Foreign multinational companies are responsible for 63% of business R&D in Israel

This is according to a survey conducted by the Central Bureau of Statistics for the National R&D Council at the Ministry of Science

Over half of the business R&D jobs in Israel are in foreign multinational companies
Foreign multinational companies have established and purchased in Israel in the last decade hundreds of development centers and local companies that manage research and development activities on a considerable scale, among which we can mention Apple, Google, IBM, Intel, Microsoft, ebay, Hewlett-Packard and Texas Instruments.

A new survey by the National R&D Council at the Ministry of Science, carried out by the CBS, shows that in 2011 the research and development expenses of companies of this type in Israel amounted to approximately 6 billion dollars, an increase of 13% compared to 2010, which is mainly due to a sharp increase in the industry The R&D The survey shows that in these years the companies were responsible for 63% of the R&D expenses of the business sector in Israel. The leading sectors in terms of spending on R&D were in the high-tech sector - the scientific research and development sector and the software sector.

"Israel's economy relies to a large extent on funding sources from other countries for research and development purposes, and this is a fragile situation," says Minister of Science, Technology and Space Yaakov Perry. "If we do not increase government investment in research and development, Israel's knowledge bases will be undermined and the main beneficiaries of Israeli creativity will be the multinational companies. At the same time as encouraging multinational companies to build R&D centers in Israel, we must also expand the government's investment in research and development."

In these companies, 34,356 jobs were counted in R&D - an increase of about 2% compared to 2010 - of which, 39% in the R&D sector, 40% in the software sector and 18% in the industrial sectors. Furthermore, the survey shows that more than half of the R&D jobs in the business sector in Israel in 2010 and 2011 were registered in these multinational companies.

The R&D exports of these companies from Israel to abroad amounted to 2011 billion dollars in 4.2, and constituted 93% of all R&D exports in the economy, - an increase of about 12% compared to 3.7 billion dollars the previous year. The export of R&D includes the provision of research and development services to companies abroad, mainly to the parent companies of the companies located in Israel, but does not include the sale of start-up companies and sales of patents and know-how. Also, in most cases, the R&D expenses of these companies are financed by the foreign parent companies and are considered exports of the R&D services of the Israeli companies.

The survey also shows that 68% of R&D exports are to the USA and 27% to Europe.
As part of the data relating to foreign-owned multinational companies operating in Israel, the survey also includes specific data about R&D centers in Israel that serve as branches of foreign multinational companies to carry out R&D, such as Google's center and development branch in Haifa. The R&D carried out by the R&D centers in Israel is carried out almost entirely for the parent companies and other affiliated companies abroad. Here too, the foreign companies purchase and establish R&D centers in Israel, mainly in the high-tech industries.

In 2011, 23,131 R&D jobs were registered in these R&D centers, which accounted for about 67% of the total R&D jobs among the multinational companies located here. The R&D expenses of these R&D centers amounted to 2011 billion dollars in 4.2, and accounted for 71% of the total R&D expenses of the multinational companies that have a branch or company in Israel. Here, too, this is an increase of about 12% compared to $3.7 billion in 2010. The R&D exports of this type of R&D centers amounted to $2011 billion in 3.9, and constituted about 92% of the total R&D exports of the companies Multinationals, most of them for foreign parent companies.

"The knowledge and IP created from the extensive activity of the R&D centers in Israel is transferred entirely to the use of the parent companies abroad," explains the chairman of the National R&D Council at the Ministry of Science Prof. Yitzhak Ben-Israel. "These R&D centers submit about 1,000 original applications for patents every year in recent years, when the ownership of these patents remains with the parent companies and in fact the Israeli know-how is leaking out."

The survey also examined the R&D carried out in Israeli companies that own a subsidiary abroad, such as Teva and Elbit. The R&D expenses of companies of this type totaled 2011 billion dollars in 3.6, an increase of 7% compared to 2010 and accounted for 38% of all expenses for business R&D in the Israeli economy. Unlike the activities of foreign-owned multinational companies that operate in Israel and are concentrated in the high-tech sector, these companies are mainly concentrated in the industrial sectors, about 72% of their R&D expenditures were made in companies in the industrial sectors, and they are the dominant factor of industrial R&D in Israel. Also, their R&D activity is done mainly for the companies' own use (about 93%).

Subsidiaries of Israeli companies located abroad provide R&D services to their parent companies in Israel. R&D imports from all sources by Israeli-owned multinational companies amounted to $2011 million in 476 and accounted for approximately 78% of all R&D imports in the Israeli economy - an increase of 14% relative to 2010. Furthermore, approximately 61% of the R&D imports "F of these companies originate from the subsidiaries abroad - most of the imports originate from North America (51%) and Europe (40%).

The R&D expenses of the subsidiaries of the Israeli companies abroad amounted to one billion dollars in 2011, and represented an increase of about 29% to the R&D activities of the companies in Israel. Only about a third of the R&D activity of the subsidiaries abroad in 2010-2011 was carried out for the Israeli parent companies. In the industrial sectors, about 31% of the R&D activity of the subsidiaries was carried out for the parent companies, while in the R&D branch all the R&D of the subsidiaries abroad was carried out for the Israeli parent companies.

The R&D activity carried out abroad by the subsidiaries constitutes an addition to the R&D activity of the companies in Israel. This addition is significant in the textile and clothing manufacturing industries and in the chemical and pharmaceutical manufacturing industries, where the scope of the R&D activity of the subsidiaries abroad is similar to the scope of the R&D activity in Israel. On the other hand, in the software and R&D sectors, the scope of R&D activity carried out abroad by subsidiaries is much smaller, and is an addition of about 11-13% to the R&D activity carried out in Israel. The R&D expenses of subsidiaries abroad were carried out mainly in the chemical and pharmaceutical manufacturing industry. Most of the expenses for R&D were carried out by subsidiaries in North America (69% of total expenses) and by subsidiaries in Europe (26%).