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"Israel's Technology Economy" with David Rosenberg

By Adam Cohavi

On Thursday, October 18, 2018, the Center for Israel Studies invited David Rosenberg to speak about his novel, Israel’s Technology Economy. Rosenberg refers to Israel as “the startup nation” throughout his lecture, as Israeli startups get billions of dollars in foreign investment every year. He began the lecture by telling an economic history of Israel from the Zionist idea of a Jewish socioeconomic transformation to today’s “startup nation economy.” Israel’s economy went through several major transformations from its founding all the way through the Cold War. Some were plentiful, and others were so dire that the Israeli government was forced to take reparations from Germany as a result of the Holocaust. Looking at Israel’s economic history is a great way to understand how Israel is today leading the technology industry.

The end of the Cold War changed the outlook of Israel’s economy. In 1992, Israel started doing business with China and an influx of 700,000 Soviet Jews built up the already strong Israeli human capital. New markets opened during this period of global change, which created competition and drove down prices in Israel. The most notable new product on the Israeli market was the Japanese car, which provided Israelis with a more affordable mode of transportation. This period was also the start of a deregulated telecommunication industry, which gave citizens the ability to innovate with telecommunications equipment, which many Israelis already had experience using from their time in the army. This enabled many Israelis to skip any form of higher education for communication and quickly get products on the market.

Thirty years after the end of the Cold War, Israel’s tech innovation is still thriving in the form of small electronics, usually bought out by massive United States technology giants such as Google or Intel. Today, more than 300 multinational companies have research and development centers in Israel, and Israel spends 4.5% of their annual gross domestic product on research and development, which is a massive investment superseded by few nations in the world. According to Rosenberg, Israelis have four key traits that lead to their success in the technology startup sector. First, Israeli’s culturally have a strong distaste for typical organizational hierarchical structures and rules. Second, Israeli culture consists of teamwork and group loyalty which is ingrained since elementary school and through army service: you either fail or succeed as a team, and this sets the standard for the workplace and Israeli life in general. Third, Israeli culture promotes taking risks: Israelis tend to see the payoff as more important than the risk. The fourth trait is the Israeli ability focus on any task and problem solve with creative innovation. Rosenberg concluded his lecture with this analysis and left an entranced crowd interested in learning more about Israel’s technology economy.

The event then led into a Q and A section in which the audience asked Rosenberg questions about the current Israeli economy including the topics of the Boycott, Divest, and Sanctions (BDS) movement against Israel and Israel's controversial trade relationship with China. Regarding the BDS movement, when asked if foreign companies are ignoring Israeli technology products because they are from Israel, Rosenberg responded by claiming that companies just want the best available resources, and to most of them, it does not matter where they come from, so the movement has not affected Israel’s economy. When asked about Israel's dangerous, growing relationship with China, Rosenberg explained the controversy in which Israel has been selling equipment to China that could be repurposed into military equipment, which has lead to concern from the United States, since China is a political rival of the United States and the West.

This event was particularly interesting because not only was the room full of guests but a student from the University of Washington studying Israeli innovation in relation to the Israeli Defence Forces even video called in to listen and take notes. Israel’s technology economy is becoming larger and more influential every day; it has become the Silicon Valley of the Middle East, and its story will certainly be a fascinating one to watch in the next few years.

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