Why is Israel the worlds second largest silicon valley? | ABC radio
For a country of 8 million people, with all the issues and concerns going on around it, it’s difficult to fathom why a country like Israel looms so large in the technology space and carries the title of the world’s second largest silicon valley.
Tim Holt of ABC radio South East NSW was keen to explore this further and we chatted about some of the underlying structures that may have contributed to this including the Governments willingness to spend 4% of its GDP on Research and Development (Australia spends approx 2.4%) and back innovation as a key economic stimulus.
We explored the world of digitisation, the notion that everybody and soon everything would be discoverable with the ability to connect to each other and our belongings.
Very soon waking up in the morning will trigger a cascade of routine activities to occur in your home from heating to opening blinds, to showers turning on to breakfast being started and then on into the car and through your day, each activity being analysed to ensure that all that you want to do and have to do can be done and suggesting and making adjustments for you as in advance of you even knowing you need it.
Evidence of this was clearly demonstrated at the Consumer Electronic Show earlier this year and we chatted about Samsung’s desire to own this new frontier and their demonstration of it.
Our chat then turned back to Israel to look at new technologies like Waze that has not only changed the way they drive, but anecdotally changed their motoring habits and along the way picked up a cool $1 billion from Google which as of this morning has announced that Waze will now be preloaded on all new android devices.
We also took a quick tour through Bar Ilan University to meet with some fellow futurist and to try on Occulus Rift virtual glasses allowing me to soar above the desserts and dive into the oceans all from the comfort of my university arm chair.
We finished our chat by asking the perennial question: “why can’t we do this in Australia?”
My answer is always the same – we do and we are, but there isn’t the funding, interest or apolitical backing to see us truly take advantage of the brilliant minds and innovations we have in Australia.
Let’s turn this around and collectively demand that innovation receives more funding, more kudos and greater importance, if Israel can land $16.4 billion of tech sales last years imagine what Australia can do!
Have a listen now (20 minutes) and then share your thoughts…
Frequently Asked Questions
Q: What structural factors explain Israel’s disproportionate technology innovation output?
The structural factors most consistently identified as drivers of Israel’s innovation ecosystem include: the mandatory military service system that gives large proportions of the population early exposure to advanced technology, complex problem-solving under pressure, and high-trust small-team operating environments — skills directly transferable to startup contexts; the culture of direct challenge and debate (encapsulated in the ‘chutzpah’ concept) that is conducive to the questioning of established assumptions required for genuine innovation; the forced diaspora connections that create global networks from the beginning rather than requiring internationalisation as a secondary step; the significant defence and intelligence technology investment that creates a research and development base with commercial applications; and the immigration of technically skilled populations from the former Soviet Union that significantly expanded the talent pool in the 1990s.
Q: What does the Israeli innovation ecosystem reveal about what governments and regions can do to develop their own innovation capacity?
The Israeli example reveals both encouraging and sobering lessons for governments and regions seeking to develop innovation capacity: the encouraging lesson is that structural conditions matter — the combination of skilled talent, cultural risk tolerance, global networks, and research investment is not accidental but the product of deliberate policy choices over decades; the sobering lesson is that many of the most important structural conditions (military service culture, diaspora networks, immigration-driven talent concentration) are not replicable by policy decision in a short timeframe. The most actionable lessons for other regions are: the importance of early exposure to complex problem-solving and technology for broad populations (not just self-selected STEM students); the value of building global connections into innovation infrastructure from the beginning rather than treating internationalisation as a later stage; and the importance of risk-tolerant capital and failure-accepting culture, which can be influenced by policy but cannot be mandated.
Q: How does the Israeli technology model connect to the broader question of what Australia needs to develop its own innovation ecosystem?
Australia shares some structural advantages with Israel — a highly educated population, strong international connections, and significant research infrastructure — but faces different structural challenges: geographic distance from major technology markets; a dominant economic model built on resources and services rather than technology manufacturing; a relatively small domestic market that limits organic scaling; and a risk tolerance and failure acceptance culture that is still developing relative to the most productive innovation environments. The signals from Australia’s technology ecosystem since 2015 have been more encouraging than many expected — the growth of Australian-founded technology companies with global scale is a genuine capability signal. The gap remains in the depth of the talent pipeline and the scale of early-stage risk capital relative to the opportunity.
Q: How can I book Morris Misel for a innovation ecosystems, national competitiveness, or technology economy keynote?
Contact the booking team at morrismisel.com/event-organisers.
For a country of 8 million people, with all the issues and concerns going on around it, it’s difficult to fathom why a country like Israel looms so large in the technology space and carries the title of the world’s second largest silicon valley. Tim Holt of ABC radio South East N.
When signals like Israel the worlds second largest silicon valley emerge, organisations that engage early have the advantage of choosing their response rather than reacting to events. That gap between those who prepared and those who did not is where competitive positioning is actually made or lost.
The most important question is not whether Israel the worlds second largest silicon valley will matter, but how quickly it will matter in your specific context. Leaders benefit most from mapping the ripple effects early — not just the direct impact but the second and third-order consequences that arrive later and hit harder. That is the practical work of foresight.
