Why the Israeli Economy is Thriving while the Rest of the World is in Recession
Dan Senor and Saul Singer report on how the Israeli economy has been thriving while the rest of the world has gone in the gutter:
For all the press coverage of the Middle East, there is one side of Israel that gets scant attention: the country’s economy has the highest concentration of innovation and entrepreneurialism in the world today. For years, multinational technology companies and global investors have been beating a path to Israel. Even in 2008—a year of global economic turmoil—per capita venture investments in Israel were 2.5 times greater than in the United States, more than 30 times greater than in Europe, 80 times greater than in China, and 350 times greater than in India. And Israel still boasts the highest density of start-ups in the world (a total of 3,850 start-ups, one for every 1,844 Israelis). More Israeli companies are on NASDAQ than companies from all of Europe, China, India, Korea, and Japan combined.
In the article, they give most credit towards the IDF enlistment requirement for Israeli teenagers at the end of high school. Instead of going off to college, most Israelis go into the army where they are forced to grow up quickly Harvard, Yale and Princeton are made equivalent to the elite units in the IDF. “There is something about the DNA of Israeli innovation that is unexplainable,” Shainberg said. But he did have the beginnings of a theory. “I think it comes down to maturity. That’s because nowhere else in the world where people work in a center of technology innovation do they also have to do national service.”[snip]By the time students finish college, they’re in their mid-twenties; some already have graduate degrees, and a large number are married. “All this changes the mental ability of the individual,” Shainberg reasoned. “They’re much more mature; they’ve got more life experience. Innovation is all about finding ideas.”
They do make some good points, though I think that there are some other factors that come into play here:
- Due to the pressure of living in Israel, most Israeli kids are already more mature than their diaspora counter-parts at the end of high school
- The society here is encouraging of the macho, risk-taking personality traits that startups demand
- Secular Israelis tend to idolize all things American and Western. Early technology adoption coupled with the above factors naturally lead to more innovation.
- One can't underplay the contributions of those who have made aliyah (immigration) in the past decade from the US, Europe and other English speaking countries. This includes many new tech leaders in Israeli society.
