Why Israel is Powerful? How did it become a Technology Startup Nation?

After World War II, in 1948, the Jews announced the establishment of a separate state Israel on the soil of Palestine. Jews established their country on a 5500 square miles area and fought numerous wars with Arab countries and expanded its territory gradually. Despite spending so much on these wars, Why Israel is powerful, and how has its GDP continuously increased from 1960 to 2021? As of 2021, Israel’s GDP was $481 billion which surpassed UAE, Singapore, Malaysia, and Pakistan. Moreover, area-wise it is five times smaller than Pakistan’s province Khyber Pakhtunkhawa (KPK). Moreover, its total population is a mere 9.3 million.

Despite its low population, Israel introduces new startups and new inventions every year. It is the 10th biggest arms exporter and the 8th most powerful country. How did it all happen? In this article, we will discuss all of these:

Why Israel is Powerful

1. Financial Aid

After the establishment of Israel, Jewish organizations around the whole world provided financial support to help it and gathered funds to help Israel. Between 1953 and 1966, West Germany provided $845 million to Israel to restore the damages of World War II. Besides, the US government and international financial institutions also provided financial assistance and loans on easy terms to Israel immediately after its establishment. There is no doubt that their mutual relationship is very cooperative. However, it is not the only secret of Israel’s progress, but the strategy which Israel made to make the proper use of that aid. This strategy helped Israel to make its powerful position in the world.

Also Read: Israel-Pakistan Relationship and Way Forward

2. Israel – A Start-Up Nation

A startup refers to a business that introduces a new idea or product. Due to Israel’s business-friendly policies, it is number one in the world in per capita startups. As of 2022, the total number of startups in Israel is 6000, and its population is 9.3 million. It means, in Israel, there is a new startup company for every 1500 people. Despite the low population, it is surprising to have a huge number of startups. To reach this point, they needed long-term planning which they did.

In the 1990s, when the Israeli government had the idea that due to their low population it would not be possible to market their big projects and startups in their country and implement them, they introduced a brilliant government venture capital fund called Yozma Fund. Venture capital is a type of private equity and financing that investors provide to start-up companies and businesses that are believed to have the potential for long-term growth. Under this scheme, the Israeli government offered foreign investors that the government would invest 40% in any startup if the investor is willing to do. However, if the investor wants, it can buy the remaining 40% from Israel.

For instance, if a startup costs $10 million, foreign investors will contribute $6 million and the Israeli government $4 million but after the startup becomes profitable, foreign investors can buy government shares after paying $4 million. This startup policy attracted many foreign investors and proved to be a game-changer for Israel. Between 1993 and 1996 only, foreign investors invested $250 million in the Yozma fund.

In 2021, Israeli startups broke all records and received fund of $25.6 billion in venture capital funding in only one year. It means, Israel’s per capita investment was about $28,000 in 2021 and of the US was $1000.

Some Israeli Startups

The world’s biggest startups such as website developer Wix.com, cybersecurity firm Biocatch, freelancing platform Fiverr, and agricultural solutions company Prospera, all are based in Israel. Furthermore, large American companies acquire these big startups after they become successful such as the USB maker company M Systems. Sandisk acquired this company for $1.6 billion. Similarly, Waze, an application that Israel introduced for updating real-time road traffic which helps drivers to tell them an alternative route, was obtained by Google for $1.3 billion.

There are many other international companies that bought thousands of Israeli startups for billions of dollars. Those startups were related to medicine, agriculture, technology, information technology, and defense. This purchasing became the cause of Israel’s economic progress.

Also Read: India-China Relations – The Border Dispute

3. Education & Research

In Pakistan, most people get higher education only to get high-paid jobs. Whereas Israel’s education system focuses on developing students’ practical skills. It also emboldens people should go for business rather than a job. Their projects are analyzed for value in the real world. In their universities, students do projects on practical issues like traffic management, energy crisis, water scarcity, etc.

Their high authorities review educational curricula regularly and modify them according to the needs. Asia’s top 50 universities include 3 universities in Israel. Moreover, 2 universities in Israel are included in the world’s top 100 universities. Israeli education values research and spends 5.5% of its GDP on research and development.

Today, Israel has more than 300 research centers of the world’s largest companies like Google, Apple, Intel, Facebook, and Amazon. Consequently, Israeli scientists came up with numerous innovations and unique products to solve their local needs which benefited the whole world.

4. Agriculture and Food Security

Till 1948, 60% of the land where Israel started to make its territory, was a remote area of the Negev desert which was far from the cities. Although it was uninhabited and maybe uncultivated, Israel’s founder David ben Gurion was confident that the Negev could be transformed into fertile land where the Jews can be settled and prosper. That’s why in the 1960s, Israeli scientists invented a revolutionary system of farming in the desert with the help of less water which is called the drip irrigation system. It is the most efficient system till now by saving 60% water and a 90% increase in production.

Using this technology, Israel has made a large area of the Negev cultivating. NETAFIM is an Israel-based company that sells its products related to drip irrigation in more than 110 countries around the world. It is the only country that has extra water than its needs and it also sells water to other countries.

Also Read: Reminiscence of the 2022 Year of Unexpectations

In 1969, the Israeli government also established a university in the Negev desert for research and development in agriculture. After the death of David Ben-Gurion, it was named after him and now its name is the Ben-Gurion University of the Negev. This university played an instrumental role in the development of the Negev desert. Interestingly, students from other Arab countries also study at this university. They take part in research and apply methods of development in their countries also.

Currently, Israeli companies are researching alternative proteins derived from plants instead of animals and food production using synthetic methods. They are researching cultured meat, cow-free milk, honey without bees, hybrid food, and many more.

5. Defence Strategy

Fighting war anywhere in the world requires a lot of weapons and financial resources. Therefore, instead of buying arms from other countries, Israel set up its own arms manufacturing factories on a large scale. Furthermore, Israel also did huge research in arms and defense technology and introduced the latest weapons and war technology.

In 2011, Israel developed a sophisticated air defense system called Iron Dome to prevent missiles from other countries. Its accuracy is more than 90%. Through this defense system, Israel didn’t become only self-sufficient for its war needs but also started to export its arms and technology to other counties. In 2021, Israel exported $11.3 billion worth of arms and technology to different countries. These countries include China, Europe, some Arab countries, and North America. And, these exports include rockets, missiles, drones, and air defense systems.

Defense strategy on Border

Israel also built a large-scale sophisticated system to analyze and monitor spy movement across the border. This system includes fences, sensors, surveillance cameras, facial expression reading through AI, to control microphone and camera of mobile, a call recording system, etc. Obviously, it is surveillance for Israel’s opponents. However, there is another commercial purpose for this. Israel tests spying equipment and techniques locally before selling to other countries.

This is the reason why Israel has a significant position in the global cybersecurity ecosystem and digital surveillance. It also provides other cyber security systems, hacking tools, and other defense services to many countries around the world. In Israel, for people above 18, it is mandatory to have military training. All males and females are part of the Israeli military force for more or less a time period. Thus, they become the part of Israeli reserve military force.

Moreover, service in the army inculcates decisions making and confidence-like qualities in every individual which are helpful in their practical lives. These are all the reasons why Israel is powerful. Despite difficult diplomatic situations of wars, natural resource shortages, and population shortages, the pace of Israel’s development is perhaps unparalleled.

Also Read: India-Pakistan and Nuclear Weapons


By adopting these policies, any developing country can become a consolidated and economically powerful country. Pakistan and other all countries which have not been developed yet must learn from Israel how did it manage to become so powerful. They should learn that mindset, education policies, political stability, corruption-free country, research methods, and many more. Every developing country needs to be confident in themselves to be on the path of Israel.

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