Why the global tech sector should follow Israel’s lead

Israel’s success as an innovator is also reflected by its global standings in various high-tech industries, especially those closely associated with the defense industry.

By GARY SHAPIRO
THE TEL AVIV skyline (photo credit: REUTERS)
THE TEL AVIV skyline
(photo credit: REUTERS)
Living under the constant threat of conflict has produced a remarkable determination within the people of Israel. This will to succeed – indeed thrive – along with Israel’s high percentage of immigrants, phenomenal educational system and can-do entrepreneurial spirit are key reasons for the country’s success in a number of areas, including as an incubator of technology and innovation.
And other nations should follow Israel’s lead in creating a business environment that encourages and fosters entrepreneurship.
The country is home to the most startups per capita in the world and second only to China in foreign companies traded on NASDAQ. The world’s top technology companies have helped justify Israel’s reputation as a “start-up nation.”
Amazon, Apple, Cisco, Google and Microsoft are just some of the tech titans that now house research and development facilities in Israel.
According to the Organization for Economic Cooperation and Development, Israel is the fourth-best target for foreign investment among its 34 member countries, with more than $1.8 billion in direct investment from the US alone in 2012. Even during this summer’s conflict in Gaza, Israel’s tech sector moved forward as four Israeli companies went public. The most successful of them, driver-assistance technology company Mobileye, raised $890 million last month – the biggest IPO ever for an Israeli company in the United States.
At the center of Israel’s innovation economy is Tel Aviv, a tech hub seen as second only to Silicon Valley in terms of its start-up ecosystem. This week, the city hosts Israel’s largest international high-tech gathering, the DLD Tel Aviv Innovation Festival. The week-long series of events showcases the latest in startup technology, attracting about 2,500 attendees from across the globe.
While the world takes note of Israel’s innovators, the country itself is a well-connected society with a distinct passion for technology. Last year, the Consumer Electronics Association (CEA)® conducted research across 13 countries, and Israelis proved to be among the world’s biggest tech enthusiasts. Israel’s consumers ranked first for both individual spending on consumer electronics (CE) and household spending on CE. Further proof of their profound appetite for technology: at the time of the research, almost half (46 percent) of Israelis owned tablets, which exceeded the rate of US tablet ownership.
Additionally, CEA research showed Israelis are very optimistic about their country’s tech future. Israel had the highest portion of citizens – 90% – who said that high-tech companies thrive in their country. And 91% agreed the consumer technology devices they own give them access to information when and where they need it. Both responses are a strong indication that Israel will be a global leader as we move toward more widespread adoption of the Internet of Things.
Another indicator of the country’s intent to remain at the cutting edge of the digital experience is its representation at the International CES®, the gathering place for all who thrive on the business of consumer technologies. More and more Israelis are coming to the Las Vegas event – last year, attendance from Israel jumped almost 30 percent. And Israeli companies such as Celeno, Comigo, INUITIVE, Jinni and Magnacom came to the 2014 CES to introduce their products at the world’s proving ground for innovators and breakthrough technologies.
Given the country’s status as one of the world leaders in availability for qualified scientists and engineers, Israel’s influence on global consumer technology will only continue to grow.
Israel’s success as an innovator is also reflected by its global standings in various high-tech industries, especially those closely associated with the defense industry. A study published last month shows Israel as the world leader in several tech development and export categories such as military systems, satellites and cyber products.
The Israeli government takes great interest in growing its economy, especially in the tech sector. Through Matimop, Israel’s Industry Center for R&D, the country’s Economy and Trade Ministry runs a network of 29 bilateral agreements with several countries. Israel is also a top education center, offering seven research universities encouraged by the government to develop commercially viable research.
Israel’s tech industry is a shining example of how a government and business sector can work together to encourage growth. The fact that the country is so successful at attracting foreign investment, despite the region’s instability, indicates just how strongly much of the rest of the world values and embraces Israel’s innovative edge.
The author is president and CEO of the Consumer Electronics Association (CEA)®, the US trade association representing more than 2,000 consumer electronics companies, and author of the New York Times best-selling books, Ninja Innovation: The Ten Killer Strategies of the World’s Most Successful Businesses and The Comeback: How Innovation Will Restore the American Dream. His views are his own. Connect with him on Twitter: @GaryShapiro.