Innovation occurs at different levels between one country and another. Innovation does not occur by accident. While some nations depend on individuals to drive the creative process, others provide an environment and infrastructure that foster and support technological development. When a country focuses its attention on providing the best opportunities to innovate, that country can rise above the pack.

Global Innovative Powers

The United States and Japan have thrived for many years as countries that foster innovative development. Each nation has maintained an interest in educating its citizens in science and technology, encouraging the best and brightest to create ways to improve the world. The United States is responsible for almost 30 percent of the world’s patents, and hosts 15 of the top 25 research universities in the world. Japan, meanwhile, has the world’s third largest economy and has long established itself as a key global player in the auto making and electronics markets.

In Europe, several countries have risen as leaders in the race to innovate. Denmark, Germany, and the United Kingdom in particular support technological growth through educational opportunities and governmental spending. The World Economic Forum ranks Germany fourth globally in company spending on research and development, and sixth for the quality of its research institutions. Meanwhile, the United Kingdom has pledged to increase its national R&D investment by two billion pounds by the year 2020. Denmark possesses particular strength in emerging and renewable energy innovation.

Israel: The Perfect Innovative Storm

Israel, nicknamed the “Startup Nation”, is known as a center of technological innovation, and appears on the radar of many leading international companies looking to invest in and acquire innovative technologies. Israel can be seen as an example of a country focusing on fostering innovation.

The international interest in the local innovation economy is reflected in the scope of international investments and acquisitions of Israeli based tech companies and by the presence of more than 200 development centers of multinational top-tier corporations. Cyber security, Automotive technology, Fintech and the Internet of Things (IOT) are the current favored flavors.

The innovation ecosystem is spreading across the entire country, branching out from Tel Aviv, Haifa and Herzliya, to Jerusalem, the Galilee and the Negev. The Israeli government endeavors to support the technology innovation ecosystem, which is also supported by numerous accelerators, incubators and early stage funds, some of which are supported by leading international companies and major financial institutions.

Last year saw the introduction of an important amendment to the Encouragement of Research and Development Law, easing the rules governing technology transfer and establishing a new National Authority for Technological Innovation (NATI), replacing the Office of the Chief Scientist (OCS). New relevant tax rules are being considered and are expected to come into effect in 2017. Matters under consideration include treatment of intellectual property held by multinational companies, cross-border transfer pricing, taxation of online based businesses, and treatment of “reverse vesting” mechanisms.