Vision to Reality: The Reut Blog

A recent article in Haaretz reported that Israel Chemicals, an Israeli company based in the Negev, is seeking to protect the benefits it receives from state grants. While several government ministries have called to cancel these grants, Israel Chemicals argues that doing so would force it to dismiss a large part of its workforce in a region already struggling with unemployment.

This argument assumes that Israel’s peripheral regions lack natural growth engines and  that therefore, that the government must provide incentives for companies willing to create jobs there.

A similar argument was employed by Intel Israel which received a state grant to create a factory in Kiryat Gat, a remote region. In fact, Intel is currently asking for even more benefits despite ongoing research as to whether its relocation has had a significant effect on the surrounding region.

But let’s not forget one important fact: Israel Chemicals uses phosphate mines, a natural resource of the Negev which cannot be moved. If they leave, other entrepreneurs will replace the firm and hire the miners. The unique assets of the Negev cannot move. In fact, the unique assets of any region cannot move. Therefore, instead of encouraging companies like Intel to relocate to remote regions, and instead of depending on companies like Israel Chemicals to provide employment, regions like the Negev must identify the full breadth of their unique assets and transform them into engines of growth. By doing so they can not only grow economically, but also ensure their populations enjoy the fruits of such growth.