“The grass is always greener…” may be a banality, but it’s an appropriate one for what is turning out to be an internal debate in two countries known for their technology – Israel and Singapore.
At an event in Tel Aviv Monday, both Economics Minister Naftali Bennett and Google Israel chairman Meir Brand bemoaned (or at least expressed concern) over why Israel, despite its reputation as the Start-Up Nation, was failing to “cash in” the way Asian tiger countries like Singapore have.
But in conversations with the Times of Israel, it’s Israel that students, entrepreneurs, and business figures from south Asia, including Singapore, feel that their countries should emulate. “The Asians just don’t have the start-up spirit,” said Singaporean Adry Lee, who in a recent interview described himself as a serial entrepreneur.
Lee’s comments were typical of those of numerous Singaporeans the Times of Israel has interviewed at several events geared to promoting Israel-Asia business relations, such as last May’s Israel-Asia Business Summit. “It’s very hard for Singaporeans to think out of the box and come up with non-traditional ideas as Israelis do,” he said.
That wasn’t the feeling in Israel, or at least among the speakers — including Economics Minister Naftali Bennett and Google Israel chairman Meir Brand — at the launch of an initiative called E-nnovate Israel, a hub initiated by Google Israel for projects and studies to promote innovation and economic growth in Israel, with an emphasis on strengthening the country’s information infrastructure.
As its first project, E-nnovate introduced on Monday a report by consulting firm Trigger-Foresight Group Deloitte — the report was funded by Google Israel — which compared the impact of Israel’s tech economy on the country’s overall economy. Israel, according to the study, is a world leader in the size of its “internet economy,” the term used to describe industries that produce “information economy” internet-related products and services (like most high-tech companies). Those companies represented 6.4% of Israel’s GDP in 2009, and will exceed 8% by 2015 — on a par with most advanced European countries, like Germany and the UK, and not far behind the US.
But somehow Israel’s tech savvy has not translated into economic benefits, as it has elsewhere. The study took Singapore as a good example of how well Israel hasn’t done. The GDP for both countries was similar throughout the 1980s — but then Singapore’s fortunes took off, leaving Israel in the dust. Today, the Asian tiger’s GDP is about $60,000 — nearly double that of Israel.
What happened? It’s not about military spending, as many believe; surprisingly, Singapore’s per capita defense spending for 2012 ($1,593) wasn’t that much less than Israel’s ($1,882); Singapore, it turns out, ranked 23rd in the world in military expenditures in 2012, compared to Israel’s 17th-place ranking.
What it is about, said the report, is that Singapore has much more successfully leveraged its Internet technology to make its economy more efficient. Israel hasn’t, and that has been very bad for the economy. The report cited an analysis of productivity in Israel which said that despite Israel’s position as a high-tech country, it’s only 24th (out of 30) in the OECD in terms of productivity. “Even though Israel, in its early years, narrowed the productivity gap between itself and the OECD countries, it stagnated on par with the OECD average from the 1970s until today,” said the study.
It was a future told by American economist Robert Solow, who won the Nobel Prize in 1987 for proving the close connection between economic growth and increased productivity and innovation, the study said. “However, innovation also necessitates creatively providing useful, efficient and effective solutions to non-economic problems. This is the only way to increase productivity and create growth in advanced economies.” The way to do that, the study said, was for Israel to implement Internet-efficient communications and technologies in a much wider manner.
And the only way to make that happen, said Google chairman Brand, was for the government to embark on an aggressive Internet infrastructure investment campaign. “A program like this would require an investment in infrastructure, but could save the economy millions,” he said. The money could go towards direct funding for infrastructure projects, or be available for low-cost loans for organizations that wanted to upgrade their communications and network systems to make themselves more efficient.
For example, said Google’s Doron Avni — who heads Google’s Middle East, Israel, and Africa government relations department — the government here could fund a project similar to one in the UK, where the National Health Service borrowed money to set up an online portal for information, appointments, and self-diagnosis for certain conditions (via apps, questionnaires, etc.) The money was given as a loan to the NHS, which paid it back in full within four years, and saved the organization 110 million euros in 2008 alone.
Another example is that of the Virtual High School in Florida, a special online and in-person school that has students doing much of their work through the internet via videoconferencing with teachers, remote submission of reports and homework, and more. Costs to the state for students in such schools are $1,000 less than for students in “regular” schools.
According to entrepreneur Lee, Singaporeans ‘don’t have the chutzpah you need to buck trends… We are taught to listen to our elders’
The secret to getting this done, said Brand, is instituting an Information and Communication Technology (ICT) policy, as successful countries — such as Singapore, Germany, Japan, and others have. Such a policy, he said, would ensure that Israel could enjoy the economic benefits of the technology developed here, instead of just making others richer. “The likelihood that Israel will develop the next big thing in telemedicine, for example, but that the device will be used in Denmark, Singapore, and Finland – but not here – is very high,” said Brand. “In order to avoid this, Israel must learn from other countries that have developed successful ICT policies, to develop the Internet and make it into a tool that can be used in many areas.”
But is Singapore the right role model for Israel? According to Singaporean entrepreneur Lee, “the government has been spending a lot of money setting up incubators and accelerators for entrepreneurs, but the program has been less successful than they hoped it would be.” While Singapore has the “form” of a start-up nation, Singaporeans “don’t have the chutzpah you need to buck trends and come up with something truly innovative. We are taught to listen to our elders,” he said, “and of course to teachers.” Whereas stories about Israeli or American tech heroes who were dropouts are not uncommon, said Lee, no Singaporean in his or her right mind would drop out of college, much less high school, for fear they would be frozen out of jobs at large corporations.
It’s the same Asian mindset described by another Asian entrepreneur, Bowei Gai, in a recent interview with the Times of Israel. Describing why Israelis start-up entrepreneurs are more creative and innovative than those in China, Gai said that China — considered by many to be the most dynamic and creative economy in Asia — concentrates on what he calls “commodity innovation,” a rehashing of existing technology and methodologies that builds on widely known models. “In the end it’s about making money, and the best and easiest way to do that in a place like China is by using proven models that have been successful elsewhere. There are so many ways to make money in China using these models because there are so many people to market to, and they don’t need to innovate or invent something new to succeed. It’s much easier to go for the ‘low hanging fruit’ of commodity innovation by basically duplicating existing technology,” said Gai.
But you can’t argue with the bottom line, Bennett said at the E-nnovation event Monday. Israelis may have “creative genes,” he said, “but genes alone, like a seed, cannot grow unless planted in the right kind of soil. The government’s job is to prepare that soil so that the seeds can sprout. Entrepreneurs and the private sector are racing ahead, while the government remains behind. We must invest in physical infrastructure, and develop the human infrastructure.”