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Venture Capital Investment in Israel: Impact on the Economy and Technological Development

Author

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  • Alexey S. Larionov

    (Institute of Oriental Studies of the Russian Academy of Sciences, Moscow, Russian Federation)

Abstract

Israel is one of the world's leading countries in attracting venture capital, which has largely determined Israel's success in building an innovative economy. This study analyzes the dynamics of venture capital investment in Israel from 1991 to 2021 and assesses the correlation between the level of such investment and the level of foreign direct investment, as well as the impact of venture capital investment on the growth of the technological sector of GDP. It is revealed that venture capital investment stimulates the growth of the high-tech sector of Israel’s GDP, and this provides a cumulative positive effect on other sectors of the economy. The stimulating effect of venture capital investment is reflected in an increase of exports of goods and services, citizens’ incomes and the growth of the country’s GDP. The relevance of the topic of the article is confirmed by the immediacy of the problem of attracting venture capital in the Russian Federation and in most developing countries of the world: for them, there is an objective need to resolve the issues related both to the state policy in the field of attracting venture capital and to the creation of infrastructure for the development of the technological innovation sector of the economy.

Suggested Citation

  • Alexey S. Larionov, 2024. "Venture Capital Investment in Israel: Impact on the Economy and Technological Development," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 4, pages 114-133, August.
    • Handle: RePEc:fru:finjrn:240407:p:114-133
    DOI: 10.31107/2075-1990-2024-4-114-133
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    References listed on IDEAS

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    1. Paul A. Gompers & Josh Lerner, 1998. "What Drives Venture Capital Fundraising?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1998 Micr), pages 149-204.
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    More about this item

    Keywords

    venture capital investments; venture capital funds (VC funds); startups; R&D; high-tech exports; IPOs;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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