High-tech people are protesting against the legal revolution. It is unclear how the plan will manage the bad blood between the high-tech industry and the government (Photo: documentation on social networks according to section 27A of the Copyright Law)
The mentor of Economy Minister Nir Barkat is Prof. Michael Porter, an international expert on business administration from Harvard University. They have been in close contact for many years, and have become friends.
Porter, a Harvard Business Administration expert on the comparative advantage of societies and nations, has raised generations of economists who believe in his teachings and spread it religiously around the world. Last Thursday, Barkat, two of them, hosted two of them in his office in Tel Aviv, when he presented the "National Plan for Economic Growth," the flagship program that his ministry will lead in the coming years.
This is the third time Barkat has promoted a "Portrian" plan. The first was during his term as mayor of Jerusalem, where the distinguished professor himself prepared for him a detailed plan for the city's growth, which, according to Barkat, yielded good results. A few years later, he brought him to the Kohelet Forum to formulate a plan for economic growth for Israel, the basis for the plan presented last week.
Porter believes that economic development should be based on the region's comparative advantages, as opposed to theories that advocate strengthening its weaker areas. In Jerusalem, for example, he identified an advantage in developing tourism and high-tech, where resources were invested, in conjunction with the private sector. In the national plan Porter prepared for Kohelet in 2019, when Barkat was promised to be finance minister, he focused on developing the periphery through growth engines.
Investments from abroad and tourism development? Good ideas, but also ones that sound detached from reality. Barkat and Netanyahu (Photo: Flash 90, Jonathan Zindel)
Even before the presentation of the National Plan for Economic Growth, it was strongly criticized by the Shomrim website for the high cost of employing the experts, NIS 1.3 million, which was done with an exemption from tender at the minister's request. Barkat attacked the critics, calling them "an extreme left-wing organization masquerading as an investigative journal whose sole purpose is to harm the activities of the right-wing government." In the end, the delegation arrived in Israel as planned.
For two weeks, the team of experts, which included Kevin Murphy, Porter's right-hand man for the past 20 years, Martin Weber, a competitiveness consultant, and Dr. Christian Cattles, a Harvard faculty member and one of the leaders of the Institute for Strategy and Competition, formulated a plan that would maximize Israel's economic potential by mapping clusters, geographically concentrating businesses, companies, institutions and actors that maintain economic ties, with expertise in resources, Specific services and skills, or in other words - a unique ecosystem. This is the place to emphasize that most of the strong areas chosen by the experts are in the field of technology.
In Jerusalem, high-tech, life sciences, and tourism were marked. In the south of the country, deserttech and agrotech, advanced industry, cyber, marine biology and desert tourism. In the north, med-tech, blue economy, agro-foodtech, industry and tourism. In the West Bank, technology-oriented industries and tourism and the Bible and in the center and throughout the country, fintech, cyber, smart industry, agrotech, foodtech, med-tech and digital health. Each cluster will have a "security officer", which will manage internal and external interactions and help create profitable partnerships at the level of private companies, the state and other countries.
Funding for the program will be carried out through matching between the government and the private sector. For every billion shekels of the state, the private sector will invest three billion shekels, and therefore, Barkat believes, the resources that the government will allocate to the program are not considered an expense, but rather an investment, a locomotive that will pull the economy up. The plan was budgeted at NIS 400 million in the upcoming budget, and the Minister of Economy hopes to recruit more and more ministries, each of which will contribute its part to the national effort.
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Minister of Economy and Prime Minister at the opening of the Carrefour branch. Barkat also knows that with all due respect to the long term, the Israeli economy needs a short-term emergency plan (Photo: Kobi Gideon / GPO)
On the one hand, it is refreshing to hear a minister present an orderly strategic plan, based on research and in-depth work, rather than retrieving and extinguishing fires. On the other hand, at a time when investors are fleeing for their lives and are unwilling to hear about doing business in Israel, especially in high-tech, it is not clear who will give the expected matching, especially since a large part of the high-tech sector sees itself as harmed by the legal revolution – and at the moment the situation is more of a brain drain and less of an investor entry.
Investment in tourism also sounds like a sad joke, in a government that wanted to cancel the VAT exemption for tourists, after someone in the budget department thought that the tourism industry could be shut down because it has no future. Tourism Minister Haim Katz managed to pull it out at the last minute.
Barkat is determined to advance his plan and finish formulating it by the end of June, and he is confident that the other ministers in the coalition will willingly join it. But at a time when every minister cares about his constituents, it is hard to believe that many of them will be able to prioritize the long-term national need over the ballots that will be cast on the ballot in the upcoming elections.
Therefore, although parts of the new plan sound correct and even exciting, it would be good if the economy minister also invested in short-term plans, such as those intended to combat the cost of living, alongside long-term preparations.
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- Nir Bareket
- Ministry of Economy