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Israel Turns to High Technology to Increase Exports and Jobs

April 7, 1989

JERUSALEM (AP) _ Poor in natural resources but rich in scientists and engineers, Israel is turning to high technology to increase export income and to create jobs for its people.

The launching of an experimental satellite this past fall has been hailed as Israel’s ″high-tech calling card,″ a symbol of the nation’s growing technological expertise.

″A feature that makes us unique is that we have a wide spectrum of technology - aerospace, electronic, computer, medical,″ Yigal Erlich, chief scientist in the Industry Ministry, said in an interview. ″Our national goal is to increase exports, and we think high technology is the best way to do it.″

The country exported $2.8 billion worth of technically advanced products in 1987, seven times more than a decade earlier, according to the ministry’s latest statistics.

The goal is to reach $8 billion by 1995, or about two-thirds of projected total exports.

There are rising calls for more spending on research and development to avoid a ″brain drain″ of highly skilled workers. Still, some warn that high technology will not be a panacea.

″Many politicians, not only in Israel, view science and technology as an undifferentiated source of salvation and throw away millions of dollars on hopeless schemes,″ a Hebrew University researcher, Gerald M. Steinberg, recently wrote in The Jerusalem Post.

He said some of the nation’s largest high-tech companies - the government- own ed Israel Aircraft Industries, the innovative Elscint medical equipment company and the electronics giant Tadiran Ltd. - are running in the red and should be restructured.

″There seems to be no recognition or discussion of the possibility that there are just too many engineers and scientists in Israel for the government to support economically,″ Steinberg complained.

The Israel Academy of Sciences and Humanities said in a report in March that Israel produces some 3,000 science and engineering college graduates a year and must absorb ″a significant number″ of immigrant engineers, many from the Soviet Union.

It raised the prospect of a brain drain in this nation of 4.2 million people if spending for research is not increased.

The government estimates that as much as $300 million will be spent on public and private industrial research and development this year alone.

Private entrepreneurs say the environment in Israel is conducive to new projects, and small high-tech companies are sprouting around the country.

Chemist Herman Branover, who emigrated from the Soviet Union in 1972, and his son, Daniel, founded Satec Ltd. a year and a half ago.

Situated in a burgeoning high-tech industrial park near Jerusalem, the company has just launched production of a digital power meter for factories and is underwriting research in precious metal extraction and oil exploration.

Half of Satec’s 60 employees are scientists and engineers who came to Israel from the Soviet Union.

″These people have extremely high theoretical skills but lack practical skills like applied research and marketing,″ Herman Branover said during a tour of Satec’s laboratories. ″We’ve put together a team that includes Western-trained managers to make it work.″

Son Daniel, who is managing director, believes that the company’s equipment sales this year could reach $3 million and grow as much as 25 percent a year.

Many of Israel’s kibbutz communal farms, which were the backbone of Israel’s agricultural revolution, have turned to technology to expand their incomes. More than 315 industrial enterprises now are on collectives, averaging 45 workers each, according to the United Kibbutz Movement.

Gersher Metzger, deputy director of the Science Ministry, points out that Israel’s high technology has developed successfully from three roots: agriculture, chemicals from the Dead Sea and the military.

Much of the advancement started with the military. Israel, which has fought five wars with its Arab neighbors since its creation in 1948, has been a testing ground for weapons use in combat.

″From trying it out at home, we have a lot of experience in sophisticated weapons and this has indirectly supported electronics, advanced material applications and computers,″ Metzger noted.

Israeli military industries had record orders from abroad totaling about $2 billion last year in products ranging from Kfir combat jets to Uzi machine guns, the Israel Economist magazine estimates.

Still, the decision to cancel development of the sophisticated Lavi jet fighter in August 1987 has cost many aerospace jobs and had a ripple effect in subsidiary industries, such as electronics.

Finance Minister Shimon Peres estimated earlier this year that more than 8,000 workers had lost jobs in high technology industries and that many were having trouble finding comparable work.

Although Peres made widespread cuts in this year’s budget, he gave the Industry Ministry more funding for export promotion and research.

″Without investment in modern infrastructure, products and equipment, we have no chance of conquering new markets for Israeli products,″ Peres said. ″Such investment is, in essence, investment in our primary natural resource - the excellent manpower of the Israeli economy.″

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