Israel's standing as an innovation powerhouse is at risk because of its small number of startups, former National Economic Council head Professor Eugene Kandel warned on Thursday.
Kandel headed the council, a body that analyzes economic issues for the Prime Minister's Office, from 2009 to 2015, and is now the CEO of Start-Up Nation Central, a nonprofit organization dedicated to strengthening Israeli innovation and connecting it to the world.
"In 2015, Tel Aviv ranked second in the Global Startup Ecosystem Index, after California's Silicon Valley, but today we are only sixth," Kandel told a conference in Tel Aviv on human capital and the economy.
"We must wake up and take urgent measures lest Israel become a former startup nation."
Kandel said the most immediate focus should be on expanding Israel's high-tech industry, which employs only 8.3% of Israel's workforce.
"If high-tech salaries go up, this will attract people from all segments of society, increase the industry's share in the workforce and fuel the economy," he said. "This is not feasible today because Israel is focused more on innovation centers – which we already have in excess – rather than on creating more companies. This encourages people to relocate to the company's hubs abroad, and if the current trends continue, I am not sure Israel will enjoy the same technological edge it currently has."
Kandel also said the government should make a concerted effort to boost scientific expertise, possibly in the form of a new ministry dedicated to innovation and technology.
Peretz Lavie, the president of the Technion-Israel Institute of Technology, also spoke at the conference. He said Israel is falling behind when it comes to academic research in technology.
"The world is changing as we speak, but Israeli academia is moving in its slow and conservative pace; we must catch up by investing in higher education," he said.
Israel Innovation Authority CEO Aharon Aharon told the audience that even though only 270,000 Israelis work in high-tech, the industry accounts for 43% of the country's exports.
He said Israeli high-tech must take a greater share of the overall economy because it is the economy's growth engine.
"Israeli high-tech should move out of central Israel into other parts of the country. This way people from the lower rungs of the socioeconomic ladder will join it. Innovation can be used as a leverage for economic growth and it is the only way we can maintain our technological edge," he said.
