7 Reasons US Multinationals Invest in Israel
By Ziva Eger
With the highest concentration of startups in the world after Silicon Valley, Israel has become renowned globally as the “Startup Nation.” Trailblazing startups from Waze to Wix to PrimeSense to Mobileye have helped Israel gain its reputation as an international hub of entrepreneurialism and hi-tech ingenuity.
But what is perhaps no less remarkable is that more than 270 multinational corporations (MNCs) have established more than 320 advanced R&D facilities throughout Israel, making our tiny country an “R&D Lab” for the world’s leading tech firms. These include Google, Apple, Facebook, Microsoft, Intel, Yahoo!, Motorola, HP, Siemens, GE, GM, IBM, Cisco and many more. In fact, these multinationals employ around half of Israel’s hi-tech workforce and contribute significantly to the Israeli economy. Many of these centers of excellence are the companies’ only R&D centers outside their home countries, with more and more setting up shop in Israel almost on a daily basis.
Over 200 of these MNCs are American. Part of this can be attributed to the fact that Israel and the US share mutually robust, creative economies driven by affinities for entrepreneurship and enterprise. Here are seven more reasons US MNCs continue to invest in Israel.
1. Innovation. Israel has become a global powerhouse for innovation and pioneering technologies, punching way above its weight class in a wide variety of fields such as Internet, cyber-security, health & life sciences, big data, computer vision, and fintech, just to name a few. Israeli innovation is helping revolutionize the world as we know it, and the global players want in.
2. Success. Many MNCs have been able to develop some of their most innovative solutions, breakthrough technologies and even their flagship products at their Israel R&D centers, and nothing, as the old saying goes, breeds success like success. US MNCs have realized that if they want to stay on the frontlines of innovation, then tapping into Israeli ingenuity is the way to do it.
3. Human Capital. Known for their never-take-no-for-an-answer attitude, creativity, innovation and “hutzpah,” Israel’s unique workforce is a key reason behind the cluster of MNCs in the country. Moreover, combined with our renowned academia, Israel has the highest concentration of engineers and PhD’s per capita in the world, all laying the foundation for groundbreaking research and innovation.
4. Startups. Many prominent MNCs established their presence in Israel by acquiring nimble, cutting-edge Israeli startups and turning them into centers of innovation and excellence, while others merge startups into existing R&D centers. IBM, for example, has acquired more than a dozen Israeli companies since establishing its Israeli presence over four decades ago.
5. Advanced Manufacturing. Israel has some of the most advanced manufacturing facilities in the world, including several established by multinationals. Take, for example, Intel, which opened its Israel offices over 40 years ago and is currently the largest tech employer in the country with over 10,000 workers in 6 locations across the country. Israel is also a driving force in the automotive industry, with over 250 innovative aftermarket suppliers manufacturing everything from spare parts to accessories using advanced technologies. In agritech, over 25 companies manufacture seeds and other innovative solutions in Israel, including irrigation – more than 3 million acres of farmland in the United States use cutting-edge methods and equipment manufactured by Israel’s Netafim. Pharmaceuticals is also a significant sector. In addition to Israeli pharma giant Teva, the largest generic drug manufacturer in the world, Perrigo, a leading global healthcare supplier, recently inaugurated a new pharmaceutical manufacturing plant in the country.
6. A Strong and Resilient Economy. During this period of global economic volatility, Israel has seen consecutive years of GDP growth – above even that of the OECD and the US. Our 5% unemployment rate is among the world’s lowest. Despite geopolitical challenges in the region, the Israeli economy has been identified as one of the healthiest and most stable in the world.
7. Open for Business. The Foreign Investments and Industrial Cooperation Division at the Israeli Ministry of Economy and Industry, which I lead, promotes foreign investment in Israel, with programs and services designed to address every phase of the investment process. Comprehensive governmental incentives make Israel one of the world’s most attractive places for foreign investors to do business, with a range of incentives from tax breaks to supportive grants designed to offset the cost of R&D and to take advantage of all that Israel has to offer.
President Barack Obama remarked that “If people want to see the future of the world economy they should look at Tel Aviv, home to hundreds of startups and research centers.” That is why hundreds of top executives and other leaders will be on hand for the upcoming Israel Dealmakers Summit 2016, taking place for the first time in Silicon Valley. The summit is the premier Israel-focused business event of the year – a meticulously curated gathering of global corporations, investors, dealmakers and entrepreneurs converging from around the world to discuss key industries such as IoT & Smart Everything, Digital Media & Mobile, Advanced Manufacturing, Cloud & Internet Infrastructure, Artificial Intelligence, Virtual Reality and Big Data & Analytics, and more.