Start-Up Nation

Radically New Ideas

Israel deliberately focuses its national assets on innovation and entrepreneurship. It has one of the highest levels of research and development of any nation and a higher concentration of engineers and scientists than any other country. A land of early adopters, Israel is the world’s top internet user and has the highest density of business start-ups: 3,850, or “one for every 1,844 Israelis.” It leads the way in technological innovation, and it excels at launching start-up businesses and building them up to Nasdaq-level. Israel has more Nasdaq-listed corporate headquarters than Europe, and it draws many international investors. Israel attracted $2 billion in venture capital in 2008, which, on a per capita basis, was akin to the investment that went to the United Kingdom, or to Germany and France combined. In 2008, venture capitalists invested 2.5 times more per capita in Israel than in the U.S.

Israel, with its 7.1 million population, is a bastion of entrepreneurship, but that was not always the case. After the United Nations vote that established the state in 1948, Israel’s neighbors attacked it and inflicted immense wartime losses. When it achieved...