“Start-Up Nation”: Israel’s Economic Triumph

The term “start-up” is in regard to an entrepreneurial activity where a small, new business aims to either develop a new product or build a market around a new product. For example, the Israeli company Mobileye developed a new product for car safety and collision prevention, an electronic censor that alerts the driver if they are drifting or if there is another car that is too close to the vehicle. Mobileye was purchased by Intel in March 2017 for over $15 billion, another success story in Israel’s history of intellectual innovation. Israel is referred to as the “Start-up Nation,” and for a good reason, the country has had to transform their market, utilize the strengths of her people in every way, and continue reaching for the stars. The State of Israel is the world’s epicenter of technological innovation and continues to punch well above her weight, though it took a lot of courage and work to get there.

 

 

 

 

 

 

 

In 1948, the State of Israel was established. The modern-day nation-state of the Jewish people started with many entrepreneurial successes in the time of the Ottoman Empire continuing into the British Mandate of Palestine. Israel, a miracle in the desert, had to survive in the desert, Jewish Zionists saw this problem and developed a solution. Pinhus Rutenberg, a Russian Jewish engineer and businessman, saw an opportunity to progress Jewish settlement and modernity in the Land of Israel. In 1932, Rutenberg founded a hydroelectric power-plant in Naharayim on the Yarmouk River between Israel and Jordan, with the ability to provide electricity to both peoples on both sides of the Jordan River, Jewish and Arab. With British investment, this start-up project created an atmosphere of peace, if only for a short while before the First Arab-Israeli War.

Early in days of Israel’s rebirth, the country was based on the ideas of socialism, following the proceeding history in which the Jewish people were bound to strong, central communities where the only way to survive was to band together. These central communities are also known as kibbutzim, in this era Israel has much success in topics like agriculture, where the residents had to work tirelessly in the field, this would eventually pay off. The people of Israel had developed many new ways to be more efficient in the field, creating new technologies to work the fields. Since these communities only worked for themselves, they did not need extra crops to then sell in a competitive market. The model of start-up is not inherently socialist, it is a project built in an economic system of freedom and entrepreneurship. Israel’s economy for the first fifty-years was the one of banding together, not allowing the people to act individually. At the time, this model was needed for a small people to survive in a hostile region. It was in the mid-1980s that Israel began to reform her economy as a market-based system, allowing her people to use their intelligence to innovate instead of just contribute.

According to the prominent 2009 book “Start-Up Nation” by Dan Senor and Saul Singer, it examined and explained what was behind Israel’s transformation from socialist and survivalist to one whose economic growth competed with Silicon Valley in California and Wall Street in New York. In Israel’s new economy, there were two factors that helped the country break out and quickly grow into the “innovation nation” that she is today, immigration and the Israel Defense Forces. The State of Israel is country of refugees, those who really know Israel know about the abundance of culture and diversity. This is because of the masses of Jewish immigrants whom have come and added to Israel’s intellectual pool. For example, in the 1990s, Israel received a large wave of immigration from the former Soviet Union. Russian, Ukrainian and many other Soviet Jews moved from the motherland to their homeland, bringing skills and expertise in medicine, physical sciences and mathematics with them.

This new Israel had brought together the right formula to breed competition and private-sector development. The combination of Jewish immigrants whom had worked in industry and business in their previous countries, Israeli’s whom wished to innovate new products and sell them on a freer market, and Israel’s new economic reforms, brought Israel into rapid economic growth. The other factor in this equation was the Israel Defense Forces and the new skills and technology which influences and educates Israel’s younger generation. When the next soldiers come into the army, they will gain an expertise in a number of significant topics like science, technology and math. These soldiers also learn to work as a team, develop new strategies and have to create new, creative methods for life or death security issues. When these soldiers leave their posts and retire their olive-green uniforms, they will be able to take these skills into the professional world and contribute to the “innovation nation.”

While a start-up company’s aim is to create a new product or transform old systems into more efficient models, the model that Israel herself has created is the ultimate innovation, society. A society which values education, development and repairing the world breeds a creative and skilled people. Though, Israel was not always this way, the country had to reform and allow its people to succeed. Today, Israel is the start-up nation as well as the “innovation nation,” bringing new industry and technology into a world that thrives on new inventions.

Israeli Economic Statistics 2018:

  • Israel exports more than $1.3 billion worth of agricultural products every year as well as $1.2 billion worth of agricultural technology.
  • Israel punches 200 times above her weight, as 0.2% of the world, Israel received 20% of the world’s start-up investment.
  • In Israel, 1,200 start-ups are opened every year and there are 5,000 start-up businesses in the country.
  • Solar power is used for water heaters, now used in over 90% of Israeli homes.

Between 2016 and 2017, Israeli tourism rose 25%, contributing billions to Israel’s economy.