Office of the Chief Scientist Ministry of Industry & Trade 1 Local vs. Global Competitiveness and Collaboration Dr. Orna Berry Chief Scientist Head of the R&D Administration MINISTRY OF INDUSTRY & TRADE EU, Helsinki 22Nov. 1999

Office of the Chief Scientist Ministry of Industry & Trade The rate of growth of the capitalistic system is on the decline: Source:Lester Thurow, the future of Capitalism

Office of the Chief Scientist Ministry of Industry & Trade 3 In the 20 th century we observe:  Disappearance of comparative advantage e.g.  Geographic location of industry  Natural resources  Capital richProductivity  Labor rich

Office of the Chief Scientist Ministry of Industry & Trade 4  Capital invested, not necessarily where natural resources, or even financial richness are.  Human capital: Brainpower, skills and knowledge are attracting investments creating physical capital

Office of the Chief Scientist Ministry of Industry & Trade 5 Democracy - Capitalism  Democracy - one person, one vote  Capitalism - economically fit drive the unfit out  Government - Equal distribution of income  Market Economy - Rapid increase in inequality Power is based on wealth and political position

Office of the Chief Scientist Ministry of Industry & Trade 6 Economic Competitiveness Individual - capitalism Government - preserving wealth and distributing it via wise investments (education, economic infrastructure...)

Office of the Chief Scientist Ministry of Industry & Trade 7  How can government be attractive to capitalistic activities?  Strengthen talents and skills  Equal opportunity to leverage  Create Future Potential

Office of the Chief Scientist Ministry of Industry & Trade 8 Local vs. Global  Competitive advantage is taken into international trade.  In theory - In an equal global environment no region, industry or firm has preference.  Business costs in different locations are approaching equality.  The edge of an individual - country -market segment depends only on skill and talent.

Office of the Chief Scientist Ministry of Industry & Trade 9 Policies are set to continuously create a competitive edge so that economic power is developed and maintained via brainpower industries

Office of the Chief Scientist Ministry of Industry & Trade 10 National Programs International Programs Industrial R&D Generic R&D “MAGNET” Technological Incubators “MESER”- “BASHAN" : Bi-national Funds BIRDF CIIRD SIIRDF BRITECH South-Korea Israel - US High Tech Commission EU RTD Fp-5 Other Bi-National Agreements Chief Scientist Dr. Orna Berry Chief Scientist Dr. Orna Berry Industrial Incubators

Office of the Chief Scientist Ministry of Industry & Trade 11 Source: Manuel Trajtenberg - TAU Patents Per Capita: Israel vs. the NIC

Office of the Chief Scientist Ministry of Industry & Trade 12 Source:: Manuel Trajtenberg TAU Patents per Capita: Israel vs. the G7 (patents per 100,000 population)

Office of the Chief Scientist Ministry of Industry & Trade 13 Industrial R&D (millions of 1990$) Source: Manuel Trajtenberg - TAU Number of Patents Issued in the US Israeli Patents in the US and Industrial R&D

Office of the Chief Scientist Ministry of Industry & Trade 14 26% 22% 30% 25% 21% Output per Capita and Labor Force - Growth In Israeli Electronic Industry Based on I.E.A. data

Office of the Chief Scientist Ministry of Industry & Trade 15 Economy Education Defense Israel’s competitive edge in technology - based industries