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SME and Entrepreneurship Policy in Israel 2016

image of SME and Entrepreneurship Policy in Israel 2016

This report examines Israel’s performance in stimulating SMEs and entrepreneurship and makes recommendations for government policy. A dual economy has gradually emerged in Israel, in which high rates of successful technology-based entrepreneurship contrast with low average productivity and growth in traditional SMEs. Israel has excellent framework conditions and programmes for technology-based start-ups and SMEs in areas such as R&D, high-level skills generation and venture capital finance. These strengths need to be maintained. At the same time, more needs to be done to spread success to all types of SMEs and all groups of the Israeli population. This report recommends a range of new and expanded interventions for example in access to credit, broad innovation, workforce skills development, management support and entrepreneurship education. It recommends underpinning these actions with a national SME and entrepreneurship policy strategy and new arrangements for inter-ministerial co-ordination.

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Business environment and framework conditions in Israel

This chapter examines the framework conditions influencing SME and entrepreneurship development in Israel. It covers macroeconomic conditions, product market regulations and the ease of doing business, human resources, the innovation system, access to finance, business taxation and foreign direct investment. Israel has experienced strong economic growth in recent years thanks to major assets such as high rates of participation in tertiary education, strong R&D expenditure, well-developed equity finance, and favourable business taxation. This has offered favourable conditions for Israel’s successful high-technology entrepreneurial ecosystem. Nonetheless, improvements can still be made to framework conditions for SME and entrepreneurship development more generally, including addressing barriers to product market competition, inadequate vocational skills and training, limited access to loan finance, limited support for non-R&D based innovation and limited FDI‐SME linkages. Tackling these issues can help reduce the dualism of the Israeli economy between an internationally advanced high-technology sector and a lagging traditional manufacturing and services sector.

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