The Fostering and Facilitating Role of the Israeli Government

Israel is also characterized by strong state support for the R&D sector in general, and for start-up creation. A unique Israeli phenomenon is the office of the chief scientist at the Ministry of Industry and Trade, which distributes grants totalling nearly $400 million to various R&D projects. The projects that succeed are expected to pay royalties to the chief scientist's office for a number of years .

Through the Scientific Office in the Industry and Trade Ministry, the Israeli government fosters high-tech development by granting substantial financial support to high-tech companies. Companies may obtain financial support of 30% to 60% of their gross expenses, which may be refunded through royalties. During the last few years, the Scientific Office has financed more than 1,000 projects per year with a budget of $400 million, and subsidized more than 200 seed companies located in 26 technological incubators spread all over the country. Therefore, thanks to this proactive government policy, Israel is in the first rank worldwide for R&D investment as a percentage of GDP (during the last few years, an average of 2.5% of GDP). ^[10]