By James Pethokoukis

In a region of the world where so much doesn’t work, Israel does. A few stats from a new Financial Times column by Gideon Rachman provide a good reminder of that welcome reality. From the piece:

Israel has enjoyed more than a decade of rising prosperity and relative peace. Its per capita income is now higher than that of Britain. The country’s booming tech industry boasts more than 70 unicorns (tech start-up companies valued at $1bn or more), which is about 10 percent of the global total. Venture capital is pouring into the country. Israel is also a world leader in the fight against Covid-19, vaccinating its population faster than any other country.

And it’s not as if Israel is making a bundle off its blessing of natural resources. Indeed, few countries generate less natural-resource income than Israel. So what’s its secret? For starters, it ranks 26th on the 2021 Index of Economic Freedom, just below Japan, South Korea, and Austria, and just above the Czech Republic, Norway, and Germany. By comparison, its neighbors rank far lower: Jordan, 69;, Egypt, 130;, Lebanon, 154;, and Syria, not ranked. A 2017 analysis by the World Economic Forum highlights a number of factors. For instance: Israel spends more money on research and development as a proportion of its economy than any other country. It’s also the leader in venture-capital investment per person. No surprise, then, that Israel also scores highly in terms of billionaire entrepreneurs:

I would be remiss if I didn’t mention the 2009 book Start-Up Nation: The Story of Israel’s Economic Miracle by Dan Senor and Saul Singer. Here is a bit from a Q&A with Senor:

The great irony of the Start-Up Nation story is that Israel has transformed the challenges it has faced into assets that form the cornerstones of its culture of innovation. Adversity of all kinds, such as being under attack, small, isolated, and lacking resources, have forced Israelis to be resourceful, to do more with less, to innovate, and to be global from day one. . . . A key lesson from Israel is that innovation is not just something that goes on inside companies; it comes from a wider culture that fosters both innovation and entrepreneurship. Israel is a country of immigrants — there are over 70 nationalities represented in this tiny country. . . . Immigrants are natural risk takers since they were willing to uproot themselves and start over. In particular, the great wave of immigrants from the former Soviet Union in 1990 to 2000 brought to Israel a tremendous boost in engineering talent just as the tech sector began to take off.

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