Start-Up Nation: The Story of Israel's Economic Miracle
By Dan Senor and Saul Singer | Twelve Books | $26.99; 320 pages

The following is an excerpt from the book

It is by now well known in the tech world that global companies and investors are beating a path to Israel. Indeed, even in 2008 - a year of global economic turmoil - per capita venture investments in Israel were 2.5 times greater than in the United States, more than 30 times greater than in Europe, 80 times greater than in China, and 350 times greater than in India. And Israel still boasts the highest density of start-ups in the world (a total of 3,850 start-ups, one for every 1,844 Israelis).

It may be less well known that Israel's economy and government policies cultivate a unique entrepreneurialism through its universal military training, innovative approach to immigration, and disproportionate research and development spending (Israel is the world leader in the percentage of the economy that is spent on R&D).

But less well known is how the Arab world's concerted campaign of isolation has actually been an important ingredient for success, too. The economic effects of this isolation can be found in places like La Paz, Bolivia.

THE ELEVATION of La Paz is 11,220 feet and El Lobo is one floor higher. El Lobo is a restaurant, hostel, social club, and the only source of Israeli food in town. It is run by its founders, Dorit Moralli and her husband, Eli, both from Israel.

Almost every Israeli trekker in Bolivia is likely to come through El Lobo, but not just to get food that tastes like it's from home, to speak Hebrew, and to meet other Israelis. They know they will find something else there, something even more valuable: the Book. Though spoken of in the singular, the Book is not one book but an amorphous and evolving collection of journals, dispersed throughout some of the most remote locations in the world. Each journal is a handwritten "Bible" of advice from one traveler to another. And while the Book is no longer exclusively Israeli, its authors and readers tend to be from Israel.

El Lobo's incarnation of the Book was created in 1986, just one month after her restaurant opened. Four Israeli backpackers came in and asked, "Where's the Book?" When she looked mystified, they explained that they meant a book where people could leave recommendations and warnings for other travelers. They went out and bought a blank journal and donated it to the restaurant, complete with the first entry, in Hebrew, about a remote jungle town they thought other Israelis might like.

The Book predated the Internet - it actually started in Israel in the 1970s - but even in today's world of blogs, chat rooms, and instant messaging, this primitive, paper-and-pen-based institution is still going strong. El Lobo has become a regional Book hub, with six volumes: a successor to the original Book started in 1989, along with separate Books for Brazil, Chile, Argentina, Peru, and the northern part of South America. There are other Books stationed throughout Asia. While the original was written only in Hebrew, today's Books are written in a wide array of languages.

"The polyglot entries were random, frustrating, and beautiful, a carnival of ideas, pleas, boasts, and obsolete phone numbers," Outside Magazine reported in an article in 2005. But how is it that travelers from a country as small as Israel have become so dominant in the trekking scene in so many parts of the world?

A well-known joke about Israeli travelers applies equally well in Nepal, Thailand, India, Vietnam, Peru, Bolivia, or Ecuador. A hotelkeeper sees a guest present an Israeli passport and asks, "By the way, how many are you?" When the young Israeli answers, "Seven million," the hotelkeeper presses, "And how many are still back in Israel?" It is hardly surprising that people in many countries think that Israel must be about as big and populous as China, judging from the number of Israelis that come through. "More than any other nationality," says Outside, "[Israelis] have absorbed the ethic of global tramping with ferocity: Go far, stay long, see deep." Israeli wanderlust is not only about seeing the world; its sources are deeper. One is simply the need for release after years of confining army service.

But it's more than just the army. After all, these young Israelis probably don't run into many veterans from other armies, as military service alone does not induce their foreign peers to travel. There is another psychological factor at work - a reaction to physical and diplomatic isolation. "There is a sense of a mental prison living here, surrounded by enemies," says Yair Qedar, editor of the Israeli travel magazine Masa Acher. "When the sky opens, you get out." Until recently, Israelis could not travel to a single neighboring country, though Beirut, Damascus, Amman, and Cairo are all less than a day's drive from Israel. Peace treaties with Egypt and Jordan have not changed this much, though many curious Israelis have now visited these countries. In any event, this slight opening has not dampened the urge to break out of the straitjacket that has been a part of Israel's modern history from the beginning - from before the beginning.

Long before there was a State of Israel, there was already isolation. An early economic boycott can be traced back to 1891, when local Arabs asked Palestine's Ottoman rulers to block Jewish immigration and land sales. In 1922, the Fifth Palestine Arab Congress called for the boycott of all Jewish businesses.

The official Arab League boycott of "products of Jewish industry in Palestine" was launched in 1943, five years before Israel's founding. This ban eventually extended to foreign companies from any country that bought from or sold to Israel (the "secondary" boycott), and even to companies that traded with these blacklisted companies (the "tertiary" boycott).

Until the mid-1990s, almost all the major Japanese and Korean car manufacturers - including Honda, Toyota, Mazda, and Mitsubishi - complied with the secondary boycott, and their products could not be found on Israeli roads. A notable exception was Subaru, which for a long time had the Israeli market nearly to itself but was barred from selling in the Arab world.