SME and Entrepreneurship Policy in Israel 2016

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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.



Executive summary

Israel is one of the most successful economies in the world for technology-based enterprises, which account for approximately 10% of business sector employment. Israel has great foundations in fields such as Information and Communications Technologies (ICT) and biotechnologies, in which productivity, business start-up rates and high-growth entrepreneurship rates are all very high, reflecting some exceptionally strong framework conditions for high-technology industries. Israel has the largest share of early-stage and seed venture capital funding in GDP of OECD countries, a rate of adult participation in tertiary education that is fully 16 percentage points above the OECD average, the second highest ratio of R&D expenditure to GDP in the OECD and a large base of R&D-based inward foreign direct investments.


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