Israel’s competitive advantage is
not technology, it is creativity
Dr. Reuven Reuveni - IsraelFebruary 15, 2014
Based on Global Innovation Ranking
derived from WEF (World
Economic Forum) Executive Opinion survey, Israel is located in the honorable
place – 6 among 139 countries, as has recently published in the prestigious Financial Times magazine
This industry has transformed the national economy as well as the entire
Israeli society via creating new wealth, a new class of entrepreneurs and a new
role model for the young.
“For thousands of years, a Jewish
mother wanted her son to become a doctor,” says Yossi Vardi, the man who founded the country’s
first software company in 1969 and is considered as the Israel’s original high-tech pioneer. “Now, in Israel, she wants him to
become the founder of a start-up.”
Haim Shani, the director-general at the ministry of finance says it is of “extreme strategic
importance to the economy” . It is certainly due to 11 per cent to 15 per
cent of national output and 14 per cent of the private sector labor force. Less tangible but no less important, it is also a source of considerable international
prestige: at
a time when Israel often finds itself isolated on the diplomatic front, the
high-tech
sector stands out as a universally admired national asset.
Israel today consistently finds
itself at the top, or very near the top, of rankings measuring the number of
start-ups, patents, venture capital investment and technology listings. During the last 15 years, the
country has rebranded itself, in the title of a recent bestseller, as the “start-up nation” – cranking out ideas, patents, products and companies at a blistering pace. Only Taiwan, Japan and the US register more patents per head than Israel.
Analysts agree that many of the ingredients for the high-tech revolution were in place well before the first venture capital fund
appeared in the early 1990s. The country had, for example, long boasted a
highly educated population as well as strong universities and research
institutions.
Certainly these were the main power to push Israel firmly towards creating
a “knowledge economy” long before the term existed.
In spite of the recent concern over European and American sovereign debt
may yet there are signs of improvement though. Recent data published by the Israel Venture Capital Research Center show the country’s high-tech sector raised more than $1bn in capital in the first half of the year,
an increase of 82 per cent compared with the same period in 2010. The number of companies obtaining funds was the highest in at least five
years.
And more importantly, the sector is once again managing to secure
profitable exits: MediaMind, the Israeli digital
advertising company, was bought by a US rival for $517m in June. Last month, Dotomi, another Israeli
advertising business, was snapped up by another American group for $275m. Deals such as these should go at least some way towards assuaging investor
concern – and help persuade them to keep on funding.
Moreover, there is no sign that the
homegrown high-tech industry is missing any boats – as recent deals show
that groups such as Facebook (which this year acquired its first Israeli company) have as much interest in the country’s start-ups today as Intel and Cisco did more than a decade ago, when the first wave of Israeli start-ups was snapped up. As Mr. Shani confidently summarized
that “the world will still need solutions that Israel can
provide.”
In summary, Erel Margalit, who now serves as
chairman of a $900m fund and a well-known advocate of Israel’s high-tech industry, indicates that Israel's high-tech boom was always based on more than clever algorithms and nifty chip design.
“People misread
Israel’s competitive advantage,” he says. “Israel’s
competitive advantage is not technology, it is creativity
Based on article entitled: Israel: Invention tension
By Tobias Buck, published in Financial
Times magazine
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