Targeting industries for regional development in Israel and in Germany - A comparative study

Economic growth is driven to a large extent by technological progress and innovation. It is therefore essential for effective public policy to identify innovative industries so that policy makers will be able to target government incentive programs toward this specific group of industries. In the present study we assumed that innovation is more prevalent among fastest-growing industries. Thus, the major objective of the current study was to develop a methodology to identify this specific group of industries. Furthermore, we hypothesized that within the fastest-growing industries the high-technology (electronic) firms are by far more innovative than the "traditional" (plastic and metal) firms. The findings corroborate our hypothesis that fastest-growing industries are highly innovative. Moreover, high-technology firms have a significantly greater prohibit by of engaging in innovation than the more traditional firms. These findings could assist in the design of effective public policies aimed at inducing regional innovation.