Israel's Slow Digital Transformation Threatens Economic Productivity, OECD Report Reveals

The OECD report published last week showed that Israel lags behind the OECD countries not only in relation to the low rate of ultra-Orthodox employment, but also hints at the slow transition of the Israeli economy, at least the one outside the high-tech sector, to a more technological era. Perhaps the most important figure What emerges in the context of digital transformation is that as of 2021, only 62.2% of businesses in Israel have a website compared to an average of 78.1% in OECD countries.
According to Dr. Assaf Patir, the chief economist of the Startup Nation Israel research institute, the low rate of businesses with websites in Israel reflects a broader problem in the Israeli economy: "Although Israel has a large high-tech sector, which includes 10-15% of the employees In an economy with very high productivity, the productivity of the Israeli worker is low compared to workers in similar sectors in developed countries. One of the reasons for the low productivity is that the adoption of new technologies in Israel in many sectors of the economy is very slow compared to other countries."
The OECD report also reflects a similar picture. The report notes that the process of adopting new technologies in the Israeli economy, outside of the high-tech sector, is slow - but the ability of businesses to adopt this type of technology can reduce the gap in productivity between the high-tech sector and the rest of the economy in Israel . According to Dr. Patir, "This is the duality of the Israeli economy: on the one hand, new technologies are invested and developed, but on the other hand, the companies' sales are concentrated abroad. One of the reasons for this is that the Israeli market is small, and start-ups that want to sell their products will naturally focus on the markets The biggest they can operate in: the US and Europe."
"But this is not the only reason," adds Patir. "The high salary in high-tech compared to the other sectors attracts a lot of people who, if they were working in another industry, would introduce and operate the new technologies." In other words, Patir says that in Israel there are those who develop the new technologies and know how to sell them in the world - but there is no one who integrates them into the Israeli industry.