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The National Digital Program of the Government of Israel

Description of Worldwide Digital Trends

Our world is in the midst of one of the most significant revolutions in human history – “the digital revolution”. 


This revolution is transforming the world as we know it, with an intensity not experienced since the industrial revolution in the 19th century and producing fundamental changes in all areas of modern life – including the economy, society and government[1].
The emergence of the personal computer in the 1980s and the entry of the Internet into our lives in the 1990s, created a new digital world based on information and communication technologies. More than 40% of the world population – about 3.2 billion individuals – currently use the Internet compared to only about 400 million in 2000, and there are more than 7 billion mobile subscribers throughout the world compared to less than 1 billion at the beginning of the millennium[2]. The Internet and mobile now serve as platforms for the development and spread of additional advanced technologies.

The volume of information created on these communication infrastructures is unprecedented, making almost all the knowledge known to man accessible anywhere on the globe: in 2012, it was estimated that an unfathomed amount of information is created every day – 2.5 exabytes - about 2.5 billion gigabytes – and this rate has accelerated significantly since then[3]. Digitization also fosters business innovation and supports economic growth worldwide: the digital economy contributes about 19.2 trillion dollars to the world GDP, more than the GDP of the European Union or the United States, and constitutes 22.5% of world goods. By 2020, the digital economy is expected to grow by approximately 5.5 trillion dollars, and to make up 25% of the world economy[4].

The “digital revolution” transitioned to a new stage in recent years, accelerating economic and social processes. Four digital trends are developing concurrently, creating innovative business models and revolutionary digital work methods and changing the way each and every one of us experiences life. These trends are known as SMAC – Social media, Mobile phones, Analytics and Cloud applications:

Innovative technological trends in fields such as cyber and information security, Fintech, Smart Cities, and health and education in the digital age, are also significant economic growth engines impacting all areas of the citizen's life. Countries that adopted the digital revolution and have taken action to integrate innovative technologies at all levels of society and the economy, among them South Korea, Britain, Estonia, Sweden, Denmark, Norway and others, enjoy higher productivity, accelerated growth and enhanced quality of life for their citizens compared to other countries[5].

It is a goal of the National Initiative to foster the growth of digital industries in Israel, to support the development of an innovation ecosystem, to improve and integrate the digital revolution in government work and the public domain, and to foster and help citizens and businesses exploit the advantages of ICT technologies and data driven innovation. The underlying assumption of the National Initiative is that the State of Israel must advance to the forefront of the digital era, vigorously and rapidly, in order to ensure its continued economic prosperity and the welfare of its citizens. It must do so while focusing attention on all population sectors and segments, as part of a comprehensive approach for fostering social cohesion and diversity, empowering the individual and narrowing social, geographic and economic disparities in Israeli society.


The State of Digitization in Israel

An examination of the state of digitization in Israel reveals a complex picture. On the one hand, Israel is known as the Start-up Nation, with innovative technology ranked among the highest in the world. 

It is ranked second in the world in gross domestic expenditure on R&D as a percentage of world GDP[6], and the scope of venture capital invested per person in Israel is among the highest in the world - $170 per capita, compared to only $75 in the second-ranking country, the USA[7]. Furthermore, Israel is ranked relatively high compared to other developed countries on the World Economic Forum Global Competitiveness Index with respect to indicators relating to innovation and technological readiness.

Israeli consumers are perceived as “early adopters” of innovative technologies and services, providing the country with a qualitative basis for the integration of digital services. The high penetration rate of smartphones in Israel is also a significant enabling factor for adopting digital applications.

photo: Gross Domestic Expenditure on R&D as a Percentage of GDP, Five Leading Countries, 6 2014

Despite Israeli innovation and advanced technologies used in the local high-tech industry – the potential and advantages of the digital age have yet to permeate significantly into all economic sectors and population groups.

Thus, for example, notwithstanding the extensive communication infrastructures deployed throughout the country, Israel ranks only 24th among OECD countries in broadband penetration, and only 25th in the world in terms of average data transmission rate[8].  Furthermore, there is a significant digital divide in Israel, between the population sectors that take advantage of digitization processes and between those weakened populations who do not. The following table shows that the digital divide corresponds to economic and social gaps in the country, in effect reinforcing high inequality levels.

The table below also shows that despite the extensive access to Internet in Israel, use of applications is among the lowest in western countries – for example, Israel ranks 25th in e-Commerce and 28th in the use of online banking services among the 34 OECD countries.

The digital divide and the gap in Internet access and Internet use is, to a large extent, the result of the low level of digital literacy among considerable parts of the population[9]. Thus, for example, on the OECD Adult Digital Literacy Index, only 27% of the adult population in Israel passed the basic-level of the test. Among the Jewish ultra-orthodox population, the Israeli Arab population and those 55 years of age and older – the rate of those who failed was significantly higher[10].

Furthermore, digital innovation that developed in the business sector has yet to permeate the public sector. While Israel is ranked at the top of indices measuring innovation in high-tech, it ranks lower in the use of infrastructure and technology in the public sector: 13th in the world in providing online government services on the United Nations e-Government Survey[11], and 27th on the OECD index of online public communication with government entities[12]