Policy of the transition from agricultural to high-tech export in conditions of permanent military threat: Israeli experience for Ukraine

Abstract

The Russian-Ukrainian war causes the loss of a significant part of Ukraine's production and raw and food export potential, which creates the risk of economic insecurity in the long run. At the same time, the new challenges create favourable conditions and opportunities for restructuring the national economy in the direction of developing high-tech areas and increasing the science-intensiveness of traditional industries. Today, the question is to choose the most effective institutional and economic mechanism for such a transformation, as exemplified by the State of Israel. The article is devoted to the research of the Israeli practice of transition to high-tech production and the formation of an innovative export-oriented economy. The author aims to clarify the conditions, factors, mechanisms, and tools for the successful economic transformation of Israel in terms of the possibility of implementing the acquired historical experience in Ukrainian realities. The methodology is based on a systematic approach, which considers the economic transformation of Israel as a set of processes and systems of closely interrelated elements (historical conditions, institutional factors, public policy, available resources, economic potential, etc.). It is necessary to apply the historical-evolutionary approach to identify the features and trends of the country's transition from traditional spheres of production and export to high-tech. In this context, comparative-historical analyse is used. The precondition for the transition of the State of Israel to high-tech production and exports was the development of powerful science-intensive complexes of its own agricultural and defence production through targeted public and private investment, subsidies and loans to producers, stimulating education and research, a unique system of public-private partnership (so-called "gold triangle"). It is determined that the use of defence technologies in production of the double-purpose products (in space, aviation, cybersecurity spheres), the flow of intellectual capital, and the formed research base became the basis for the development of pharmaceuticals, electronics, microelectronics, computer hardware, and software, etc. The key role in the Israeli transition to high-tech production and exports was played by state support policy implemented by grant funding instruments for education and R&D, venture capital incentive programs, tax and credit benefits for small and medium businesses, an extensive system of institutional assistance, and effective legal regulation of the business environment for the protection of intellectual property rights, granting special privileges, simplifying the procedure of repatriation of profits, ensuring high-quality products, etc. The policy of "arms diplomacy", trade liberalization, tax, credit, and institutional support of exporters, the conclusion of a system of agreements on international trade, and economic and scientific-technical cooperation contributed to the formation of the competitive advantages of Israel in the markets of high-tech products.