MK: ‘Australia must invest in its people’
A LEADING Israeli MK has urged Australia to switch from commodities to “human capital” in looking for continued prosperity in the wake of the mining boom.
A LEADING Israeli MK has urged Australia to switch from commodities to “human capital” in looking for continued prosperity in the wake of the mining boom.
Professor Manuel Trajtenberg, a Tel Aviv University economics professor who won a Labour Knesset seat in the March elections, was in Australia to address Future Summit 2015, a conference hosted by think-tank the Australian Davos Connection.
The economist, an authority on Israel’s start-up culture, said Australian business leaders “suffer from complacency” after the long minerals boom and need to invest in people more than commodities.
“There is no case in history of the long-term economic success of any major country that does not rely on human capital and innovation … You have to rely on technological change,” Trajtenberg told The AJN. “You have to promote innovation heavily, as if you did not have commodities.
“Economic change always brings about winners and losers. You have to provide for the losers and encourage and incentivise the winners.”
Looking back at Israel’s love affair with entrepreneurship, Trajtenberg said it had come about in the 1970s after the state’s early burst of economic growth, which was averaging some 10 per cent per year, had begun to fade.
“Now everyone talks about innovation, but 40 years ago Israel was the only country with a strategy of growth via innovation,” he recalled. “A conscious decision was made to leverage the only resource that the country had, which was and still is highly skilled labour and scientific capabilities.”
It was a strategy that began to bear fruit in the 1990s, he said, noting that today Israel has the world’s highest ratio of research and development to its gross national product.
For Australia, the halving of economic growth in China signals a need to embrace “human capital and innovation”, he said, cautioning it was not the government’s role “to pick areas [of development] because government is not good at it. Let the market go its own way.”
PETER KOHN
comments