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High-Tech Project “Engineers from the Periphery”. Proposal for a national undertaking in Israel. Presented by: Yehuda Zisapel. Contribution of High-Tech to the Israeli Economy. Over 50% of Israel’s Exports, i.e. $16 B 21,300 engineers from a total of 60,000 workers Sales per worker: $300K - PowerPoint PPT Presentation
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RAD Group
High-Tech Project“Engineers from the
Periphery”
Presented by:
Yehuda Zisapel
Proposal for a national undertaking in Israel
Engineers from the Periphery Slide 2
Contribution of High-Tech to the Israeli Economy
• Over 50% of Israel’s Exports, i.e. $16 B
• 21,300 engineers from a total of 60,000 workers
• Sales per worker: $300K
• High-Tech activity primarily in the center of the country
Result: The country center becomes more wealthy and the socio-economic gap widens
Engineers from the Periphery Slide 3
Export
Domestic
Sales of Electronics and Software Products in Israel, 2007
2 79
51
801
3 37
51
935
3 97
02
030
4 63
02
210
5 48
02
320
6 70
02
280
8 05
02
330
9 13
02
400
13 0
002
500
12 2
502
500
10 7
402
300
10 8
702
300
13 4
002
400
14 2
002
500
16 0
002
700
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
4,5965,310
6,000
6,840
7,800
9,980
10,380
11,530
14,75015,500
13,040 13,170
15,800
16,700
18,700
0
2000
4000
10,000
8000
6000
18,000
16,000
14,000
12,000
20,000M$
Engineers from the Periphery Slide 4
High-Tech is the country’s Growth Engine
Market
MoneyCapital
HumanCapital
Engineers from the Periphery Slide 5
Technological Markets on an upward trend
• Israel now has a 1% market share of the worldwide technological market
Conclusion: No market constraint regarding growth potential
Source: Bureau of Economic Analysis, Morgan Stanley Technology Research
US-based Information Technology as a Percentage of Nominal Business Capital Equipment Spending
Engineers from the Periphery Slide 6
USA vs. Israel: Total Capital Invested in Venture-Backed Companies
US$ Billion
Source: Ernst & Young; VentureOne
Engineers from the Periphery Slide 7
Summary: Conditions enabling the development of High-Tech
Conditions:
• Market – unlimited
• Investment Capital – searches for qualitative technological ideas; also unlimited
Bottleneck:
• Human Capital – shortage of quality manpower and quality education
Quality Human Resources to generate ideas and createinvestment opportunities is the Engine of High-Tech
Engineers from the Periphery Slide 8
Developing Human Capital
• Manpower increase from country center – growth potential: 5%
• Manpower increase from the periphery – growth potential: 100%
Conclusion: Development of High-Tech in the periphery using the Atidim Project as a model
Engineers from the Periphery Slide 9
Atidim Model
• Participants are high school graduates, pre-Army, from the periphery
• Target Population: • Minimum personal attribute qualifications
• “Bagrut” certificate – poor or none
• No chance of acceptance to a college or university
• Project Track:• Preparatory course (“mechina”) of one year
• Conclusion of “mechina” and university entrance exams
• Study in normal university courses
• Track Record:• Student success rate: top 15%
• IDF “Atudah” academic program
Engineers from the Periphery Slide 10
Objective: to adopt “Atidim” model which has proved itself
• Participants:• From the periphery
• IDF veterans
• Preference to combat unit veterans
• Target number of participants: 1500 per year
• University Partnering – Universities which have expressed their willingness to participate:• Technion
• Hebrew University in Jerusalem
• Tel Aviv University
• Ben-Gurion University of the Negev
• Bar Ilan University
Engineers from the Periphery Slide 11
High Tech Project in the Periphery
• Training & qualification of 1500 engineers from the periphery each year
• Immediate budget of $16,500,000 per year to $82,500,000 fixed, after 5 years
• Increase of High-Tech by $10B within 10 years
Critical mass of quality manpower is the Engine of our economy:
Years 1 2 3 4 5
Investment in $1,000 16,500 33,000 49,500 66,000 82,500
Engineers from the Periphery Slide 12
Contribution of a High Tech Engineer to the Employment Market
Years in High Tech 1 2 3 4
№ of Workplaces 1 2 4 5
№ of Workplaces
№ of Years inEmployment
5
3
2
1
1 2 3 4
4
Engineers from the Periphery Slide 13
Effect of High-Tech on Production & Employment Growth
Years of Program 6 7 8 9 10
Years in Industry 1 2 3 4 5
Additional Workers in High Tech 1200 2400 3600 4800 6000
Additional Production, Dollars, $M 1200 3600 8400 14400 19200
№ Years of Program(№ Years in Industry)
3000
6(1)
7(2)
8(3)
9(4)
10(5)
6000
9000
12000
15000
18000Number of Engineers
Additional Production, Dollars, $M
Additional Workers in High Tech
Additional Production, Dollars, $M
750
1500
2250
3000
3750
4500
Engineers from the Periphery Slide 14
Effect of the Program on Export Growth
4416
3312
1932
828
176 167
787
1835
4195
3146
1377
3146
2360
590
125,40
1000
2000
3000
4000
6 7 8 9 10
Production Export (95%) Balance of Payments Improvement (75%)
AccumulatedProduction Increase, $M
№ Years in Program
Engineers from the Periphery Slide 15
Effect of the Program on Employment Growth
840014400 19200
5400
16200
37800
64800
86400
36000
20000
40000
60000
80000
100000
6 7 8 9 10
High Tech Workers Non-High Tech Workers (4.5:1)
№ Years in Program
Total AdditionalWorkers in Economy
6600
19800
46200
78800
105600
1200
Engineers from the Periphery Slide 16
Return on Investment
№ of Years in the Program
200
6 7 8 9 10
400
600
800
1000
1200
Income TaxPayments, $M
№ Years in the Program 6 7 8 9 10
Income Tax Payments, $M 44 206 642 828 1101
Engineers from the Periphery Slide 17
Socio-Economic Gap in Israel
• Present Growth of High-Tech Industry – center of the country
• Effect on Socio-Economic Gap – it widens
Center
Periphery
Engineers from the Periphery Slide 18
Solution to Socio-Economic GapEngineers from the Periphery
• Development of High-Tech in the periphery will aid in decreasing the socio-economic gap in Israel
CenterPeriphery
Engineers from the Periphery Slide 19
Implementation of “High-Tech in the Periphery”
• Execution• Technion Alumni Association & Technion 100 Club
• Financing• Philanthropists/Contributors: First year “mechinah”
• 4 years of study: Bank Loans (Bank Leumi agreement)
Engineers from the Periphery Slide 20
thank youfor your attention