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Innovation in the ICT Sector in Israel

SNI was commissioned by the World Bank to prepare a chapter for their World Development Report 2016 on the subject ‘Best Practices and Lessons Learned in ICT Sector Innovation: A Case Study of Israel.’ The study, led by Dr. Daphne Getz, analyzes and describes how government policies (national and local) have contributed to the development of a vibrant ecosystem that has spurred a high rate of both technological innovation (e.g., VoIP, security software) and entrepreneurship, and describes the environment it has created.

The analysis provides relevant recommendations for the World Bank’s client countries, ranging from middle-income developing countries such as ‘emerging markets’, to low-income, small-sized or challenged economies.

The study shows that government policies helped to enable to start the development of the ICT sector, as well as Israel's high-tech industry. The Israeli ICT Ecosystem was gradually built up in the Tel Aviv and Haifa areas, both close to leading academic institutes: Technion, Israel Institute of Technology, and Tel Aviv University. The companies in this ecosystem are mainly export-oriented. We also showed that as the ICT sector grew and branched out, multinational companies seeking innovative technology bought small startup companies and established local R&D centers.

The chapter, describes, using five case studies of ICT companies active in Israel, how startups have developed within the ICT Ecosystem. Among the lessons that developing countries and emerging markets can learn from the Israeli experience: nurturing an entrepreneurial focus that will develop into a combined ecosystem of innovation.

The following is a link to the background paper on “Best Practices and Lessons Learned in ICT Sector Innovation: A Case Study of Israel” to the World Development Report 2016 - Digital Dividends.

On Tuesday, 17 May, 2016, personnel from the World Bank led by Anat Lewin (WB strategic plan for the ICT sector and current projects in the developing world) gave a short presentation at Tel Aviv University, describing the ICT sector in Israel. Anat also described the lessons learnt from it. The presentation elaborated on a case study and its main points, based on a report prepared by the Samuel Neaman Institute as a background paper for the World Bank development report 2016 (WDR 2016) Digital Dividends.

Ms. Indira Santos (Ph.D.), Senior Economist in the Social Protection and Labor Group, gave the WDR presentation.  Ms. Santos presented the various issues involved in the acquisition of Digital Dividends by developing countries.

Dr. Daphne Getz and Eliezer Shein presented the Israeli case study. They showed that developing countries could build their own ICT ecosystem, given that the required resources are invested in the education system.

The purpose of the report is to describe the environment for Internet entrepreneurship in Israel and analyze how government policies have contributed to the development of a vibrant ecosystem that spurred a high rate of technological innovation and entrepreneurship. The objective is to draw conclusions from Israel's growth experience that can be relevant for developing countries.

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