Human Capital—Tangibles

Abstract

Unlike traditional industrial clusters, the Israeli high-tech sector is reliant on a single resource—its human capital. This has two components: One is tangible, measured by the country’s achievements in education and science, and the other comprises intangible factors bound up in culture. Regarding the first, Israelis are highly educated by global standards and are among the world leaders in knowledge economy benchmarks such as patents filed. But Israeli schooling is poor and on international exams of achievement students score very low. Israeli universities rank high in international comparisons, and the system of higher education has expanded greatly in the last 20 years, but it has seen its budgets cut sharply. Meanwhile, the share of Israel’s ultra-Orthodox Jewish population, which is uneducated by modern standards, is growing rapidly.