“Israel entered the crisis of judicial reform and the war in a good position, but its economic standing and the position of the engine of the economy, the Israeli technology sector, are at risk,” Shlomo Dovrat, co-founder of the investment firm Viola Group and head of the Aaron Institute for Economic Policy at Reichman University, said yesterday. “Israel’s standing in the global technology sector is at risk. There are already more academic articles on artificial intelligence from Cambridge University than ever before published by all the academic institutions in Israel. The global appetite for risk is declining, and in a period of rising interest rates, investments are becoming more selective. Investment in high-tech is recovering worldwide, but Israel is not keeping pace. It suffers from overconcentration in areas such as cybersecurity, the Internet and fintech. Cybersecurity is good, but part of economic resilience is diversification, and that is currently at risk.”
Dovrat was speaking at the annual conference of the Aaron Institute for Economic Policy, named after his father, Aaron Dovrat. “Israel is dependent on international markets, and that is also a risk,” Dovrat continued. “If Israel becomes a less good place to live, people will leave, because there are more alternatives, and an Israel that receives a check from the Sequoia Fund will have a good reason to move. There is competition for Israeli entrepreneurs. It is not a concession — Israel has to be a place where it is worth starting startups.”
“But how can Israel remain competitive in a world of advanced AI? This is the most disruptive, and perhaps the most important, technology we have ever seen. It will have a major impact on industry – on the computing sector, on the professions, but more than that: it will transform industries such as transportation, logistics, food, and even pharmaceuticals. In this regard, technological capabilities in the field of AI are not enough; expertise is also required in medicine and biology.
“Do Israel’s strengths support the development of AI? I have my doubts. There are problems with human capital, for example with the Haredim and the Arabs. I served in Unit 8200 – and this is not a world leader in AI. Most of the information comes from academic institutions, from computer science, and Israel is not strong enough in this area. It does not have the infrastructure: no supercomputer, no advanced AI capabilities, and we need the infrastructure. It is enough to look at what is happening in the UAE to feel embarrassed.
“Success in AI requires a scientific infrastructure, and unfortunately we spend so little on scientific research. There is no Israeli university among the top 100 universities in this field. I have no doubt that the next technology cycle will see the emergence of a new Google in the world. Israel may be capable of it, but we have to pull ourselves together.
“So what should we do? We need to stabilize the security situation, hold elections, choose a new government, and restore the confidence of citizens in the country. Then we need to build a strategic plan for the economy and society. The war has exposed deep weaknesses in state institutions: politics, public service, and the army. We have seen an amazing mobilization of civil society, but the institutions have failed to perform their functions. In a successful economy, two elements are crucial: citizens’ confidence in the country, and a sense of security. If the war ends and there is no longer a sense of security, if there is no political reform capable of making people believe in state institutions and public service, there will be no growing economy here.”
This article was published in Globes, Israeli Business News – en.globes.co.il – on July 10, 2024.
© Copyright Globes Publisher Itonut (1983) Ltd., 2024.
