Global development of the knowledge economy: lessons from the Israeli case

June 25, 2018

 

 
Academic session led by Oren Gershtein, CEO of "Identity Roads", with comments from Lucas Cornejo y Martín Guinart, organized by the Committee of Science and Technology Issues
Written by Victoria Bohl

"The current GDP of Argentina was about 500 billion in 2016, but if the country would be capable to develop some of the results in Israel, the GDP would cross the 2.500 billion"

Thought the discussion, Oren Gerhstein intended to explain the meaning of knowledge economy. In order to do so, he analyzed the Israeli case study and the evolution of one of the most sophisticated knowledge technology. Also, he combined this with observations of Argentina’s utilities, challenges and practices.

Firstly, the speaker stated that the basic principle of knowledge economy is that when people are using raw material and energy, there is less of it, but when knowledge is exploited, there is more of it. Furthermore, in order to illustrate the benefits of knowledge economy, Gerhstein argued that "the current GDP of Argentina was about 500 billion in 2016, but if the country would be capable to develop some of the results in Israel, the GDP would cross the 2.500 billion".

In order to avoid any claims that Israel had everything necessary to achieve economic progress, the speaker mentioned that Argentina is by far in a better starting point than Israel, three decades ago. In the late eighties, the Asian country had an inflation rate of 450%. In response to it, the Israeli government developed public policies that aimed to exploit their excellent human resources and find alternatives to traditional industries, which were moving to the Far East. The first policy merged private money to public money in a proportion of one to one. Then, in 1991 Israel started a technology incubator program that was aimed to integrate the immigration of foreign Russia into the Israeli population. The 40% out of these people where engineers and PHD’s; the idea was to absorb them into the ecosystem and not lose them into other countries. Nowadays, "Israel is the largest number of multinational per capita and actually it is a house of knowledge and trade, everything related to advance technology and companies".

Later, the speaker indicated that universities play a key role in knowledge economy. For this reason, academic institutions in Israel are fully subsidized by the government, and thanks to public support, they have been able to generate income by commercializing their ideas in a daily basis.

"Israel is the largest number of multinational per capita and actually it is a house of knowledge and trade, everything related to advance technology and companies"

Taking into account the importance of the academies, Gerhstein explained that intellectual property is also a vital tool. However and even though Argentina has amazing high tech industries, argentines are not aware of the importance of patents to prevent competitive use national products without paying a license. CONICET is the main player in Argentina that is fighting intellectual property, but out of the hundred patents that were fought in CONICET, only 5% were granted. Nevertheless, according to the speaker, this is not CONICET’s responsibility, the owners and the companies should protect the ideas.

Then, the orator explained that the factor of time is also crucial. In order to reproduce the Israeli high-tech ecosystem, a critical mass of activity needs to be created in a short period of time. However, once it has been created, the speaker indicated that the ecosystem cannot be stopped. In effect, even during two world wide crises, the Israeli state continued to invest so that the private sector could keep creating companies and innovating.

Moreover, Gerhstein introduced other significant element within the creation of the ecosystem: culture. In this point there are probably the more differences between Argentina and Israel. In fact, while, Argentina has the advantage of having a great amount of young and highly educated people, in Israel international conferences are always taking place, entrepreneurship is taught since high school years and failure is considered to be an asset.

With respect to the question if the Israeli experience could be duplicated, in accordance to the speaker, the right answer would be that governments can successfully produce similar results by adjusting the same policies to different territories.

"Argentina has the largest manufacture of entrepreneurs, but they are all around the world, the only thing needed is an understanding that they can do it"

In the case of Argentina, Gerhstein mentioned the importance in having created CITES, being the first technology incubator, located in Santa Fe and owned by "Sancor Seguros". The goal of this type of institution is to build management capabilities within a group of young, talented and highly educated people, in order for them to learn how to create an innovative company. Also, in November 2017, the Minister of Production announced three sophisticated public policies that support technologies and develop a knowledge economy. According to the orator, this is only the beginning of the innovation process, but it is a great place to start.

To conclude, Gerhstein stated that the creation of a high tech ecosystem is not spontaneous and that it is a government responsibility. Also, developing knowledge economy capabilities within the nation is not a privilege but a necessity, because nations that don’t embrace this process will stay behind with a gap that will be hard to close. "Argentina has the largest manufacture of entrepreneurs, but they are all around the world, the only thing needed is an understanding that they can do it".

Oren GerhsteinCEO of the global consultancy "Identity Roads". In the past, he served as CEO of the Investment Fund "Van Leer Ventures" and was a member of the Board of Directors of numerous Investment Funds. He has founded and deferred more than 75 incipient technology companies. He has also worked with the Government of New Zealand in the design and creation of the National Technological Program of Incubators of Start Ups and has supervised the redesign of the CITES Project in Argentina

Lucas CornejoNational Director of Entrepreneurial Capital of the Secretariat of Entrepreneurs and SMEs of the Ministry of Production. He holds a degree in Business Economics from the Universidad Torcuato Di Tella. In his current position, he is responsible for developing the entrepreneurial capital industry and favoring the creation of high impact companies. He was part of the design and execution of risk capital investment programs and in the development of the Entrepreneurs Act. He was the Coordinator of the BA Emprende Accelerators program and participated in the development and implementation of the Innovation Plan of the City of Buenos Aires. He also worked in companies such as IBM Global Business Services Talent & Engagement and British American Tobacco Argentina

Martín GuinartNational Director of Technological Development and Innovation dependent on the Undersecretary of Policies of the Ministry of Science, Technology and Productive Innovation (MINCYT). Doctorate in International Relations and Foreign Affairs from the Universidad del Salvador, and Bachelor in Economics from the Universidad Argentina de la Empresa. In 2006, he entered the Ministry of Science, Technology and Productive Innovation where he served as General Coordinator of the Federal Council. Next, he worked as Coordinator of International Programs of the Argentine Industrial Union. In 2011 he resumed public duties, assuming as National Director of Technological Development and Innovation, a position he holds until now. It is also, docent in the Universidad del Salvador and the University of Tres de Febrero

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