In the 1990s, Israel emerged as a leading center for technology start-ups and innovation. In 2000, near the peak of the high-tech boom, Israel had 4000 high-tech firms and new ones were forming at the rate of about 500 start-ups per year.
Today, out of the 101 companies trading on NASDAQ; 63 of them are registered in Israel; a stunning number indeed for a country with a population of only seven million people, the size of Rhode Island and the population of New Jersey.
And the story doesn’t stop here.
The Israeli high-tech industry boasts today 43 of the 50 leading technology giants in the world; all with cutting-edge R&D centers. Scientific American’s list of ’50 Research Leaders’ include three Israeli scientists.
Notwithstanding the fact that S&P credit rating for Israel is still AA – amid a still shaky global environment – , four Israelis have been awarded the Nobel Prize and Israel tech investments have produced consistent and significant returns which only continue to climb.
So the question is: What makes Israeli technology companies so unique?
One argument is that the country’s small size forces Israeli companies into creating a global operational platform at a very early stage. The benefit is the consequence of a lack of a large local market. Many companies in countries with large domestic markets have been unable to overcome the hurdles to globalization.
India for instance, has a thriving technology industry that is making huge and not always successful efforts to evolve beyond technological services to product-based models. Brazil is another example.
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