two biggest areas of expertise are what he called existence technologies, such as water and cleantech, as well as cyber security. Israel is making a “massive investment” in cybersecurity, which he cast as an issue of personal privacy.

Innovation alone hasn’t created a thriving economy, Netanyahu said. Government is needed in order to limit fiscal deficits. Innovation also depends on “sound macroeconomic policy” of smaller government, lower taxes and barriers to competition in the business sector.

Prime Minister Benjamin Netanyahu speaks during a session at the annual meeting of the World Economic Forum in Davos January 23, 2014.Credit: Reuters