Office of The Chief Scientist

(Ministry of Industry and Trade)

DR. Orna Berry, Chief Scientist

Ministry of Industry and Trade

The office of The Chief Scientist (OCS) at the Ministry of Industry and Trade is charged with the responsibility of assisting Israeli high-tech enterprises in realizing their potential. The OCS shares in the risk and large investment required by high-tech companies by offering a program of incentives. The importance of this office is underscored by the fact that high technology is playing an increasingly important role in the Israeli economy, currently generating more than 70% of Israeli exports.

The operation of the OCS was formalized by enactment of the ‘Law for the Encouragement of Industrial R&D’ in 1984 which also designates the Chief Scientist as head of the Research and development Administration.

The OCS’ professed goals as stated in this law and as having evolved through the years are:

· To accelerate Israel’s economic growth by increasing industrial sector production

· To enhance the attractiveness of high tech industry by risk sharing

· To encourage industry to engage in R&D in order to develop products that enable Israel to compete in technologically driven world markets

· To stimulate R&D activity in emerging and future technologies

· To promote international joint R&D ventures

· To nurture technological start-up companies through their early years.

These objectives lead to a more vibrant economy by the creation of jobs and an improvement in Israel’s balance of payments.

OCS Project Applications and Approvals 1995-1998

For a project to qualify for an OCS grant, it must be both innovative and slated primarily for export. In return for an OCS grant, a recipient must produce the developed product in Israel and repay the amount of the grant through royalties on its sales.

Government support of science-based industry through the OCS has been a catalyst in Israel’s transformation into a high tech superpower. The OCS’ support for high tech typically extends to enterprises which have benefited in some way from one or more of three major factors which have given a boost to high tech industry:

· Defense related industries – Innovation and self reliance in defense has brought about the development of products sharing the same technology, especially in the fields of electronics, software, DSP and ASIC design, multimedia, data protection, firewalls, intranet security, wireless communication technology, image processing, and identification and tracking.

· Academia – An excellent advanced educational network engaged in world class research has provided both workers and ideas for the high tech sector. Biotechnology is the most noteworthy example in which Israel’s investment in educationhas spawned a multitude of projects with enormous potential.

· Immigration – The introduction of highly skill immigrants into the work force, particularly in the last decade, has become a reservoir of technologically trained and oriented personnel for high tech industry.

Grants 1988-1998

Principal Programs

The encouragement of entrepreneurial ‘risk taking’ is accomplished by OCS ‘risk sharing’. In the following programs the OCS provides a range of funding for industrial R&D:

· Support for industrial projects – The largest part of the ICS budget is dedicated to the support of projects arising directly from industry. The degree of participation is generally 50% of the approved budget, but may vary from 30% for the improvement of an existing product to 66% for a start-up company. In addition, support is available for a feasibility study as well as for prototype evaluation at a customer’s sit.

· MAGNET – In order to remain competitive into the next century, a number of future technologies have been identified. A consortium has been formed around each of these technologies with the intent to explore and develop them for the common good. Funding for this is primarily from the OCS.

· Technological Incubators – Developed in response to the large influx of scientists, entrepreneurs and know-how, Incubators have provided a nurturing environment to hundreds of nascent companies and enabled them to translate their dreams into market reality. OCS has borne the bulk of the funding.

Royalties Received by OCS 1988-1999

Israeli Exports: High Technology vs. Other

International Cooperation

Israeli and foreign firms have much to offer one another. Joint R&D ventures provide the synergism of complementary technologies and broader market access as well as sharing of the risk inherent in R&D. Israel has entered into a number of bi-national R&D agreements that have proven that have proven mutually beneficial. In addition to financial support, the bi-national mechanism acts as a matchmaker in bringing interested parties together. Agreements are in effect with Austria, Canada, Belgium, France, Holland, India, Portugal, Singapore, Spain and the United States.

These joint agreements take many shapes and forms, One involves a bi-national fund to which any pair of companies-on from each country-may jointly apply. With this fund, partners define, develop, produce and market an innovative product. Existing Israeli bi-national funds include BIRD-F (US-Israel), SII-RD (Singapore-Israel) and CIIDF (Canada-Israel). Other forms of international cooperation include the US-Israel Science and Technology Commission, European Commission Frameworks for research and technological development (4th framework and 5th framework) and Eureka.

Through its R&D programs, Israel has been the first to systematically expose Israeli firms to interested US parties. When the venture capital community discovered Israel at the beginning of the 1990s, 26 Israeli firms trading on Nasdaq were introduced to their US counterparts vie the BIRD Foundation. Currently, a number of multinational programs are in effect, marketing Israeli products and know-how on an international basis.