from the October 2006 issue

The Anatomy of a Hi-Techie

Much has been written about Israel's technological prowess and ingenuity. Recognition has been awarded and in the United States alone Israel has the single largest number of companies listed on Nasdaq, the stock market specializing in technology issues. Less attention has been focused on the factors responsible for this excellence. Perhaps, first and foremost, is the high level of education and an innate striving for success. Two Israelis have won the 2004 Nobel Prize for Chemistry for their ground-breaking work in cancer research. In the past four years four Israelis have been awarded Nobel Prizes.

Education is the highest Jewish value in every family. The result is that Israel has the highest ratio of university degrees to the population in the world. Moreover, twenty-four percent of Israel's workforce holds university degrees - ranking third in the industrialized world, after the United States and Holland - and 12 percent of them hold advanced degrees.

The country's institutes of higher learning have gained international standing. The Weitzman Institute of Science has been voted the best university in the world for life scientists, to conduct research. Scientific studies are in the forefront and as a result Israel produces more scientific papers per capita than any other nation by a large margin - 109 per 10,000 people - as well as one of the highest per capita rates of patents filed.

Israel has compulsory army service.  Every youngster, at the age of 18, enters the army for three years. The army has served as a front-runner in conceptualizing and developing state-of-the-art weapons systems. Its technological and research departments have contributed enormously to providing cutting-edge technology whose use is far wider than state-of-the-art weapons systems. Such units have made world-class breakthroughs in ballistic missile technology, electro-optics and other fields. Soldiers from these units are highly sought after in the hi-tech world, and have gone on to adapt their experience from these units to use in household PCs, internet portals, wireless communication and even in cancer research. The Government of Israel has taken a strong stance in the financial support of young technological enterprises.

The R&D Fund is the main support channel of the OCS, in terms of budget, and it is open to all Israeli registered firms wishing to engage in technological research and development. The proposals are screened by technological evaluators, the final approval being that of the Research Committee, chaired by the Chief Scientist. The annual budget of $300 million is spent on about 1,000 projects being undertaken by 500 companies. In order to attract foreign investments the Government has created the Law for the Investment of Foreign Capital. The key of the law is an outright 18% cash grant of capital invested. As a result companies such as Intel, IBM and Motorola have set up shop in Israel and employ thousands of workers.

63 Israeli start-ups were acquired by Israeli or foreign companies last year for an aggregate $2.75 billion.  332 start-ups were founded and 204 closed down in 2005, and Israel had 2,622 start-up operating at the end of the year.

Finally, salaries in high-tech companies are considerably higher than those of paid in other professions.

We take this opportunity to wish our subscribers and the many visitors to our web site a Happy, Healthy, Prosperous and Peaceful New Year.

Reprinted from the Israel High-Tech & Investment Report October 2006

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