Innovation-Based Industrial Policy in Emerging Economies? The Case of Israel's it Industry

Business and Politics, Vol. 8, No. 3, Article 3, 2006

46 Pages Posted: 24 Dec 2006

See all articles by Dan Breznitz

Dan Breznitz

Georgia Institute of Technology

Abstract

In the last decade, few countries have figured prominently as cases of late-late developers that achieved worldwide success with their Information Technology (IT) industries. This paper focuses on the Israeli case and argues that uniquely in that group, and in contradication to the model propused by late development theories, Israel's competitive advantage in the IT industries, is in Research and Development (R&D). The paper's main arguments are that (a) the declared aim of Israel's industrial policy has been to develop a "science-based" industrial system similar to what we see in Israel today; (b) however, these policies, focused on diffusion and not on creation of capabilities, were successful only because of the existence of an already sophisticated and extensive R&D capability in the universities - markedly different from other Newly Industrialized Countries. Looking at the present the paper concludes that the same operational model that led Israel's IT industry to success might now be undermining its future growth.

Keywords: Industrial transformation and development, Late Development, Innovative capabilities' diffusion, systems of innovation, Information technologies, Science and technology policies

JEL Classification: L5, L6, L8, O0

Suggested Citation

Breznitz, Dan, Innovation-Based Industrial Policy in Emerging Economies? The Case of Israel's it Industry. Business and Politics, Vol. 8, No. 3, Article 3, 2006, Available at SSRN: https://ssrn.com/abstract=953401

Dan Breznitz (Contact Author)

Georgia Institute of Technology ( email )

Atlanta, GA 30332
United States

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