State of Israel
Press Release
info@cbs.gov.il
www.cbs.gov.il
Fax: 02-6521340
___________________________________________________________________
Jerusalem
February 27, 2012
049/2012
International Aspects of Israeli Civilian Research and Development,
2006-2009
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Israeli companies have a surplus in the export of technology-intensive1
services, including the export of R&D services, which in 2009 and 2010 reached
7.0 billion dollars and 7.4 billion dollars respectively.
Between the years 2007 and 2009 the volume of exports of technologyintensive services rose: in 2009 by 5.5% and in 2008 by 15.1%.
The main exporters of research and development (R&D) are Israeli foreign
controlled affiliates ("in" companies) 2, especially in the industries of computer
services (branch 72) and research and development (branch 73).
The principal research and development imports of multinational Israeli parent
companies ("out" companies) 3 are concentrated in the chemicals and chemical
products industries (branches 23, 24).
Revenues generated by the Israeli business sector from research and
development sales abroad reached NIS 20.6 billion in 2009 and NIS 17.1 billion
in 2008 - a rise of 20.5% at current prices.
In 2008, 2,596 companies were engaged in civilian research and development,
1,102 of which were multinational companies ("in" and "out" companies) which
carried out the vast majority of business R&D.
In 2007-2009, the government transferred NIS 1,024 billion overseas for the
purpose of carrying out joint civilian R&D projects with foreign partners.
798 Israeli participants (scientists and companies) received grants totaling
501.8 million Euros as part of the Seventh European Framework Program (FP7);
The part which was received was much larger than the part transferred to the
program, indicating the competitiveness of the Israeli researchers.
1
Terms and definitions appear at the end of the release.
An Israeli foreign controlled affiliate (in)- 50% of the share capital of which is controlled by an
overseas company or private individual. If the holder is a foreign company, the Israeli
company which it controls is the foreign company's subsidiary.
3 Multinational Israeli parent company (out)- An Israeli company which controls at least one
foreign-registered subsidiary overseas.
2
Written by: Oded Yosef Keneresh, Social Services Accounts sector
Explanations may be obtained from the Spokespersons' Unit on: 02-6527845
This release contains information compiled from various sources and studies undertaken by
the Central Bureau of Statistics on the international aspects of research in Israel. It addresses
the various ways in which knowledge is transferred between Israel and the outside world,
such as performance of R&D projects in a multinational company which can be used for
manufacturing in numerous states), sales to abroad of R&D carried out by local companies,
involvement of Israeli researchers in international research programs or cooperation between
governments in financing and performance of R&D.
The release was prepared on the initiative of and in consultation with the Ministry of Science
and Technology's National Research and Development Council.
The press release is based, inter alia, on the following previous releases and publications:
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"Business Research and Development 2008" Publication number 1452, issued
in December 2011.
"International Trade in Business Services in Israel According to the
Category of Service, Economic Branches and Countries 2006-2010". Press
release published in June 2011 (Press Release Number 154/2011).
"National Expenditure on Civilian Research and Development in 2010".
Press release published in August 2011 (Press Release Number 208/2011).
"Research and Development Undertaken by Multinational Companies in
Israel: 2006-2007". Press release published in April 2011 (Press Release
Number 082/2011). An updated release on this subject for the years 2008-2009
shall be published during the course of 2012.
"Economic Globalization and Activities of Multinational Companies in Israel
During the Years 2006-2007". Press release published in November 2010
(Press Release Number 282/2010).
At the start of this release, the findings relating to all activities undertaken by companies
engaged in civilian R&D in Israel are presented - the revenues generated by overseas sales
of R&D, the technology balance of payments, international cooperation, international
development centers and imports and exports. Thereafter a description of the activities of
foreign controlled companies (in) and multinational Israeli parent companies (out) according
to industries is given.
Companies active in R&D
According to the information which was collected, as of 2008, a distinction can be made
between independent Israeli companies and companies which are part of a conglomerate.
Similarly, it's possible to identify within conglomerates those companies which have overseas
subsidiaries and which are engaged in civilian R&D and to analyze them separately, as shall
be shown hereinafter.
In 2008, 2,596 commercial companies in Israel were engaged in civilian R&D, of which 1,494
did not belong to a conglomerate (without having affiliates in either Israel or overseas), 346
were foreign-controlled companies (in) and 756 were multinational Israeli parent companies
(out).
Table A: Commercial companies engaged in civilian R&D in Israel during 20084 by type
of company
Total
Number of
companies
2,596
Companies
which are not
affiliated to
foreign
companies
1,494
Foreign
controlled
companies (in)
346
Multinational
Israeli parent
companies (out)
756
4
According to "Business Research and Development 2008", Publication Number 1452 which
was issued in December 2011.
2
International Aspects of Israeli Civilian Research and Development, 2006-2009 27/02/2012
Revenues generated by sales of R&D overseas
Revenues generated by the business sector in Israel from sales of R&D abroad reached NIS
20.6 billion in 2009 and NIS 17.1 billion in 2008 - an increase of 20.5%, at current prices.
The technology balance of payments
In 2010 revenues generated from the export of technology-intensive services amounted to $
9,450 million, representing a decrease of 3.4% compared to 2009. Between 2007 and 2009,
the volume of exports rose: in 2009 by 5.5% and in 2008 by 15.1%.
Table B: Technology Balance of payments (in $ millions)
Exports
Imports
Surplus of exports
over imports
2007
8,054
2,356
5,698
2008
9,271
2,870
6,401
2009
9,785
2,403
7,382
2010
9,450
2,470
6,980
Imports of technology-intensive services amounted to $2,470 million in 2010, representing an
increase of 2.8% from 2009. In 2009 imports fell by16.3% following an increase of 21.8% in
2008.
An international comparison (see Diagram 1) of the proportion of technology exports out of
Gross Domestic Product (GDP) shows that in 2008 income from technology exports
accounted for 4.6% of Israeli GDP, 0.6% higher than the U.S., 1.5% higher than Germany
and 1.7% higher than the United Kingdom. On the other hand, in Ireland income from
technology exports represented 14.3% of GDP.
The technology balance of payments measures the commercial transactions relating to the
international transfer of technologies. It records the amount of money being paid or received
for the purchase or use of patents (purchase, sale), patent licenses, knowhow (without a
patent), models and designs, trade marks, technical services and the finance of industrial
R&D conducted outside of the country.
Diagram 1: Technology Balance of payments: Income expressed as a percentage of
GDP - An international comparison
2008
United stated
Germany
United kingdom
Sw itzerland
Netherland
Sw eden
Finland
Israel
Ireland
16.0%
14.0%
12.0%
10.0%
8.0%
3
6.0%
4.0%
2.0%
0.0%
International Aspects of Israeli Civilian Research and Development, 2006-2009 27/02/2012
International cooperation in the field of R&D
International activity in the field of civilian R&D which between 2007 and 2009 was financed
by government ministries in order to promote international cooperation, is shown in Table "C".
Approximately 85% of government transfers during those three years were paid for the
purposes of European Research Framework Programs: RFP.
Table C: Funds transferred abroad by government ministries for the purposes of
cooperation in civilian R&D projects (in NIS millions at current prices)
Classification of transfer
2007
2008
2009
European Research
Framework Program
256.2
257
306.1
Companies affiliated to
international organizations
and others
Total amounts transferred
abroad
37.3
55.9
51.3
293.5
312.9
357.4
The European Framework Program enables academic and industrial researchers to compete
for EEC research budgets. The Program covers the widest variety of scientific fields and
allows Israeli researchers to work in collaboration with their European counterparts.
Each Program lasts for between 5 and 7 years, the current European Framework Program,
which began in 2007, is due to be completed in 2013, being the seventh of its kind.
The European Framework Program has a number of objectives:
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To guarantee that key areas of research and development will be of high quality and
meet European standards.
To achieve a European level of openness through international cooperation between
researchers from various countries.
To stimulate creativity and excellence amongst researchers.
To strengthen and develop human potential in research.
To promote research, development and innovation capabilities.
Only EEC member countries (and a few additional ones such as Israel and Switzerland) are
eligible to be included in the European Framework Program. The finance is undertaken by a
special contribution paid to the European Framework Program, calculated on the basis of
each country's GDP. The perennial financial contribution of the Government of Israel to the
Seventh European Framework Program (FP7) currently stands at 304 million Euros, while the
grants received within the framework of the same program have come to approximately 501.8
million Euros.
The ratio between the grants which have been received from the Seventh European
Framework Program and the Government's contributions to the Framework Program stands
at 1.65, representing an increase of 55.5% by comparison to the parallel ratio between
payments and receipts in the case of the Sixth Program.
4
International Aspects of Israeli Civilian Research and Development, 2006-2009 27/02/2012
Table D - The European Framework Program (in millions of Euros)
Particulars
Total grants received
The Framework Program
Budget
Percentage of grants
received by comparison to
the Framework Program
Total contribution to the
European budget
Ratio between the size of
the grants which have
been received and the
contributions which have
been paid to the
Framework Program
Number of Israeli
participants (by unit)
FP7 1
501.8
FP6 2
203.9
FP5 3
166.8
48,770
17,883
13,981
1.0%
1.1%
1.2%
304
191
152
1.65
1.06
1.10
798
784
796
FP - European Framework Program
The data relates to November 2011. The period of the program is from 2007 to 2013.
The period of the Program was from 2002 until 2006.
3 The period of the Program was from 1998 until 2001.
2
Clarification: There are differences in the components of the grants, their definitions and the
areas of research between one European Framework Program and another. For example, the
grants which were received to advance scientists and researchers in the Seventh Framework
Program stand at 200.3 million Euros, whereas in the Sixth Framework Program there was no
separate amount provided for this category.
There was an enlargement in each of the areas covered by the Seventh Framework Program,
while the leading area in terms of grants received was the advancement of scientists and
researchers (see Diagram 2).
Israel enjoys a high profile in the European Framework Program in terms of the finance
provided to fund researchers and scientists. The share which was received greatly exceeded
the contribution paid to the program, which indicates a high degree of competitiveness of the
Israeli researchers.
Diagram 2: Grants received from the Sixth and Seventh5 European Framework
Programs by scientific area (in millions of Euros)
200
150
100
50
0
Other
Support to
Nanotech,
Information and
scientists and materials and communication
researches
new technology
productions
FP7
5
Science in
society and
economics
Life sciences
FP6
The data relates to November 2011.
5
International Aspects of Israeli Civilian Research and Development, 2006-2009 27/02/2012
Multinational Companies
The costs of R&D in foreign controlled companies (in) (Diagrams 3 and 4)
In 2008, 346, or 13.3%, of the companies which were involved in civilian R&D in Israel were
under foreign control. Despite this relatively low percentage, the R&D expenditures of the
companies in question accounted for 62.9% of total civilian business R&D expenditures in
2009, and 59.1% in 2008. This data reflects the major share of international development
centers in Israel.
Diagram 3: R&D expenditures of foreign controlled companies (in), by main industries
(in NIS Millions, at current prices)
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2006
2007
2008
R&D (73)
Electronic components and equipment (32-34)
Other industries
2009
Computer services (72)
Chemicals and chemical products
The foreign controlled companies (in) are concentrated in a limited number of industries, with
the industries of research and development (73), computer services (72), industrial equipment
for medical and scientific supervision and control (34) and electronic communication
equipment (32) taking the main share of the civilian R&D expenditures of foreign controlled
companies (in) - 95.1% of the total in 2009, a similar figure in 2008 - 95.3%, 93.2% in 2007
and 93.2% in 2006.
Clarification - A number of multinational Israeli parent companies exist which are controlled by
overseas residents. These companies belong to both the OUT and the IN groups and their
data is included in both groups. For this reason it is not possible to draw a simple connection
between the data relating to Israeli parent companies and that relating to Israeli foreign
controlled companies.
The R&D expenditures of foreign controlled companies (in) in 2009 amounted to a total of NIS
17,089 million which constituted an increase of 5.2% by comparison to 2008; in 2008 there
was an increase of 8.4% by comparison to 2007, and in 2007 an increase of 19.5% by
comparison with 2006.
The share of the research and development (73) and computer services (72) industries
accounted for 81.5% of all civilian R&D expenditures of foreign controlled companies (in)
during 2009, compared to 77.8% in 2008, 79.8% in 2007 and 80.5% in 2006.
The civilian R&D expenditures incurred by foreign controlled companies (in) during 2009 in
the research and development industry (73), amounted to NIS 8,242 million compared to NIS
7,267 million in 2008, NIS 6,711 million in 2007 and NIS 6,004 million in 2006, representing
an increase in civilian R&D expenditures in those industries of 13.4%, 8.3% and 11.8%
respectively.
6
International Aspects of Israeli Civilian Research and Development, 2006-2009 27/02/2012
Civilian R&D expenditures incurred by foreign controlled companies (in) during 2009 in the
computer services industry (72) amounted to NIS 5,681 million compared to NIS 5,385 million
in 2008, NIS 5,240 million in 2007 and NIS 4,080 million in 2006, representing an increase in
civilian R&D expenditures in those industries of 5.9%, 2.4% and 28.4% respectively.
Diagram 4: Civilian R&D expenditures incurred by foreign controlled companies, by
comparison to total civilian research and development expenditures in the business
sector, by main industries (in NIS millions, at current prices).
2007
R&D expenditures of foreign
controlled companies (in)
10,000
Total R&D expenditures in the
business sector
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Other industries
Chemicals and chemical
products
Electronic components
and equipment (32-34)
Computer services (72)
R&D (73)
In 2007, total civilian R&D expenditures in the business sector amounted to NIS 26,791
million, an increase of 17.6% compared to 2006.
In 2007, total civilian R&D expenditures incurred by foreign controlled companies (in)
amounted to NIS 14,981 million, constituting 55.9% of the total expenditures incurred by the
business sector during the same year and a 19.5% increase compared to 2006.
In 2007 the main civilian R&D expenditures incurred by foreign controlled companies (in)
were in the computer services industry (72) and the research and development industry (73),
which together amounted to NIS 11,951 million, constituting 44.6% of all civilian R&D
expenditures incurred by the business sector, whereas in 2006 the figure was NIS 10,084
million, constituting 44.3% of total civilian R&D expenditures incurred by the business sector.
International comparison: (see Diagram 5)
In 2008 civilian R&D expenditures incurred by foreign controlled companies (in) constituted
59.1% of total civilian R&D expenditures incurred by the business sector within Israel. To
make an international comparison, in Ireland the rate was higher at 72%. The high rate in
Israel of civilian R&D expenditures incurred by foreign controlled companies (in) is attributable
to the numerous investments that have been made in the computer services (72) and
research and development (73) industries.
7
International Aspects of Israeli Civilian Research and Development, 2006-2009 27/02/2012
Diagram 5: Civilian R&D expenditures incurred by foreign controlled companies (in) by
comparison to total civilian R&D expenditures incurred by the business sector - an
international comparison
2008
Japan
Switzerland
United s tates
Finland
France
Germ any
Canada
Sweden
United kingdom
Aus tria
Is rael
Ireland
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Civilian R&D expenditures incurred by international development centers belonging to
foreign controlled companies (Diagram 6)
The civilian R&D expenditures incurred by the international development centers ( companies
whose main R&D services are provided to overseas groups of companies to which they
belong) in Israel of foreign controlled companies in 2009 amounted to NIS 12,413 million,
compared to NIS 10,913 in 2008, NIS 9,939 in 2007 and NIS 8,002 in 2006, representing an
increases in R&D expenditures of 13.7%, 9.8% and 24.2% respectively.
The high level of activity of international development centers is characteristic to Israel, since
most of the civilian R&D expenditures incurred by foreign controlled multinational companies
(in) is concentrated in international development centers: in 2009 the centers' share of total
civilian business R&D expenditures amounted to 45.7% and in 2008 to 39.7%.
Diagram 6: R&D expenditures of international research centers in Israel belonging to
foreign controlled companies (in), by main industries (in NIS millions, at current prices)
Machinery and equipment,
office machinery and
computers
6,000
5,000
Electronic components
and equipment (32-34)
4,000
Computer services (72)
3,000
R&D (73)
2,000
1,000
0
2006
2007
8
2008
2009
International Aspects of Israeli Civilian Research and Development, 2006-2009 27/02/2012
Civilian R&D expenditures incurred by foreign controlled companies (in) ,by industries
(Diagram 7)
In 2007, the civilian R&D expenditures incurred by foreign controlled companies (in) in the
service industries constituted 78.7% of total expenditures in the business sector. The main
expenditures were incurred in the computer services (72) and research and development (73)
industries.
In countries such as Norway and Portugal the ratio of civilian R&D expenditures in the service
industries compared to those incurred in manufacturing was almost identical: 51.5% in
Norway and 49.1% in Portugal.
On the other hand, the distribution of civilian R&D expenditures incurred by foreign controlled
companies (in) in the rest of the countries examined shows that most R&D expenditures are
incurred
in
manufacturing.
Diagram 7 - Civilian R&D expenditures incurred by foreign controlled companies (in),
by groups of industries - an international comparison
2007
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Is rael
Norway
Portugal
Italy
Poland
Finland
Canada
Other
Ireland
Industry
Czech Republic
United s tates
Services
United Kingdom
Sweden
Belgium
Aus tria
Slovak Republic
Germ any
France
Japan
* The data for Finland, the U.S. and France relate to 2006. The data for Ireland relates to
2005 and Austria to 2004.
Civilian R&D expenditures incurred by Israeli owned foreign subsidiaries (out)
The civilian R&D expenditures incurred in 2007 by Israeli owned foreign subsidiaries located
abroad came to NIS 2,543 million (including payments to external factors and excluding
investments), representing 8.9% of all civilian R&D undertaken in the Israeli business sector.
In most of the OECD countries, the ratio fluctuates between 2%-30%, whereas in the United
States the ratio stands at 13% and in Japan at 3%.
Civilian R&D expenditures incurred by Israeli multinational parent companies (out), by
industries (Diagram 8)
The civilian R&D expenditures in Israel, of Israeli multinational parent companies (out) in 2007
amounted to NIS 11,260 (including payments to external factors and excluding investments),
constituting 39.3% of total civilian R&D expenditures incurred by the business sector.
The highest sum spent on R&D by Israeli multinational parent companies (out) in 2007 was in
the electronic equipment and components industry (32-34), a sum which amounted to NIS
4,544 million (including payments to external factors and excluding investments).
Clarification - There are a number of Israeli multinational parent companies which are
controlled by overseas residents. These companies belong to both the OUT and the IN
groups and their data is included in both groups. For this reason it is not possible to draw a
9
International Aspects of Israeli Civilian Research and Development, 2006-2009 27/02/2012
simple connection between the data relating to Israeli parent companies and that relating to
Israeli foreign controlled companies.
Diagram 8 - Civilian R&D expenditures incurred by multinational Israeli parent
companies (out), by main industries (in NIS millions, at current prices)
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2006
2007
R&D (73)
Computer services (72)
Electronic components and equipment (32-34)
Chemicals and chemical products
Other industries
*Including payments to external factors and excluding investments.
Import of civilian R&D for foreign controlled companies (in) and Israeli multinational
parent companies (out) (Diagram 9)
Total imported civilian R&D for foreign controlled companies (in) and Israeli multinational
parent companies (out) during 2007, amounted to NIS 2,383 million, 73.3% of which was paid
for by multinational Israeli parent companies (out).
The majority of civilian R&D imported in 2007 by Israeli multinational parent companies (out),
NIS 1,171 million in total, was in the chemicals and chemical products industry. The share of
Israeli multinational parent companies (out) in the chemicals and chemical products industry
was 67.1%. The share of the research and development (73) and computer services (72)
industries in total civilian R&D imports was relatively lower in 2007, having stood at 3.1%.
Diagram 9: Civilian R&D imports by foreign controlled companies (in) and Israeli
multinational parent companies (out), by main industries (in NIS millions at current
prices)
2007
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0
R&D (73)
Computer services
(72)
Chemicals and
chemical products
Electronic
equipment and
transportation
vessels (33-35)
Other branches
out
in
10
International Aspects of Israeli Civilian Research and Development, 2006-2009 27/02/2012
Export of civilian R&D belonging to foreign controlled companies (in), by main
industries (Diagram 10)
Most of the civilian R&D is carried out in a limited number of industries: research and
development (73) and computer services (72).
In some of the large foreign controlled companies (in) located in Israel which undertake
civilian R&D, the expenditures are financed by foreign parent companies, with the
international development centers constituting the principal source from which civilian R&D is
exported.
Total civilian R&D exports in 2007 to foreign controlled companies (in) amounted to NIS
10,656 million, an increase of 7.7% compared to 2006.
A high level of civilian R&D exports in 2007 to foreign controlled companies (in) took place in
the research and development industry (73), which accounted for 62.1% of all civilian R&D to
foreign controlled companies (in). The comparative figure for 2006 was 63%.
A substantial volume of civilian R&D in the computer services industry (72) was also exported
in 2007 to foreign controlled companies (in), having constituted 30.2% of all civilian R&D
exports to foreign controlled companies (in), The comparative figure for 2006 was 27.3%.
In 2007, 72% of civilian R&D exports to foreign controlled companies (in) went to the United
States and 22% to Europe.
Diagram 10: Civilian R&D exports by foreign controlled companies (in), by main
industries (in NIS millions, at current prices)
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2006
2007
R&D (73)
Computer services (72)
Chemicals and chemical products
Electronic equipment and transportation vessels (33-35)
Other industries
11
International Aspects of Israeli Civilian Research and Development, 2006-2009 27/02/2012
Terms and definitions
Israeli foreign controlled affiliate (in) - An Israeli company, over 50% of the share capital
of which is controlled by an overseas resident, whether a company or a private individual. If
the holder is a foreign company, the Israeli company which it controls is the foreign
company's
subsidiary.
Multinational Israeli parent company (out) – An Israeli company which controls at least one
foreign-registered subsidiary overseas.
Technology Balance of Payments (TBP) - Measures the commercial transactions relating
to the international transfer of technologies and records the amount of money paid for or
received from the acquisition or use of patents (purchases, sales), patent licenses, knowhow
(without a patent), models and designs, trademarks, technical services and the finance of
industrial
R&D
outside
of
the
state.
Technology-intensive services - Those services comprised within the Technology Balance
of Payments.
The European Framework Program - An European program which enables academic and
industrial researchers to compete for EEC research budgets. The Program covers a wide
variety of scientific fields and enables Israeli researchers to cooperate with other European
researchers.
12
International Aspects of Israeli Civilian Research and Development, 2006-2009 27/02/2012