"Israel went into the judicial overhaul crisis and the war in a good position, but its economic standing and the standing of the driver of the economy, the Israeli technology sector, are at risk," Shlomo Dovrat, one of the founders of the Viola Group investment firm and chairperson of the Aaron Institute for Economic Policy at Reichman University, said yesterday. "Israel’s standing in the global technology sector is at risk. Already there are more academic articles on artificial intelligence from Cambridge University than have ever been published by all of Israel’s academic institutions. The global appetite for risk is declining, and in a period of rising interest rates, investments are more selective. Investment in high tech around the world is recovering, but Israel is not keeping pace. It suffers from over-concentration in fields such as cybersecurity, Internet, and fintech. Cybersecurity is good, but part of economic resilience is diversification, and at present it’s in danger."
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 too is a danger," Dovrat continued. "If Israel becomes a less good place to live in, people will leave, because there are more alternatives, and an Israel who receives a check from the Sequoia fund will have good reason to move. There is competition over Israeli entrepreneurs. It’s not indulgence - Israel has to be a place where it is worthwhile founding startup companies.
"But how can Israel stay competitive in a world of advanced artificial intelligence? This is the most disruptive, perhaps the most significant technology we have ever seen. It will have a huge impact on industry - on the computing sector, on professions, but more than that: it will transform industries like transport, logistics, food, and even drugs. In this respect, technological capabilities in artificial intelligence are not enough; expertise is also required in medicine and biology.
"Do Israel’s strengths support development of artificial intelligence? I have my doubts. There are human capital problems, for example with the haredim and the Arabs. I served in the 8200 unit - that’s not a world-leading place in artificial intelligence. Most of the information comes from academic institutions, from computer science, and Israel isn’t strong enough in that field. It doesn’t have the infrastructure: there’s no supercomputer, no developed artificial intelligence capabilities, and we need the infrastructure. It’s enough to look at what’s happening in the UAE to feel embarrassed.
"To succeed in artificial intelligence we need scientific infrastructure, and unfortunately we’re spending very little on scientific research. There is no Israeli university in the top 100 universities in this area. I have no doubt that in the next technological cycle the new Googles of the world will arise. Israel could be there, 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 citizens’ faith in the country. After that, we need to build a strategic plan for the economy and for our society. The war has exposed deep weakness in the institutions of the state: in politics, in the public service, in the army. We have seen an amazing civil society rally round, but the institutions failed to function. In a successful economy, there are two critical elements: faith in the country on the part of its citizens, and a sense of security. If the war ends and there’s no sense of security, and if there’s no political reform that will make people believe in the institutions of the state and in the public service, there won’t be a growing economy here."
Published by Globes, Israel business news - en.globes.co.il - on July 10, 2024.
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