Israel: a start-up country
Recently published data from the Israel Innovation Authority shows that the country is a "start-up nation". US research firm Startup Genome ranked Tel Aviv seventh in its annual survey of the world's best start-up ecosystems.
Israel: a start-up country
2T2C: Talent, Technology, Capital, Cognition

Israel: a start-up country

Dome of the Rock, Jerusalem (Photo: iStock)
Meszár Tárik 20/03/2023 16:00

Recently published data from the Israel Innovation Authority shows that the country is a "start-up nation". US research firm Startup Genome ranked Tel Aviv seventh in its annual survey of the world's best start-up ecosystems.

Among the reasons for start-ups to move to Tel Aviv are tax incentives and preferences for individual investors. Israel's Ministry of Economy also offers wage subsidies for certain groups, such as students and minorities.

Israel's high technology has contributed strongly to the development of the Israeli economy. Employees in high-tech companies account for more than 10 per cent of all employees and pay 25 per cent of total income tax.

High-tech accounts for more than 50 per cent of Israeli exports. According to World Bank data, between 2009 and 2021, Israel's GDP per capita grew from USD 28317 to USD 52170, exceeding the GDP per capita of Germany, Hong Kong, New Zealand, the UK, France, Japan, Spain and many other countries.

Israel's unique society and culture, strong economy, government support and "global-first" market approach are just some of the factors that make Israel's innovation ecosystem one of the most successful in the world. According to Deloitte, other important characteristics of the Israeli ecosystem include innovation, a strong R&D capacity, skilled workforce, government support and the investment law which allows foreign companies to receive preferential corporate tax rates and investment aid.
Photo: iStock
For the first time in Israel's history, high-tech exports accounted for more than 50 per cent of the country's exports in 2021, while more than 10 percent of all Israelis are currently employed in high-tech industries. The Israel Innovation Authority reports that Israel is the global leader in the percentage of citizens working in high-tech, with 362,000 people employed in the industry. By comparison, the percentage of people working in high tech is 9.2 per cent in Ireland, 5.7 per cent in Sweden and 5.5 per cent in the UK.

One third of Israeli high tech companies, employing 25 per cent of the industry's workforce, are located in Tel Aviv. Jerusalem is mostly home to medium and small high-tech firms, while Haifa is home to mainly large multinational companies. Experts say that the expansion of high-tech industry is in the national, social and business interest. The development of smart industry - not only in the central cities - will promote the State of Israel, strengthen its financial position and place it alongside the world's leading countries.

The unfavourable economic environment caused by the Russo-Ukrainian war has had a negative impact on the world of Israeli start-ups, with investment in Israeli start-ups falling by 36 per cent in the third quarter of 2022 compared to the previous quarter. However, experts say that growth-stage companies have sufficient resources to get through this critical period, which has cast a shadow over all aspects of life.
The author is a researcher at the Eurasia Center of John von Neumann University.

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