The Columbia Business School recently published an article by Sharon Kahn that surveyed Israel’s unusual status as a “hotbed of innovation and small-business growth,” which the “no milk, no honey, no money” country has cemented amidst a host of assorted challenges within its relatively short 68 year-old lifespan.
The Ira L. Rennert Speaker Series hosted Ron Prosor, former Israeli ambassador to the U.N. and current chair of International Diplomacy at the Interdisciplinary Center Herzliya. As part of a talk entitled “Startup Nation: How Israel Turned its Liabilities into Assets,” Prosor offered a blunt synopsis of Israeli’s liabilities: “We lack water. We are a country of immigrants. Our economy is small.”
According to Prosor, in spite of these significant handicaps, Israel has “managed to create an economy that ranks #1 in the number of per capita scientists and engineers in the workforce, #2 as a home of global startup hubs and research centers and #4 among all countries for patents granted.” Prosor believes the root of these achievements can be traced back to Israel’s mandatory military service, which he believes naturally unifies “the populace to tackle Israel’s problems” and helps identify “who has leadership skills” that can be applied later to civilian life.
Israel’s defense industry also continuously spurs native entrepreneurship, with 50,000 Israelis employed by nearly 150 defense companies who “generate $3.5 billion in annual revenues.”
Prosor believes Israel has three major obstacles to overcome in the foreseeable future if it wants to experience continued economic growth:
- Israel needs to focus on educating its least technologically savvy demographics, namely its Palestinian and Orthodox Jewish communities, which comprise 20-25% of the population.
- Israel should continue to maintain a business relationship with the U.S. but work to broaden trade to China, India, and Vietnam. Prosor believes “Israel can become the testing ground of how new regulation will work in an era of driverless cars.”
- The Boycott, Divestment, and Sanctions Movement, which are “meant to pressure Israel to withdraw from Palestinian territories and the Golan Heights.”