ISRAEL 15 Vision - Leapfrogging The Periphery

The document presents a conceptual framework for developing Israel’s peripheral regions based on identifying their unique assets and realizing their latent global potential.

Executive Summary

This document presents a conceptual framework on how to leapfrog Israel's geographic periphery - i.e. its remote regions. It outlines which strategies can succeed in rapidly improving the socio-economic status of these regions. Doing so is a necessary condition to realize the ISRAEL 15 Vision (see below). This document represents the joint work of the Reut Institute, the Jewish Agency's Partnership 2000 Program and JDC-ELKA. The recommendations it makes are based on the latest research in regional development, meetings with experts and field personnel in Israel, two pilot projects in Beit Shemesh and the Western Galilee, and a study of the experience gained by ELKA also in the Western Galilee.

The ISRAEL 15 Vision calls for Israel to become one of the top 15 countries in terms of its citizens' quality of life. This vision requires a socio-economic leapfrog that can narrow the gap in quality of life between Israel and the world's leading countries. Leapfrogging requires that three trends occur: one, rapid and sustained growth that enlarges the economic pie; two, the allocation of this "pie" in an inclusive fashion such that the quality of life improves for all citizens; and three, the preservation of resources for the benefit of future generations. Put simply, leapfrogging requires growth, inclusiveness, and sustainability.

Leapfrogging also requires a balanced distribution of the fruits of growth between different regions. Such a distribution is one example of inclusiveness. Without such an allocation, people, goods and capital are liable to quickly migrate from underdeveloped to developed regions. Such migrations can weaken and even jeopardize the human capital and resources of poor regions.

In Israel, the central region enjoys most of the fruits of growth. Consequently, the peripheral regions lag socio-economically and suffer from negative migration.

This document presents a conceptual framework for developing Israel's peripheral regions based on identifying their unique assets and realizing their latent global potential. Because globalization enables the rapid migration of human capital, goods and knowledge from one place to another, regional assets offer an important foundation for sustained development. These assets are unique local qualities - such as a specific climate, history, heritage, environment, landscape, or challenge - which are rooted in a region and cannot be moved easily.

Because of its geographic, demographic, and climatic diversity, Israel has the potential to cultivate several regions that can compete globally. Each of these unique regions can develop its own latent growth engines. According to Reut's initial assessment, there are about 12 such regions including the Western Galilee, the Eastern Galilee, the Western Negev, and the Arava.

Despite this potential, Israeli governments have continually aimed to transfer economic activity, capital, and places of employment from the center to the periphery. This policy assumes that no local engines for growth exist. The government still promotes this policy by encouraging young Israelis to settle in the periphery and by supporting major projects such as the subsidization of Intel's factory near Kiryat Gat, the transfer of IDF bases to the Negev, and the building of a medical school in Safed.

Such a policy stems from the view that Israel is a small state, and therefore can and should function as a single region. According to this view, it is possible to apply the same policy across the country. For example, successful businesses in the center, such as high-tech startups, can easily be emulated in the periphery. Such a policy tends to ignore the regional context.

Yet despite investing significant resources in the periphery for many years, the government has not succeeded in narrowing the socio-economic disparities between the periphery and the center.

In fact, the State of Israel's current approach to developing the periphery reveals an underlying tension between two different schools of thought. On the one hand, the government acts based on its belief in a market economy - it intervenes only to shape regulation and address market failures while executing a laissez- faire policy. On the other hand, the government acts on a commitment to develop the periphery, and therefore intervenes to the point of sometimes causing market imbalances.

To reduce this tension and enhance Israel's development outlook, the government should add another layer to its development strategy - regional development based on unique assets. Such a change is not intended to replace a national development policy based on national assets, but rather to expand and strengthen it.

A policy of regional development must address two central challenges: identifying unique regional assets and encouraging regional innovation based on them. For example, ever since the Western Galilee identified wellness tourism as one of its unique regional assets, it has encouraged local entrepreneurs to innovate and establish the relevant businesses, infrastructure, and institutions.

Such a policy requires an organizing body in each region that can lead and define an overarching strategy. This body should include the various stakeholders in the region such as entrepreneurs, local authorities, and non profit organizations. Its mission should be to identify regional assets, mobilize relevant partners, set priorities, and promote regional innovation. At present, organizations exist that are willing and capable of helping to establish such a body. A prominent example is the Western Galilee cluster supported by JDC Israel-ELKA and the regional laboratories launched by the Reut Institute and Partnership 2000.

Regional mobilization can help the government achieve its objectives of integrating marginalized populations such as Israel's Arab citizens.

The government, local authorities and non profit organization all have central roles to play in encouraging regional leapfrogging.

  • The government - First, it should test the strategies for regional development outlined in this document by implementing them in a few regions. Second, it should encourage the establishment of new regional mobilizations that can help regions identify unique assets and compete globally. At the same time, it should nurture regional innovation through various policy tools. For example, it could leverage the Ministry of Science regional R&D centers and encourage regional colleges to focus on local assets.

  • The local authorities - International experience proves that leapfrog occurs only when local authorities formulate a long-term vision that addresses the regional context. Therefore Israel's local authorities should create mechanisms for coordination with neighboring local authorities and should mobilize other players in the region such as entrepreneurs, local leadership, and non-profit organizations.

  • Non-profit organizations - According to international experience, non-profit organizations can catalyze regional development by bringing together key players, learning from cases around the world, and strengthening local leadership.

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