Address by PM Netanyahu at the High Tech Industry Association Annual Conference


Photo: GPO

I want to welcome all of you to Jerusalem and to thank Aaron Menkovsky and Minister Braverman and all of you who are working in Israel and around the world, for the hi-tech and innovation industries.

I want to qualify my appreciation for hi-tech, which is enormous. Hi-tech innovation and education are not enough. And by themselves, an educated population will not achieve rapid economic growth, because we’ve seen in parts of the world where we had highly educated populations who were frustrated. They were frustrated or they were unemployed or they left the country to go to places which had the other necessary prerequisites for high growth, and in my opinion, for the proliferation of technology. And that is, I would say – free markets or freer markets. Without a market economy, you cannot really have the soil on which innovation can take root, in which initiative and entrepreneurship can produce the necessary growth and benefits to our people.

I bracket everything that I say about the value of entrepreneurship, of innovation and of technology with the prerequisite of having freer economies, mobile economies that reward effort, that reward innovation, that reward the excellence in human thought, because people don’t create just for the sake of creation. They create because they want to profit by it. They invest because they want to profit by it. They work harder because they want to profit by it. And this is a basic truth that is often forgotten, but in fact the unleashing of the tremendous spurts of economic growth in the global market is a result of the freeing up of economies, the addition of billions of people – well, at least a billion people – into modern life, into the 21st century, into the latter part of the 20th century, as a result of freer markets.

I say that because whatever else we do, as governments we have to do this. Now we must do something else, and that something else is to understand that in the freer markets, those who will win out are those who will create the possibility to add extra value. This is true of developing economies; this is true of developed economies.

By the way, it’s also true of developed economies, because for the developing economies around the world, just creating the infrastructure of communications, the infrastructure of financial movement and other prerequisites – that’s obvious. That creates and generates growth. But if you’re a developed economy – a highly developed economy – the only way you can sustain your standard of living is by giving sufficient innovation to your products and services that will allow you to compete in certain niches in the global marketplace.

So free economies is a prerequisite, but innovation, technology is the second prerequisite. The two are becoming inextricably linked. You have to have one and you have to have the other, and as it turns out, you cannot have the second without the first. But you need both.

This is what we’ve tried to do in Israel, and this is really the reason we’re gathered here in this extraordinary meeting, because in this city of Jerusalem – and I welcome the Mayor of Jerusalem, who comes from this area is now trying to fashion government policy with us so that we can see this flourishing in Jerusalem and in Israel and indeed, in cooperation with you.

Let me tell you the three points that we’re working on now. I won’t belabor the economic reforms we made. Other countries are faced now with these decisions, and reform is a continuous process. This is an important point. You never end it any more than you ever stop competing. None of the companies you represent ever stop competing. In the global marketplace, national economies never stop competing. So if they’ve done important reforms, and I think we’ve done quite a few here, you never stop. You have to reform the public sector; the way it handles service to the public, what things can be outsourced; what things can be improved with technology. There’s a lot that can be done to reform the public sector. That is critical.

But down the line, and even before that, the private sector reforms are the crucial ones because the private sector produces most of the added value in an economy. And so the crucial question is what can we do to help government policy, not merely to lift the weight of undue taxation for undue bureaucracies. Streamlining those bureaucracies, that’s one thing, and that’s very hard. A number of countries are facing this problem right now. They are welcome to look at what we did. It’s very hard politically. That I can tell you. But it has to be done. And down the line, it pays politically.

But that’s not enough to streamline our own governmental processes. The second thing that we must do is enable the private sector to thrive and the innovation and technology in the private sector to thrive. And on this we’ve been thinking of doing three main things in Israel.

The first is to encourage centers of innovation in our universities. We’ve just budgeted in our government expenditure a significant sum to try to attract academics, including Israelis who are abroad, to come to our universities and academic institutions for the purpose of technological innovation. We’re also going to make significant reforms in our higher education, because these are the places that produce the new ideas that we must have.

The second is to encourage institutional investors basically to invest in the start-up system, and that means giving incentives to pension funds and to other institutional investors to go into the root of innovation. Some of them are doing this, but we think we can do a lot more that could bolster the existing system that we have.

The third is an incentive for the companies that we do sprout here, and there are thousands of start-ups here – to have them stay in Israel. We’re looking at financial incentives, tax incentives, to make the companies stay in Israel so that some of them will mature here to become important companies on the international scene, but based in Israel. Often we’ve had a typical phenomenon that you’re probably familiar with here: we sprout many, many ideas and these ideas go through the start-up phase; they go into an initial development; they’re bought; and those companies move abroad. And that’s a natural process that will continue. We understand that. But we want to create governmental incentives to have more of these companies stay in Israel.

We’re not resting on our laurels. We know that in the coming decade, we’ll have to have the Israeli hi-tech develop and transform into other areas as well, diversify. We were very strong in IT; we’re going to have to go into other areas: into biotech, into nanotech, into solar energy and alternatives energies, alternative energy especially for oil, in transportation – that is something that the government wants to look at – and many, many other areas.

We think we’re very strong potentially in the life sciences. We have medical instrumentation here, but we also have brain research and we have mini satellites and we have, you name it. But we want to be able to create a structure, both of ideas and people, and money, that encourages these ideas to develop into actual companies, into products and services that stay in Israel.
When we say stay in Israel, we also want to have a very strong international component, very strong cooperation with other countries and other governments. I’ve just come from Canada and we’re going to talk to the Canadian government about a joint innovation conference. We want very much to do that with many countries around the world. I’m very happy that we have here representatives from North America, from Western Europe, from other parts of Europe, but especially from Asia. I know that there are very large delegations here from India and from China. We welcome you in Jerusalem. We think we can do a lot together. I don’t think Israel can compete with China and India for size. But I think that we don’t need to compete. I think we can cooperate. I think we can complement many of the mutual needs that we have. You have great talents; you have great markets; you have great capabilities everywhere. We have certain capabilities. They can fit into those needs, and I think that applies to just about any country that is represented here and any economic interest that are represented here.

The future belongs to technology. The future belongs to innovation. Israel is a center of innovation. I think right now already on a global scale, but we want to do much more. I’m going to reflect that by actually institutionalizing an award here in Israel. It’s going to be "The Innovation Entrepreneur of the Year", which is the Prime Minister’s Prize. We’ll start with Israelis but maybe we’ll continue with our partners from all over the world, so please come back. Please win all the prizes. You all deserve it. Welcome to Jerusalem.

Thank you very much.