ABSTRACT
The emerging world-wide interest in the role of small businesses in regional economic development has not by-passed Israel, and the small business sector is expected to become an important factor influencing Israel’s industrial geography during the 1990s. Local entrepreneurship has been increasingly advocated by planners and researchers as a remedy for economic difficulties in Israel’s development towns (Avraham 1985). The calls for promoting local entrepreneurship, however, were ignored for a long time by policy-makers. In addition to being contrary to prevailing ideological beliefs, promoting entrepreneurship did not have the same appeal of offering a highly visible and quick influence on local economies as did the effect of attracting large, externally owned plants or projects aimed at the tourism industry. Shrinking opportunities for attracting new, externally owned plants and limited potential in tourism, however, have led policymakers to develop an interest in local entrepreneurship strategies. Nevertheless, formation of instruments for promoting entrepreneurship by the government, local authorities, and other public organisations reached the ‘take-off’ stage only when the new wave of immigrants from the former USSR, which commenced late in 1989, created the urgent need to exploit all possible means for generating new jobs in the Israeli economy. While the regional dimension in these new instruments is explicit, their regional impact is far from certain, since, unlike the case of capital-intensive, mass-production plants, dispersal of a wide array of small enterprises may contradict locational market mechanisms.
