I saw an interesting piece on Israeli television (IBA News in English, via satellite) claiming that Israel is the second most important technology center after Silicon Valley in California. The statistics cited were startling. The number of new technology startups in Israel is roughly 25% of the number of those in the United States. In addition, the amount of venture capital invested in Israeli technology startups is also around 25% of thet in the United States. What makes these numbers so amazing is that Israel is a tiny nation of six million people, compared to 275 million plus in the U.S. in a huge land area.
They went on to cite how ubiquitous Israeli technology is. One example: the computer I am writing on is based on an Intel Pentium CPU. The Pentium architecture was developed by Intel in Haifa. The list of examples went on and on, the upshot of which is that everyone in the world, even those in nations who hate Israel, use Israeli technology each and every day of their lives.
Based on my own experience I find the report totally believable. Israeli culture places a high value on advanced education. More Israelis have college degrees by percentage than Americans, and most middle class Israelis continue their education, a class here and a class there, througout their working lives. One thing Israel does not do is export it's high tech jobs. In the U.S. high tech hiring is expected to drop by 50% from 2003 levels this year. In contrast, in Israel, high tech is the fastest growing sector of the economy with hiring and wages surpassing all other industries.
I would argue that in outsourcing so much high tech to India and other Asian destinations the U.S. is likely to lose it's ability to produce cutting edge technology. In addition, many American innovations will end up in countries where patent law is not enforced and will be duplicated and sold at a deep discount.
Leadership in technological innovation is key to the economic future and national defense of both Israel and the United States. This is one area where the U.S. could learn a thing or two from Israel, or, more correctly, can relearn the lessons that were taught to Israel by the American example of technological innovation and entrepreneurship in the first place.