The issue of economic disparities is one of the most troubling issues for the public in Israel, according to a survey of public attitudes conducted by the Israel Democracy Institute, ahead of the Eli Horowitz Conference on Economics and Society held this week, and not in vain.
There are currently two economies in Israel, the gaps between which are widening: the high-tech economy, which employs about 10% of the workers in the economy and pays high salaries;
And all the rest of the economy, most of whose workers are far behind.
The productivity and high wages that characterize the high-tech industry are made possible thanks to the added value that each worker in this industry generates.
One of the keys to raising productivity in other sectors of the economy as well is improving the performance of human capital and physical capital, as part of the process of promoting innovation.
Innovation has tremendous benefits - in growing and improving productivity, in creating jobs and reducing gaps - but many companies, especially the more traditional ones, have difficulty assimilating innovation.
The Israeli government must adopt a broad innovation strategy that will address these barriers, on two levels: beyond a broad look at the concept of innovation that will also include non-R&D, alongside the development of a systematic measurement tool for innovation in the broad sense, as is customary in advanced countries.
At the second level, innovation in this broad definition must be actively promoted in all sectors of the economy, with an emphasis on trade, services and other traditional industries.
In conclusion, thanks to Israeli innovation, we have built the "Startup Nation" brand, which we are all proud of and blessed with.
If we learn to extend this strategy to the rest of the economy, we will be able to promote inclusive growth and reduce economic and social disparities.
Michal Fink, VP of Strategy and Policy Planning, Ministry of Economy and Industry. Dafna Aviram Nitzan, Director of the Center for Government and Economics, Israel Democracy Institute
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