Big Ten Exporters Carry Too Much Weight

The Bank of Israel has warned that dependency on such a small number of exporters poses a potential danger, since a financial setback for one or two of them could adversely affect the entire economy, which derives close to half its growth from the export sector.

A study conducted by the Export Institute, a quasi-governmental office, found that all recent export growth is due to the G-10 companies.

Furthermore, the big ten are pushing aside smaller companies.

“The findings testify to the difficulties facing the great majority of the economy’s exporters — to  increase sales abroad and to be competitive internationally,” said Ofer Sachs, director of the EI. “These  data are worrying and demand that the government take steps.”

The G-10 list includes Intel, Elbit Systems, Oil Refineries Ltd., Teva Pharmaceuticals, Iscar, Israel Chemicals, agrochemicals company Makhteshim Agan, Paz Oil, Israel Aerospace and HP Indigo, a maker of digital printers.

Sacks urged that the Office of the Chief Scientist, the Economy Ministry unit that aids industrial research and development, channel more resources to the smaller firms to enable them to leverage their innovations.

“There has to be some congruence between research in R&D and the development of opportunities to advance in international markets,” said Sachs. “I’ve seen it more than once mainly with small companies, which have developed a fantastic product, that have completed a long development process, and have failed completely,” he said. “It’s because we haven’t given them the tools.”

These tools don’t exist. The government spends about NIS 1.3 billion annually on industrial R&D while assistance for exporters amounts to just NIS 100 million.

“Unfortunately, we have been hit hard by budget cuts,” sid Sachs. “The 2013 budget for the Export Institute dropped to NIS 40 million, compared with NIS 55 million in 2012. Of that NIS 40 million, NIS 25 million is the core budget, with the rest made up of one-time supplements.

Israel underspends on export promotion, according to a World Bank survey of 88 export bodies around the world conducted together with the University of Geneva and the Boston Consulting Group.

This article appeared in print on page 24 of the July 10th, 2013 edition of Hamodia.