【正文】 rms which established local research and development centers in Israel in the 70s and the 80s brought the knowhow and the operating procedures of large conglomerates to local, inexperienced firms. These firms exposed Israeli industry to new areas, primarily in the telemunications and the semiconductor industries. Cooperation with Foreign Firms The Israel hightech industry can benefit from cooperation with foreign panies at all levels. Some of the success stories of the Israel hightech industry involve a partnership between an Israeli and a foreign partner, in which the Israeli partner provides the technology or the product, and the foreign partner provides the sales and support functions in target markets. This type of cooperation is a winwin situation for both sides. For US partners or investors it is even more beneficial as the partnership can apply for BIRD Foundation funds. Motorola, Intel and others have made Israel a preferred site for production facilities. These panies benefit from a high level of technicians and engineers and from proximity to their target markets in Europe. NAFTA agreements made Israel the manufacturing location of choice for products that are to be exported to Europe. It is quite difficult for Israel to pete with South Asian countries on the basis of labor costs, but Israels better product quality is an advantage. The rapidly growing hightech industry has the potential to grow at an even faster rate, despite the present economic slowdown which affects the hightech field less than other industries. In terms of productivity per employee, Israeli hightech still has a long way to go, pared to international standards. Although output per employee in the industry is $160,000 per annum, some countries boast an output of upward of $250,000 per employee per annum. Challenges facing the industry as the 21st century approaches: The shortage of professionals in electronics and software, a mon problem in the western world. In Israel, immigrants from the former Soviet Union served as a stopgap between 1992 and 1995. Since then, immigration to Israel has slowed down and the problem has again arisen. This in turn has increased the cost of salaries to a level where the advantage of a low cost per employee in Israel no longer exists. The hightech industry needs to widen its focus on Ramp。 and exports (goods and services, 1996) of $ billion. Moreover, advanced technologies developed in Israel are in great demand, and many Israelideveloped applications can now be found in the products of multinational panies in the munications, puters, information systems, medicine, optics, consumer goods and software sectors. Origins The Israel hightech industry was born with the State of Israel. In 1948, the newlycreated Israel Defense Forces established a branch called the Science Corps. The corps developed new arms, explosives, and a variety of electric and electronic appliances for the IDF. Israels military industry developed at a rapid pace, meeting the countrys needs for armaments and technologies which it could not obtain from abroad. During the same period, Israel developed what were to bee the best institutions of education and scientific research in the Middle East. They include the TechnionIsrael Institute of Technology in Haifa, the Weizmann Institute of Science in Rehovot, the Hebrew University in Jerusalem, and universities in Haifa, Beer Sheba, Tel Aviv and Ramat Gan. In the early sixties, Israel entered the nuclear era with the establishment of two nuclear research plants. The first Israeli puter was developed and assembled in the early fifties at the Weizmann Institute. Golem (dummy) was an alltube puter, similar to the first puters developed in the US in the forties. In the late fifties and early sixties, there were already several mainframe puters in Israel, purchased from IBM and Philco. Those puters were used primarily by government ministries and institutions, universities and