Did you know that there are approximately 5,000 high-tech start-up initiatives every year in Israel? In Europe, on the other hand, only 600-700 start-up companies are established at the same rate. In addition, the rate of granted-patent in Israel is one of the highest in the world relative to the size of the population.
Israel hosts many research and development facilities of international technology companies in the fields of communication equipment, components, software, semiconductors, Internet communication and more. These companies include Intel, IBM, Google, Hewlett-Packard, Philips, Cisco Systems, Oracle Corporation, SAP, Microsoft, Motorola, and many more. These R & D centers employed more than 35,000 professionals in 2010, making Israel a center for worldwide strategic technology development.
How did it happen? How has such a young and small state, surrounded by hostile neighbors, lacking natural resources and continually absorbing huge waves of immigration become a high-tech superpower? It would seem that somehow, all of these physical and political disadvantages have turned into major technological and business advantages.
Life in Israel can be tense, largely due to the dangerous neighborhood it lives in. From its very inception, Israel has had to rely on its people and creative solutions to defend itself. Military service, since the birth of state, through to today, is mandatory. You may think that would delay the onset of higher education and work, but actually, in most cases it creates a major advantage. Many talented youngsters are recruited to serve in cutting-edge technology units, exposed at a very young age to sophisticated work experience that requires creative solutions to real-life
situations. Many of these youngsters later utilize this experience in their civilian life and become entrepreneurs and associates in the high-tech environment.
Secondly, during military service, soldiers have to rely on team work, out-of-the-box thinking and finding creative solutions under pressure. All these challenges help to develop qualities that can later be priceless in business, research and development. Another wonderful benefit is the life-long friendships that develop, which oftentimes grow into professional networking opportunities and partnerships.
Political and Security Challenges
Several problematic events have turned miraculously into beneficial cases in the history of Israel. For example, following the 1967 French arms embargo, Israel was forced to develop a domestic military industry, focusing on creating cutting-edge technology. Some of these military firms started to seek and develop civilian applications of military technology. This planted the seeds of Israel’s hi-tech corridor.
Later, during the 1980s, a failing Lavi state project turned into an unforeseen success. The Lavi was a grandiose attempt to develop an Israeli jet fighter. The project relied on the experience of Israel Aerospace Industries and US support. It attracted the best minds and resources and employed numerous engineers and fine technologists. However, the cost skyrocketed beyond Israeli means and the project was abandoned in 1987. That meant that hundreds of engineers with experience at the cutting edge of aerodynamics, avionics, computing and electronics were released into the commercial market. Did it result in unemployment and an economic crash? To the contrary, the Lavi project‘s demise has been described as one of the greatest ever boosts to the Israeli high-tech industry. It redirected the defense industry’s focus toward the creation of components, electronics, avionics and other systems that are installed in American or other platforms. It expanded the civilian high-tech industries in security, electronics, computers, software and the burgeoning Internet sectors.
Lack of Natural Resources and In-Home Market
It is well known that Israel has few natural resources and a very small local market. Therefore, Israel has always had to rely more on its relative advantages in thinking, innovation, education and on export. Relative to the size of its population, Israel has more engineers and sees more scientific articles published than any other country in the world (Israel has 135 engineers per 10,000 people; the US has 85).
Relying on export provides a further incentive to maintain technological excellence, particularly in certain niche markets, such as network security (Check Point); enterprise testing and performance management solutions (Mercury Interactive Corporation); customer relations management, billing and order management solutions (Amdocs).
Since the establishment of the State of Israel in 1948, approximately 3 million Jewish people from all over the world have made aliyah (immigrated to Israel). Currently approximately one quarter of the population and one third of the workforce is made up of foreign born residents. Though Israel has certainly faced a number of obstacles in absorbing immigrants, it gained much experience as well. The major wave of immigration from the former Soviet Union in the 1990s provided an influx of skilled scientists and engineers, which helped fuel Israel’s economic growth rate in high-tech industries.
The last decade has seen larger waves of immigration from western countries, including the United States, Canada, the UK and Australia. The helping hand of organizations such as Nefesh B’Nefesh and the Jewish Agency, which aim to guide and assist new immigrants in their immigration process, has also led to a significant rise in the levels of skilled workers, especially in the fields of research and technology.