"The West needs innovation; Israel's got it," write Council on Foreign Relations (CFR) Adjunct Senior Fellow Dan Senor and the Jerusalem Post's Saul Singer, in Start-Up Nation: The Story of Israel's Economic Miracle, a new CFR book. They note that Israel produces more start-up companies on a per capita basis than Japan, China, India, Korea, Canada, and all of Europe, and that "after the United States, Israel has more companies listed on the NASDAQ than any other country in the world."
Senor and Singer profile several Israeli inventors, investors, and entrepreneurs to provide insight into the resilience of the country's business sector. They conclude that innovation is the reason for Israel's economic success. "Making innovation happen is a collaborative process on many levels, from the team, to the company, to the country, to the world. While many countries have mastered the process at the level of large companies, few have done so at the riskiest and most dynamic level of the process, the innovation-based start-up."
The authors examine many aspects of Israeli society—from the government and military to business—to determine why start-up companies are "prevalent and impervious to the security situation." They explore the role that Israel's military training plays in grooming young business entrepreneurs, and how the United States could similarly leverage the "leadership, teamwork, and mission-oriented skills" of those serving in the U.S. military today.
Senor and Singer also credit Israel's immigration laws for its economic achievements. "It is in large part thanks to these immigrants that Israel currently has more engineers and scientists per capita than any other country.... Jewish newcomers and their non-Jewish family members are readily granted residency, citizenship, and benefits." This open immigration policy is also responsible for the concept of an "idea factory," which includes both "generating ideas at home and taking advantage of ideas generated elsewhere," write the authors.
Based on their findings, Senor and Singer assert that the United States, and the world, have "much to learn from Israel," especially during the recovery from the recent economic downturn. "Global prosperity had rested on a speculative bubble, not on the productivity increases that economists agree are the foundation of sustainable economic growth," they write. "Israel specializes in high-growth entrepreneurship—start-ups that wind up transforming entire global industries." They argue that the Israeli economic model, based on innovation, can help the United States, in particular, "get out of its economic hole."
A Council on Foreign Relations Book