From News of the day:
Facts about the 100th smallest country, with less than 1/1000th of the world's population.Posted by David Boxenhorn at June 9, 2004 04:06 PMIn proportion to its population, Israel has the largest number of startup companies in the world. In absolute terms, Israel has the largest number of startup companies than any other country in the world, except the US (3,500 companies mostly in hi-tech).
Israel is ranked #2 in the world for VC funds right behind the US.
Israel has the highest percentage in the world of home computers per capita.
With more than 3,000 high-tech companies and start-ups, Israel has the highest concentration of hi-tech companies in the world (apart from the Silicon Valley).
The cell phone was developed in Israel by Motorola-Israel. Motorola built its largest development center worldwide in Israel.
Windows NT software was developed by Microsoft-Israel.
The Pentium MMX Chip technology was designed in Israel at Intel.
AOL's instant message program was designed by an Israeli software company.
Both Microsoft and Cisco built their only R&D facilities outside the US in Israel.
It is really quite simple. Having few natural resources, Israel is forced to export what it can produce. Not being a very large market, Israel cannot rely on it's size to produce prosperity.
Secondly, Israel's defense forces are forced to confront the most technologically advanced weapons in the world and still win wars. This creates a need for a culture that strives to maximize technical advancements and maximize R&D return on invested capital. Israeli breakthroughs in cellular communication in the 1980's became the backbone of the consumer cellular phone infrastructure of today.
Thirdly the American Jewish community has given Israel four treatures of inestimable value: the freedom of the Soviet Jews (almost one third of whom had advanced degrees of some kind) and three of the most outstanding centers of academic research in the world- the Technion, Hebrew University and the Wietzmann Institute of Science.
Put all of things together and you have a winnning formula. It also helps that people like Michael Dell, Larry Ellison, Paul Allen, Steve Ballmer, Andy Grove and other Jewish American business leaders were willing to give Israel a chance to supply the talent their companies needed to grow.