Israel became a high-tech hothouse because she had to. True, she enjoys favorable conditions for the growth of high-tech industries; chief among them, well-educated, inventive, enterprising people. Relative to the size of her population, Israel has more engineers, and sees more scientific articles published, than any other country in the world (Israel has 135 engineers per 10,000 people; the US has 85). However, the stimulus for the industry's growth has been national survival, both military and economic.
David among Goliaths
Israel fought the 1967 Six Day War largely with French weaponry. When President de Gaulle imposed an arms embargo after that war, Israel turned to the United States, and to herself. The commercial consequences can be seen today. Blades Technology, for example, a company originally set up to manufacture engine parts for the Israel Air Force's Mirage aircraft, now has annual sales of $90 million, and joint ventures with Pratt & Whitney and Rolls Royce.
In the 1973 Yom Kippur War, Israel was surprised by the technological capabilities of her enemies, and also experienced difficulty in obtaining vital material from her foreign suppliers, spurring efforts for technological supremacy and self-sufficiency. The Kfir jet fighter, based on the French mirage, was one of the first large-scale projects in this effort.
As a small country in a hostile neighborhood, Israel must strive to maintain a qualitative military edge over her potential enemies. Experience in a series of wars has taught Israel that she needs to develop that edge independently as far as she can. In large part, Israel's high-tech industries are a spin-off from that process.