Innovation as a major driver of the economic growth - Israeli case in point

I often catch myself thinking about books that express my own thoughts particularly well - I tell myself that I could’ve written it myself if I only knew how to write so well grin. The author of the new book, Start-up Nation: The Story of Israel’s Economic Miracle Dan Senor did just that. 
 
The subject matter is very near and dear to me because I was a part of 1 million strong immigration to Israel from the former USSR that gave a great push to this innovation wave. The facts discussed in the book have long been circulating in the Israeli community as a  major source of pride. A small country with a size and population of my state of Massachusetts has:
 
  • The highest concentration of startups in the world
  • The highest amount of VC investments per capita than any other country
  • More NASDAQ listed companies than any country besides the US, more than all of Europe, India, China and Japan combined
  • Economy barely hit by global economic crisis
 
This side of Israeli reality typically is not very familiar to most of our readers. The answer to the question of how such a small country with limited resources could achieve this  lies in the Israeli approach to fostering innovation.  And at the time of economic downturn this is a very relevant discussion.
Let’s review some of the points made in the book that are close to my personal experience.
 
  • Israeli immigration and assimilation policies bring and support a highly motivated, diversified pool of talent into the country. I can personally attest to this one. I was one of many thousands of people integrated into technology incubators funded by the Israeli government. Funding was made available to get your idea from the initial stage to a prototype or a actual product. The incubator was than helping in obtaining the next round of funding from the large VC community tuned to the ideas being developed.
     
  • Israel spends more as a percentage of its economy on R&D than any other country in the world and knows how to make that money relevant to startups. A lot of it has also has to with the amount of highly educated talent available for hire. I witnessed Microsoft, Cisco, Intel , Vishay and many others opening R&D facilities in all parts of the country. The government provided substantial grants in the form of tax incentives geared towards foreign investment in the country. This investment also led to a string of acquisitions by the world largest hi tech giants and allowed for this capital to be reinvested into the economy.
You can listen to Dan Sinor interviews on NBC’s Squawk Box, Morning Joe and Meet the Press. This story is another proof that investment into education and infrastructure and the right government policies to boost innovation play key part in the economic development even under most problematic of circumstances.
 
Valery Zelixon
Comments: 0; Published: November 20, 2009; Permalink
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