Григорий Громов (abcdefgh) wrote,
Григорий Громов

High-Tech Wealth Shows Israel Is More Than Politics

AMSTERDAM (Reuters) - After the success of Silicon Valley in the 1990s, few countries have managed to repeat the mix of education, innovation and investment to create new wealth, and Israel is one of them, a new book said on Tuesday.

A country of just 6.8 million people best known for its conflict with the Palestinians, Israel has managed to create billions of euros of wealth through new products and services, said Douglas Davis, who with his wife Helen wrote "Israel in the World: Changing Lives Through Innovation."

Israeli researchers in recent years have developed instant messaging on the Internet, wireless computing chips for Intel, miniature video camera capsules to examine internal organs, filters and tubes for veins to prevent heart attacks and strokes, security software and new cancer treatments.

The book, to be launched in London this week, covers dozens of examples and explains the success by a potent mix of education and risk capital.

It may provide lessons to other nations looking to better cope with mass immigration and increased competition from lower wage countries -- Israel's population has grown ten-fold in less than six decades due to high birth rates and immigration.

High-tech exports from Israel amounted to $26 billion in 2000, making up 57 percent of total exports, up from 23 percent in the early 1990s. Risk capital available to new companies is the highest in the world, with a whopping 5 percent of gross domestic product devoted to research and development.


Research is done by graduates from universities heavily geared toward sciences and medicine, producing 135 engineers per 1,000 citizens, compared with 85 in the United States. Scientists also publish more in journals than anywhere else.

"The groundwork ... was laid by Israel's founders who understood that Israel had virtually no raw materials and recognized at an early stage ... the urgent need to develop Israel's natural 'brain' resources," said Davis, who writes for the English-language Jerusalem Post.

"There are more university students, proportionally, than anywhere else," he added.

Individual entrepreneurs in the book offer explanations of their own, such as the intimacy of a small population, the international connections of a people coming from all corners of the planet and the no-nonsense "settler's" mentality -- many of these characteristics can also be found in Silicon Valley.

The book notes, however, that Israel has not produced more big multinational companies. Major innovators, such as instant messaging firm ICQ, were sold off before a larger company was built.

Even the few bigger companies, such as security software company Check Point, generic drug maker Teva Pharmaceutical Industries and TV technology company NDS, are not household names.

"Maybe Israel is too young. It doesn't have a culture to build huge companies," Davis said, adding that local entrepreneurs may also prefer the quick gain rather than the arduous process of building and expanding a corporation.

By Lucas van Grinsven, European Technology Correspondent. © Reuters 2005.

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