Want Innovation? Study Israel

Why Israel?

Israel has evolved from a primarily agricultural economy to an enterprising technology innovator and producer. Home-grown entrepreneurship, effective government support and venture capital have combined to make Israel a research and development hub, with local industry complementing the approximately 220 R&D centers of multinational corporations, including Alcatel, Deutsche Telecom, Cisco, Google, HP, Merck, Microsoft, IBM, Intel. These global companies bring to Israel international standards for quality and service, and serve as training grounds for some of Israel’s top technological and managerial talent.

Israel spends 4.5% of its GDP on R&D, more than any country in the world. It has over 3,800 technology-based startup companies – more than any other country other than the US . Israel ranks second in the world in technology companies listed on NASDAQ, after the US, with over 70 companies per Israel’s population of seven million people. Venture capital funds worldwide have invested 2.5 times more funds in Israeli start-ups than in US-based ones.

With the world’s highest percentage of engineers and scientists in the workforce, Israel records the fifth highest number of patent filings per capita and leads the world in patents for medical equipment. In recent years, six Israeli scientists were awarded the Nobel Prize. The country is ranked third in the world in terms of quality of scientific research institutions, and first in total public expenditure on education as a percentage of GDP.

Israeli home-grown technological breakthroughs include ICQ, which pioneered and popularized instant messaging; flash memory and the USB memory stick from MSystems (bought by SanDisk); CheckPoint, which invented the Internet Firewall; IP Telephony by VocalTec; ZIP compression technology by a pair of professors at the Technion, Israel’s Technology Institute; and the ingestible camera from Given Imaging.

The Israeli government played an instrumental role in nurturing this environment. Israel’s high-tech would not have gotten off the ground were it not for its enlightened government policies. Policy makers determined that the future of the country’s economy lay in knowledge-based industries and that the necessary R&D would be fraught with risk.

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