The key success of the Israeli economy worldwide


Vardina Hilloo


Israel, a country relatively poor in natural resources, depends on knowledge, entrepreneurial spirit,
resourcefulness and strives for excellence to secure its independence and economic development.
In addition to functioning successfully to curb security risks and threats to her existence, these factors
combine to convert the Israeli economy into the knowledge-rich and very hi-tech economy, which Israel
has become famous for. It is through cutting edge innovations in fields ranging from healthcare,
agricultural technology and cleantech to digital printing, communication and computers that Israeli technology
has made a lasting mark on the world. Examples of such Israeli innovations are those that lay the foundations
of modern cellphone technology, USB flash drives (also known as disk-on-key), instant messaging systems,
drip irrigation, voice over i.p., digital printing and cherry tomatoes. Medical technologies is a particular case in
point, as it is estimated that about a third of all the ground-breaking medical technologies originate in Israel.

Beni Landa

The Israeli defense establishment, including defense oriented industries, such as the Israeli Aircraft
Industries (IAI) or Rafael Armament Authority, and the military, in particular the large intelligence unit
known as "8200" and the army's computer unit known as "Mamram",  attracted and continue to attract a
considerable amount of fresh talent in Israel, recruited for providing solutions to various military and
defense needs. It is not surprising that the young and very talented individuals that eventually emerge
out of such military units, are eager to utilize their skills in the business setup; with physicists, engineers
and other research scientists emerging out of defense-oriented industries, finding their way eventually
into technology-based ventures, founded by them or by peers, that have a civil and non-military focus.
It turns out that many of the innovations and technology disciplines that work successfully in solving avionic,
missile-targeting, reconnaissance and intelligence, to name but a few, may be successfully applied
to civil uses, for example, medical device innovations. 

The knowledge, entrepreneurship, resourcefulness and strive for excellence, which were key factors in
securing the competitive edge and hence the success of the Israeli economy, find their roots in education
and the strong academic sector, which has always enjoyed a very high priority in Jewish and Israeli tradition.
Unfortunately, however, the gradual decline in the quality of the Israeli education system, seen in recent
years may influence the ability of the Israeli economy to keep ahead and advance.  

The Israeli economy has so far been unsuccessful in converting such innovations into global corporations
that manufacture and market their products. And indeed, Israeli ventures traditionally rely on partnerships
for development, industrialization and marketing of the products and technologies they developed.
Such partnerships may be in the form of mergers or acquisitions, joint ventures, licensing deals and others. 

While traditionally the sought-after partners were US and European corporations, in the recent decade
the warming of Israeli-Chinese business relations, opened the gate to the Chinese market and Chinese
business community, for Israeli innovators. Motivated, among others, by the government policy aimed
at converting China into a knowledge- and intellectual property-based economy, China is undergoing
a dramatic change where innovation and technology have become the key economic players.
This includes opening new innovation and industrialization hubs, granting economic incentives'
for innovative ventures, and others. 

Israeli innovators are highly resourceful in their ability to identify needs and innovate to fulfill such needs.
However, they are less proficient in up-scaling manufacture, industrialization and marketing.
Technology-based partnership (of various kinds) between Chinese corporations and Israeli,
technology-based ventures can fill these gaps for Israeli ventures, provide Chinese corporations with
access to new innovations and make use of many economic incentives available in China.
The growing interest in both countries in the creation of such partnerships will undoubtedly
yield a dramatic growth of trade and flow of finances between the two countries, for the benefit of both.


9 November 2016