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October 29, 2004/Cheshvan 14 5765, Vol. 57, No. 9
Economic initiative hopes to help Jerusalem
DINA KRAFT
Jewish Telegraphic Agency
JERUSALEM - Although Jerusalem boasts some of the world's greatest religious and historical treasures, it remains the poorest major city in Israel.
But now, a group of investors, academics and high-tech entrepreneurs is working on a plan to jump-start the capital's economy.
For StartUp Jerusalem, the name of the game is creating "clusters" of industry - local concentrations of inter-connected businesses and institutions that can stimulate job creation and growth.
Modeled after economically thriving cities that have focused on particular sectors to boost their economies - such as bio-tech in Boston and aerospace in Houston - StartUp Jerusalem hopes to attract investment and prosperity by honing in on the city's assets and concentrating them into clusters.
"This can be successful," said a professor at Harvard Business School, Michael Porter, whose ideas serve as the basis for the organi-zation's work.
"When people come to-gether with a clear strategic framework," added Porter, an internationally renowned expert on strategic com-petition, "I've seen trans-formations."
The group's organizers are planning to focus on creating three major clusters: a health and life-science cluster including bio-tech and pharmaceutical companies; a collection of outsourcing businesses focusing on call centers; and a tourism and culture cluster that would capitalize on Jerusalem's unique assets as a relig- ious center for Judaism, Christianity and Islam.
It could take years to lift the struggling city out of poverty. About half its residents do not work, average salaries are low and more than a third of Jerusalemites live below the poverty line.
On top of that, there is a mass flight of educated young people from Jerusalem - some 7,000 Jerusalem residents are leaving the city every year, more than half of them with university degrees.
Jerusalem has also been the city hardest hit in the intifada, a target of repeated bombings of city buses and cafes. The violence has kept down tourism, once one of Jerusalem's main sources of income.
As long as the security situation remains unstable, some question the city's ability to attract in-vestment no matter how many economic initiatives are launched.
Furthermore, some experts ask whether or not Jerusalem - a city where many of the employed work in govern-ment or university jobs in the public sector - can supply an adequate private sector workforce.
"There are attempts to push industry and high-tech, but it is just not clicking," said Rafi Melnick, a professor of economics at the Inter-disciplinary Center in Herzliya. "It is possible to help Jerusalem," he said, citing new high-tech parks in the city. "But this is all on a small scale, it is not some-thing that can change the personality of the city."
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