The Story of Israel’s Economic Miracle
In Israel it is all about innovation and entrepreneurship, the formula for a successful start-up. With more start-ups per capita than any other country, Israel is the world leader in this sector, having only Silicon Valley above it in the levels of innovation. This tiny country, whose name doesn’t even fit within its borders on most world maps, is also home to the highest number of engineers per capita and boasts the world’s second-highest research and development expenditure rate.
Apart from forming educated and talented individuals, Israel enjoys an unusual richness of risk capital, ranking second in the world for venture capital availability. This boost in investors was created due the resent establishments of hundreds of local research and development centres founded by multinational corporations such as Google, Facebook, Amazon and other monopolies, which seek to benefit from the innovative nature Israel is generating.
” With more start-ups, per capita than any other country, Israel is the world leader in this sector.”
In the past decade, Israel has established life changing technologies in its innovative ecosystem to form a sustainable scaled economy for the benefit of its people. The main philosophy the Israelis use the well-known “exit culture”, where entrepreneurs begin to work with a target of being bought by a larger international company rather than be an industry-leading one. The financial value of Israeli high-tech operations over the past decade amounted to over US$70 billion, which is equivalent to nearly 20% of the country’s annual GDP. According to the Israeli, this tremendous amount of transactions is exactly what attracts multinational corporations to open and expand their Research and Development centres.
One of Israel’s most famous entrepreneurship incubators is the “Authority Incubators Program”. Here, 18 government funded incubators award millions of dollars to winning start-ups. The program is run by private investors who complete the opportunity to manage these new businesses and access the rich flow of early-safe innovations, helping the entrepreneurs with their experience and financial support. Although this benefits the start-ups, one might argue that it’s downside is the limitation it withholds, from becoming a market player without the strategic investor.
“Israel is on a great path to becoming a Scale-up nation from a Start-up nation, using its innovations and talent to upgrade its economic status.”
Israel is on a great path to becoming a scale-up nation from a start-up nation, using its innovations and talent to upgrade its economic status. As Warren Buffet, an American investor put it, “If you’re going to the Middle East to look for oil, you can skip Israel. If you’re looking for brains, look no further. Israel has shown that it has a disproportionate amount of brains and energy.”
By: Mina Vučić
