In the past twenty years, Israel has built a global high-tech nation. If we look at Ukraine before the war, for instance, an estimated 20,000 Ukrainians were working for Israeli companies in high-ranking positions – a scope of employment that is certainly not negligible.
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Due to the economy in the country, quite a few Israeli companies are looking for cheaper development solutions abroad, such as quality HR that is easy to communicate and work with without cultural differences (unlike India, for example).
About a thousand Israeli companies operate in the European Union and England. These companies employ about 30,000 people – the mutual growth potential is great and many countries at this time are trying their luck to attract Israeli companies, with one of the most prominent ones being Latvia.
On the one hand, the average salary in Latvia's high-tech industry is significantly lower than in Israel and is about 2,500-3,000 euros per month (the average monthly salary in Latvia stands at 1,300 euros). On the other hand, the human capital is of very high quality. Add to that the fact that Latvia is a member of the EU and the NATO defense alliance, which reduces the security and economic risks like the ones in neighboring Ukraine.
In recent years, a true spirit of innovation has helped to evolve extraordinary developments in Latvia, such as drones that perform tests and repairs for wind turbines, wireless charging technology for electric scooters, a focus on artificial intelligence, and developments related to the blockchain and – of course – a promising ecosystem in the field of fintech.
Latvia has also advanced in the field of education technologies. Educational technology company Edurio has developed a platform for measuring feedback and improving learning processes in schools, and the Anatomy Next company developed software for learning and demonstrating medicine and anatomy. There are about 60 institutions of higher education in Latvia for training specialists in various fields of research. Many of them offer their well-equipped laboratories for testing and piloting purposes.
Companies in Latvia are eligible to receive financial support from dozens of EU funding programs, like Horizon 2020, EUREKA, programs of the EIT, and other targeted programs designed to enable the accelerated development of innovation and advanced industry.
This support is changing the face of innovation in Latvian universities, like the Riga Technical University. Latvia has a strong and developing technology industry, a growing startup scene, and a focus on fintech, natural and environmental sciences, materials, space, and more.
There are also high-tech companies and Israeli startups, from various fields. As a prominent example from the fintech field, companies such as Sapiens and Blender decided to have development centers, services and subsidiaries in Latvia and operate from Latvia as a preferred base for penetrating both the European and international markets.
In June 2023 the Israel Innovation Authority signed a cooperation agreement with the Investment and Development Authority of Latvia (LIAA). This agreement will allow entrepreneurs, researchers and organizations from both countries to create collaborations for research and commercialization of innovation, and to work together on the same challenges, like climate, green energy, health, biotechnology, and other areas in which Latvia and Israel are mutually interested.
Latvia and Israel will announce tenders for the submission of joint proposals for jointly financed projects. The agreement will open up new opportunities for players in both the Israeli and Latvian ecosystems to build corporations together and participate in special programs of European Union funds, such as Eureka or Horizon and others, where compatible partnerships are a prerequisite for a successful application and access to significant budgets.
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A few months ago, the Investment and Development Authority of Latvia, which operates under the Latvian Economy Ministry, opened a permanent representative office in Israel, which works vigorously to promote economic relations between the countries, with a special focus on promoting innovation.
The reality we are in and the economic constraints of Israeli and international companies open the door to interesting opportunities with new countries with significant growth potential. History proves time and time again that in moments of crisis and downsizing, the most interesting connections and products are born for businesses that think differently and open up their horizons.
Irina Rubinchik is the head of the Investment and Development Authority of Latvia's permanent representative office in Israel.
