Venture Investments in Israel - A Regional Perspective Dafna Schwartz and Raphael Bar-El Ben-Gurion University, School of Management, Israel

Venture Investments in Israel – a Regional Perspective This paper analyzes the geographic distribution of venture investments in start-ups in Israel, using data for the period of 1995-2004. The findings show that their location behavior differs from that of high-tech activities: they show a pattern of "dispersed concentration" (as compared with a pattern of "concentrated concentration" of high-tech activity), with high levels of concentration in focal places, but at a commuting distance from the main metropolis. This is explained by the fact that venture investors also play the role of entrepreneurs and managers. The comparison between different types of venture investors shows that local venture capital funds lead to the heaviest concentration in the metropolis, in comparison with foreign venture investors. This heavy concentration of venture investments implies increasing regional gaps, with a minimal participation of peripheral regions, even those that enjoy some high-tech activity.

Spatial urban restructuring for economic growth with distribution: The case of Ceara (Brazil)

One of the most important challenges of economic policy is the combination between economic growth and the reduction of inequality and poverty. The change of the regime in Brazil can be seen as a reaction to the failure of economic policy in this field. We focus on the case of one of Brazil's states in the Northeast, Ceara, that experienced a rapid macro economic growth in the last decade, but with no reduction of poverty and inequality. Established economic theory shows that economic growth generally implies a changing economic structure (relatively less agriculture, and more industry and later services), and a process of urbanization. Our hypothesis is that in addition to industrialization and urbanization, a component of spatial urban restructuring is necessary for the achievement of a more equalitarian economic growth. The persistence of inequalities and high levels of poverty in spite of the macro economic growth can be explained by the continuing high level of urban concentration, and the insufficient growth of urban centers outside the metropolis. We test this using data of economic growth in Ceara, compared with trends of urbanization and its concentration level, changing economic structures (distribution between agriculture, industry and services) in the regions outside the metropolis and levels of productivity. Results lead to the conclusion that economic policy measures should consider a spatial reallocation of public expenditures for physical and human infrastructures, leading to a spatial urban restructuring.

Targeted consultancy services as an instrument for the development of rural SMEs - a brazilian case

One of the problems that policy makers face in the process of development in many countries is the inequality between the periphery and the metropolis center. The periphery has difficulties making the structural adjustments needed to fit in the national growth, leading to growing unemployment rates, regional gaps and continuous migration to the big metropolis. One of the sectors that has a difficulty making the transition is the small business sector. Amongst the reasons is in-adequate skills and information of the business management and in some cases a lack of awareness to the importance of these fields in the potential growth to the business. In addition the government support systems for small businesses do not give an adequate response. Support programs for small businesses are mostly provided within the urban sector, and are not adapted to the needs of the rural sector. The outcome is that although there is a "potential" need among small businesses in the interior for business consultant's services and in-spite of there being a wide range system of support for small businesses at the national level, their access to such services is limited. As a consequence of the potential demand that doesn't come into expression in the existing structure and of a national supply of these services that does not meet the needs of this sector, the gaps between the rural area and the urban central area grows. Our hypothesis is that an effort to establish a link between the unexpressed demand and the inappropriate supply of services to small-scale businesses in the rural area may contribute to economic growth. We test this hypothesis by using a program that was launched in the state of Ceara, Brazil, that is set to aim at both the demand and supply, focusing on a specific population: non-agricultural businesses in the rural region. The program is intended in the first stage to create awareness in the business community to the potential for business development and to encourage their demand for such services. The program offers consultancy services suited to the special needs of businesses in the non-metropolitan region adopting a reach-out approach. The program is part of the San Jose Project directed by the Secretary of Rural Development of the State of Ceara, that is aimed to bring a reduction in poverty in rural poor areas. The first stage of the research is to identify the potential of demand for consulting services and identifying the main areas in which the consulting is needed. A questionnaire was applied to 224 entrepreneurs in three selected areas. The findings show that about all the entrepreneurs are interested in receiving the consulting services. 90% of them evaluated that they had a growth potential. The factors that they point out as main constraints are, in order: physical infrastructures (65%), marketing (60%), capital returns (52%) problems in management and labor force (37%) and administration problems (35%). The second stage of the research was focused on 140 entrepreneurs who responded to a few basic criteria and were entitled to receive basic consulting services, of up to 15 hours. At this stage the marketing turned up as a main problem, especially for businesses that are in a process of transition from local to national markets. The findings show also that the support system that provides the consultancy services needs to go through a process of adaptation. One important difficulty of the system is to switch from internal advisers to external ones who specialize in the field.

From metropolis to metropolis-based region: the case of Tel-Aviv

The decreasing importance of metropolitan areas in the distribution of population and economic activity within many nations of the developed world raises questions about the emergence of agglomeration diseconomies and about the changes in urban spatial structure. Here we explore the thesis that an emerging metropolitan area based region (MBR), comprising the metropolis and a surrounding territory, is gradually replacing the metropolis. Using data covering the last 22 years for the metropolis of Tel-Aviv (Israel) and its surrounding territory, various indicators are estimated. These include national and regional deconcentration (both measured in terms of population and employment), as well as centrality, dependence, attractiveness and integration (measured in terms of employment). The main results of the analysis include the following: the need to view metropolitan stagnation and deconcentration within the wider context of the MBR; employment deconcentration occurring at a slower rate than population deconcentration, leading to increasing levels of employment centrality within the MBR; the process of consolidation within the MBR and a strengthening of its economic role within the nation.