Innovation in the Public Sector in the Start-up Nation: Challenges of Technology, Bureaucracy, and Digital Divide

Innovation provides opportunities to all countries, as advancement in technology and globalization of economic markets encourage global competition and increase the role of governments in gaining a strategic competitive advantage while boosting economic growth and productivity. According to the OECD, innovation can make a difference in addressing developmental challenges and providing catalyst for countries to accelerate business processes and practices that improve public service efficiency. The public sector plays a significant role in modern economies and innovation is a necessary condition for improving government services to the public and creating a competitive economy. Israel is known as the “start-up nation”, but innovation policies and strategies relating to the public sector are less developed than those of business innovation due to lack of innovation culture, digital divide, and bureaucracy. The research examines innovation in the public sector in Israel compared to other OECD countries. It is argued that despite the enormous influence of high-tech and start-ups on the economy and gross of national product, the flourishing technology sector has not contributed to other sectors of the economy and the performance of the public service lags behind the private sector in terms of innovation and efficiency. The research concludes that implementing Israel’s success in business innovation into the public sector requires long-run strategic investments and public policies to increase the supply and quality of human capital and infrastructure. The goal should be to narrow digital divide with other developed countries and advance the technological capabilities and productivity of the public service.