5 January 2016

What makes Israel the tech capital of the world?


Research and development is the foundation of all innovation and a key driver of economic growth. With 4.21% of GDP spent on R&D, based on figures from the Organisation for the Economic Cooperation and Development (OECD), Israel ranks first in the world, according to the World Economic Forum, in comparison to the US at 11th, and the UK at 25th.

What is the cause of Israel’s high ranking? Some, like Eliana Rubee at the Observer, have attributed this in part to the Israeli people and culture, so inextricably linked with Judaism. Ran Avrahamy, VP of marketing at AppsFlyer, gives credit to the skills Israelis learn at a young age while in mandatory army service, where they must solve complex problems quickly and with limited resources. Meanwhile Amihai Loven, the co-founder of Mantis Vision (a company that uses 3D imaging to aid with various mapping projects), describes Israel as an environment where there is “zero tolerance for work-arounds” and immense pressure to “develop something that actually works , and not just in lab environments”.

It helps that Israel is also ranked in the top 30 economies in the world to do business in, according to both the Heritage Foundation and the business magazine Forbes. Forbes credits Israel with a “technologically advanced market economy” with a “globally competitive, knowledge-based technology sector”.

In an in-depth report by the World Economic Forum, Israel is the 27th most-competitive economy in the world. Under technological readiness, which measures an economy’s ability to absorb and utilise new technologies, it is ranked fourth best in the world, and is also the fourth best place to get venture capital for a start-up. Israel scores even better on their “capacity for innovation” and “quality of scientific research institutions”, with good performances on other aspects such as the availability of scientists to tackle issues, per-capita patent applications and university-industry collaboration.

Ranked 33rd in the world in terms of economic freedom by the Heritage Foundation, Israel is praised as a “democratic and free-market bastion in the Middle East”, which has “entrenched the principles of economic freedom during its development.” Without heavy government intervention, Israel has been able to rely on its “competitive regulatory environment and well-established rule of law to attract international investment”, despite sizable government spending.

Israel is putting these funds to good use. A recent partnership between Israel and the United States will see the first ever Aviation Cyber Innovation Centre set up thanks to a joint collaboration between the University of Tel Aviv and the International Air Transport Association (IATA), the global trade association for the airline industry that represents 83% of the world’s passenger and freight traffic. The purpose of the centre, based at the university’s Blavatnik Interdisciplinary Cyber Research Centre, will be to promote research and development in areas including big-data analysis, cyber-security, authentication for security purposes, and safety and security checks relevant to the field of international flight.

The Israel-US Binational Industrial Research and Development (BIRD) Foundation will manage a new project, announced in December 2015, calling for “NextGen First Responder Technologies”.  Driven by the desire to better equip and prepare both countries’ national rescue forces, applicants can contribute ideas for developing different types of technology. One candidate for the programme is the app iOref by eViglio , an Israeli start-up. The app delivers location-based alerts and notifications in real-time to smartphones and PCs, and also has the ability to integrate with third-party apps such as Waze with the purpose of sending live traffic instructions so users can navigate to the closest safe point, facilitating rescue and evacuation efforts.

All this has contributed to the UN ranking Israel the world’s 18th most developed country. Dr Kobi Vortman, the CEO, CTO and founder of InSightec, describes Israel’s dedication to continuous research and development succinctly: “In almost anything you touch there is a chance to do something different… The way I see it and dream about it is making a huge change and helping millions of people globally.”

Wei Tien Sng is a CapX contributor.