ABSTACT:Venture capital cannot only promote technological innovation and the development of high-tech industries, but also makes contribution to economic growth. Having a good reputation as the "Silicon Valley in Middle East", Israel is one of the most successful countries in developing venture capital. It is worth studying the impact of Israeli venture capital on its economic growth. We take Israel as example to establish an economic growth model with venture capital, which is taken as an endogenous variable in this paper. The results show that venture capital plays a significant role in the country’s economic growth.

JELClassification:C22, F43, G2

Keywords:venture capital, economic growth, Cobb-Douglas function, Israel

Romanian Journal of Economic Forecasting (SSCI),2013,Volume16, Issue2,115-128