Israel's R&D Expenditure Surges in 2022 - Outpacing International Averages

Israel's investment in civilian research and development (R&D) witnessed a substantial surge in 2022, according to data released by the Central Bureau of Statistics (CBS). The national expenditure on civilian R&D soared by 14.7%, reaching a remarkable NIS 106.1 billion for the year.

This substantial increase in R&D spending reflects a significant commitment to innovation and technological advancement, with Israel dedicating 6.1% of its GDP to civilian R&D – a figure that remains on par with the previous year (2021) at 5.8%. This dedication to research and development far exceeds international standards, with an average rate of 2.7% in the OECD, 4.9% in South Korea, 3.5% in the USA, and 3.3% in Japan.

Examining the multi-year perspective, this surge in R&D spending comes on the heels of a 12.7% increase in 2021 and a 2.4% increase in 2020. Remarkably, the rate of increase in 2022 equals that of 2019. In the period from 2017 to 2019, Israel consistently saw growth in R&D spending ranging from 5.2% to 6.2%.

Breaking down the sectors contributing to this remarkable growth, the business sector was a standout performer, increasing its R&D spending by 15.8% in 2022, following a strong 13.7% increase in 2021 and a 3.0% increase in 2020. This sector also saw around a 5% rise in R&D expenditures among start-up companies, international development, technology incubators, and research institutes, with industrial sectors experiencing a 4.7% increase.

In contrast, the government sector's R&D spending remained stable in 2022 after a modest 1.8% increase in 2021. Higher education institutions recorded a 1.7% increase, following a 2.3% rise in 2021. The private non-profit sector, on the other hand, experienced a robust 9.7% increase in R&D spending in 2022, building on the 11.6% growth observed in 2021.

Government ministries allocated NIS 9.4 billion to R&D in 2022, with a focus on research and development funding for universities (54%), promoting industrial technology through Innovation Authority grants (33%), infrastructure development (3%), and research in the field of social services (2%).

It's important to note that defense R&D, conducted for security purposes, is not included in these figures, emphasizing the civilian nature of the investments.

Despite the government's efforts, most R&D investments in Israel are still financed by the private sector, with a remarkable 46% of R&D expenditures coming from multinational companies operating within the country. Coupled with funds from abroad, the private sector accounts for over 90% of R&D expenses, while the government sector, including the Innovation Authority, contributed only 7.9% in 2021. Higher education institutions, primarily universities, provided a mere 0.2% of the expenditure on civilian R&D.

In terms of employment, the business sector employed more than 136,000 individuals in R&D activities in 2021, representing a 16% increase from 2020. Notably, approximately 4% held a PhD, while around 78% possessed a bachelor's or master's degree, with 9% holding an engineer's or technician's certificate.

Israel's commitment to bolstering its R&D landscape not only enhances its global standing in innovation but also holds great promise for driving economic growth and fostering technological advancements in the years to come.