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Netanyahu: Hi-Tech Ed not Enough, We Need Market Economy

PM Netanyahu told the High-Tech Industry Association Annual Conference that economic reform is not only critical, it must be ever ongoing.
By Hillel Fendel
First Publish: 6/9/2010, 4:27 PM / Last Update: 6/9/2010, 4:52 PM

Flash 90

Prime Minister Binyamin Netanyahu addressed the High-Tech Industry Association Annual Conference, including members from Israel and around the world, on Wednesday. He told them that economic reform is not only critical, it must be constantly ongoing.

Excerpts from his speech:

“[Though I greatly appreciate hi-tech], hi-tech innovation and education are not enough… because we've seen in parts of the world where we had highly educated populations who were frustrated, or unemployed, or left the country to go to places that had the other necessary prerequisites for high growth [and] the proliferation of technology. Free markets, or freer markets. Without a market economy, you cannot really have the soil on which innovation can take root, in which initiative and entrepreneurship can produce the necessary growth and benefits to our people.

[We must have] freer economies, mobile economies that reward effort, that reward innovation, that reward the excellence in human thought - because people don't create just for the sake of creation. They create, and invest, and work harder, because they want to profit by it. And this is a basic truth that is often forgotten, but in fact the unleashing of the tremendous spurts of economic growth in the global market is a result of the freeing up of economies, the addition of… at least a billion people into modern life…

“… For the developing economies around the world, [what’s important is] just creating the infrastructure of communications, the infrastructure of financial movement and other prerequisites. That creates and generates growth. But if you're a developed economy, the only way you can sustain your standard of living is by giving sufficient innovation to your products and services that will allow you to compete in certain niches in the global marketplace.

"So free economies is a prerequisite, but innovation and technology is the second prerequisite… You cannot have the second without the first.  But you need both.

"This is what we've tried to do in Israel, and this is really the reason we're gathered here in this extraordinary meeting, because in this city of Jerusalem… is now trying to fashion government policy with us so that we can see this flourishing in Jerusalem and in Israel.

"Let me tell you the three points that we're working on now.  I won't belabor the economic reforms we made; other countries are faced now with these decisions, and reform is a continuous process.  This is an important point. You never end it any more than you ever stop competing. None of the companies you represent ever stop competing.  In the global marketplace, national economies never stop competing. So if they've done important reforms, and I think we've done quite a few here, you never stop. You have to reform the public sector; the way it handles service to the public, what things can be outsourced; what things can be improved with technology. There's a lot that can be done to reform the public sector.  That is critical.

"But down the line, and even before that, the private sector reforms are the crucial ones because the private sector produces most of the added value in an economy.  And so the crucial question is what can we do to help government policy, not merely to lift the weight of undue taxation for undue bureaucracies. Streamlining those bureaucracies, that's one thing, and that's very hard.  A number of countries are facing this problem right now. They are welcome to look at what we did.  It's very hard politically, that I can tell you.  But it has to be done.  And down the line, it pays politically.

"… The second thing that we must do is enable the private sector, and its innovation and technology, to thrive.  And on this we've been thinking of doing three main things in 
Israel. The first is to encourage centers of innovation in our universities… The second thing is to encourage institutional investors to invest in the start-up system, and that means giving incentives to pension funds and to other institutional investors to go into the root of innovation… The third is an incentive for the companies that we do sprout here, and there are thousands of start-ups here - to have them stay in Israel.  We're looking at financial incentives, tax incentives, to make the companies stay in Israel so that some of them will mature here to become important companies on the international scene, but based in Israel

"We're not resting on our laurels.  We know that in the coming decade, we'll have to have the Israeli hi-tech develop and transform into other areas as well, diversify.  We were very strong in IT; we're going to have to go into other areas: into biotech, into nanotech, into solar energy and alternatives energies, alternative energy especially for oil, in transportation - that is something that the government wants to look at - and many, many other areas. 

We think we're very strong potentially in the life sciences.  We have medical instrumentation here, but we also have brain research and we have mini-satellites and we have, you name it.  But we want to be able to create a structure, both of ideas and people, and money, that encourages these ideas to develop into actual companies, into products and services that stay in 
Israel.

"When we say stay in 
Israel, we also want to have a very strong international component, very strong cooperation with other countries and other governments.  I've just come from Canada and we're going to talk to the Canadian government about a joint innovation conference.  We want very much to do that with many countries around the world…

"The future belongs to technology. The future belongs to innovation. Israel is a center of innovation… I'm going to reflect that by actually institutionalizing an award here in Israel.  It's going to be "The Innovation Entrepreneur of the Year” … We'll start with Israelis but maybe we'll continue with our partners from all over the world, so please come back.  Please win all the prizes.  You all deserve it.  Welcome to Jerusalem. Thank you very much.