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Israel has thrived during the global collapse—thanks to an entrepreneurial culture built on compulsory military service. Dan Senor and Saul Singer on why U.S. companies should take notes.
For all the press coverage of the Middle East, there is one side of Israel that gets scant attention: the country’s economy has the highest concentration of innovation and entrepreneurialism in the world today. For years, multinational technology companies and global investors have been beating a path to Israel. Even in 2008—a year of global economic turmoil—per capita venture investments in Israel were 2.5 times greater than in the United States, more than 30 times greater than in Europe, 80 times greater than in China, and 350 times greater than in India. And Israel still boasts the highest density of start-ups in the world (a total of 3,850 start-ups, one for every 1,844 Israelis). More Israeli companies are on NASDAQ than companies from all of Europe, China, India, Korea, and Japan combined.
“When it comes to U.S. military résumés, Silicon Valley is illiterate. It’s a shame. What a waste of the kick-ass leadership talent coming out of Iraq and Afghanistan,” said Israeli entrepreneur Jon Medved.
Watch Dan Senor discuss Health Care and Afghanistan on Meet the Press
The root of Israel’s economic dynamism—and the way it weathered a global downturn—can be traced to government policies that cultivate a unique entrepreneurialism. These include innovative immigration policies and disproportionate research and development spending (Israel is the world leader in the percentage of the economy that is spent on R&D). But the real turbocharger has been its universal military training and national service program.
Here's how it works. While students in other countries are preoccupied with deciding which college to attend, Israelis are weighing the merits of different military units. And just as students elsewhere are thinking about what they need to do to get into the best schools, many Israelis are positioning themselves to be recruited by the elite units of the IDF (Israel Defense Forces).
One IDF Army officer with whom we spoke knew when he was just twelve years old that he wanted to learn Arabic, partly because he realized even then that it might help him get accepted into the best intelligence units.
One year before reaching draft age, all seventeen-year-old males and females are called to report to IDF recruiting centers for an initial one-day screening that includes aptitude and psychological exams, interviews, and a medical evaluation. At the end of the day, a health and psychometric classification is determined and service possibilities are presented to the young candidate in a personal interview.
Those who complete the training together remain as a team throughout their regular and reserve service. Their unit becomes a second family. They remain in the reserves until they are in their mid-forties.
While it’s difficult to get into the top Israeli universities, the nation’s equivalent of Harvard, Princeton, and Yale are the IDF’s elite units. The unit in which an applicant served tells prospective employers what kind of selection process he or she navigated, and what skills and relevant experience he or she may already possess.
“In Israel, one’s academic past is somehow less important than the military past. One of the questions asked in every job interview is, Where did you serve in the army?” says Gil Kerbs, an intelligence unit alumnus who today works in Israel’s venture capital industry, specializing in China’s technology market.
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frankopr
Propaganda much?
Jinglebob
A good example for their neighbors. See what can happen when you put hate aside and stop blaming everyone else for your plight.
al-nafs
You do realize that they have taken their neighbors land, and that they use their military to dominate their nearest neighbor right? They may be prospering, but it is at the expense of their Palestinian neighbors. They are the single largest _cause_ of their neighbors plight.
allludes
You have no clue. First - study history and get your facts straight. The "Palestinians" are a modern day group, Name a leader prior top Yasser Arafat. You can't. The problem isn't what the Israelis conquered in 1967. The Arabs and the "Palestinians" did not accept Israel pre-1967. Israel is fighting 1948 war not 1967 war. Bret Stephens - former Wall Street Journal reporter said: "Do you think most Israeli would object to a Palestinian state if it were facsimile of Canada. Of course not, but it would be a facsimile of the Taliban. Israeli Arabs have a good life in Israel. They are in the malls, the parks, everywhere. The signs are even in Arabic,"
And why are the settlements so offensive - the thought of living with Jews?
Jews were oppressed,fled and were expelled from Arab lands. No one argues that. But they get on with life and do not play up the refugee claim. Maybe they should. If the Palestinians put there effort into making a productive society instead of trying to terrorize Israel and consistently distort the truth - they would be much better off.
AVHYAHAV
1/ land has been bought ny the Keren Kayemet LeIsrael inbetween 1900 and 1945
2/ Arabs caused people to flee.
3/ At the same time 800,000 Jews were expelled from Arab countries and their possessions [confiscated by Arab governements] represent a much larger surface than what you call Palestine!
Stymamax
Absolute bullshit Mr al-nafs! If the Palestinian people would stand up against their religiously fanatical leaders they would enjoy a prosperity they did not believe possible. It is in Israel's interest to promote the development of the Palestinians, but not when its leaders constantly and openly call for its destruction. The Palestinians are their own worst enemies. They need to take their heads out of their collective butts and start realizing that there is a lot to be gained by co-operation with Israel.
mcguirejazz
Something the article didn't address about how Israeli military experience relates to business is the idea of acceptable risk. It is part of any military operational decision. No business school can teach that as well as having to make life and death decisions that involve your closest friends.
artois
Overstated disconnected drivel!
Bullelephant
Do you think maybe Israel thrives cause it on the US titty? Their propaganda machine is quite good. Where would America be without Israel: better off.
media4citizens
A missing but relevant bit of information in this article: What percentage of new Israeli ventures are for military/defense products? I'm sure that silicon valley and other high tech sectors could do a much better job of recognizing the value of veterans. But how many of the Israeli vets have simply seen the financial bonanza in the military defense industry (well subsidized by the dollars of U.S. taxpayers) during their time in uniform? Lord knows it's virtually the only growth sector in manufacturing that the U.S. has left. Hooray for us.
lexus50
I'm a retired "government" worker and true, we just don't give Israel hundrerds of million of $$ during the past 50 years, it's in the billions!!!!
So, what do we get back for that investment? Well, for starters, try some of the best intelligence information in the world. In fact, Shin-Bet, the MI arm of the Israeli Army, makes the KGB and CiIA look like the Boy Scouts. In my first year of gov't service, I learned that SB had enbedded more than 25 agents in the KGB going back to 1955. Most of that data went to the USA. Want more? How about Smart Weapons? Take a guess who developed most of them and where did they go? That's right--to the USA!! I can go on and on, but then, you seem to know it all. Right???
AVHYAHAV
Nobody needs America to help herself waste billions!
America withdraws trillions from her own Federal Reserve! Stop complaining and do something to stop the haemorrhage that greed produced in this country!
Raymond-in-DC
Yes, some ventures involve military technologies. But others cover the gamut: medical, agricultural, energy, information, water, and much more. The OECD just named Israel a "patent center". There's more Israeli technology in your cell phone, computer and doctor's office than you realize. They're #1 in percentage of exports classified as "high tech". Check out http://israel21c.org for a sample of what they're cooking up.
DavidBarron
Nothing against military/civil service, but I suspect that university is better at exposing young people to different cultures, background, religions, as well as different lifestyles and ideas.
Meanwhile, I think media4citizens has figured out the economic catch. I'd have to have more information, but my hypothesis is that learning to obey orders unquestioningly in a rigid command structure wouldn't necessarily translate to entrepreneurship.
ghost22
Dan Senor has all along been a shill for the neo-con puppet masters of the Cheney/bush administration. Do it like Israel. Position yourself for perpetual, senseless war, cultivate an irrevocable bond with the world's largest sugar daddy, and let it rip. The Cheney/bush administration accomplished the first goal, but the only sugar daddy they could find was American taxpayers for generations ahead. What pure, unadulterated horse manure.
neshama79
nothing against your personal opinion, but just curious - have you served in a military, or is this opinion based only on the one sided experience of being in a Uni? (assuming you went). The only reason I'm questioning is because I've been to both and disagree with you. At Uni, people can still choose who their friends are and who they listen to. The point made in this article is that young Israelis can not escape living with and co-operating with people from vastly different backgrounds. The military makes a point of arranging who they put together to serve together for this very reason. In Israel, the military is as much a social tool as a defense force. National service is a recognized social tool to produce healthy, mature and contributing adults in the Israeli society by the time they are finished with their National service.
Furthermore, normally I would agree with your second point - if we were discussing any other military than Israel's. The IDF's military discipline looks very different than most military's. Yes there are direct orders. But no one goes through their National service learning to blindly follow orders, forgetting how to think for themselves for 2-3yr. There is the constant pull between following orders for the safety the unity and fulfilling our role in conjunction with every other unit in the military, but on the same hand we are always questioning, always wieghing our own beliefs and rights against our role as a soldier. Soldiers are constantly exterting their unique independance in any area they can outside of disobeying direct orders. And this tension is eliviated by a unique IDF concept of 'distance' between enlisted and officers being limited to particular times and circumstances and lifted during 'off hours'. This is accepted as inevitable in the IDF because the IDF is made up of soldiers who did not volunteer and who are raised to be independent, opinionated and to fight for their rights - to not just assume their rights will be honored. These prized characteristics of Israeli youth are not suppressed by military discipline but somehow cultivated. It is a paradox that can not be understood but only experienced. And it is the very thing that does make the IDF the breeding grounds for Israeli entrepreneurship that this article discusses. Simply put, you have a point but it simply doesn't apply to the IDF. But this article does discuss, quite pointedly, how the IDF does contribute to our successful entrepreneurship.
PRoche
Would Israel be able to offer these benefits to its citizens (and yes, believe it or not, mandatory conscription is a benefit for all the reason cited) were it not for the fact that the U.S. provides Israel more financial aid than any other individual country and basically unlimited, indirect military aid?
Israel has the 53rd largest GDP (~ $200 billion) in the world and it is 48th highest GDP per capita. Israel's per capita household income is on par with that of the UK and Australia. Yet the U.S. provides Israel $2.5 billion per year, almost 20% of its defense budget, in direct foreign aid.
GeorgeAlbert44
OK, the US have given more money and aid to Iraq and Afghanistan in the past 8 years than it has given to Israel in Israel's modern existence since 1948, so enough with the lies. Second, over 75% of all aid to Israel actually goes directly to US government defense contractors and jobs in the US. Third, the protection aid that we have given to murderous regime in Saudi, and to Kuwait and to the UAE has a value of approximately 24 billion dollars per year, and for this they continue to rip us off and support terrorism and the murder of Americans and others. Really, the Jew haters never cease to amaze me with their stupidity and ignorance.
PRoche
There you go, every time someone complains that the U.S. cares more about the citizens of Israel than it does about its own citizens the Israel Lobby screams ANTI-SEMITISISM!
The fact is that bin Laden would never have attacked the U.S. if it were not for the U.S. total support of Israel.
The fact is the U.S. would not need to have 3 or 4 carrier groups perpetually in the Middle East if it were not for the unlimited military support the U.S. gives Israel.
The fact is that the U.S. would probably not be in Afghanistan, or Iraq or Saudi Arabia if it were not for the unlimited military support the U.S. gives Israel.
The fact is that the U.S - Israel alliance is a strategic liability to the U.S. and if the roles were reversed Israel would drop the U.S. like a dead rat.
The fact is that the Israel Lobby will defeat any national candidate that does not kowtow to Israel's foreign policy.
The fact is that the U.S. is financially broke in large measure to our global protection of Israel and the Israel Lobby just wants more and more and more!
The fact is that Israel gives healthcare to all of its citizens but the U.S. can't afford to.
The fact is that I don't hate anyone but I do love my Country more than I love any other country. Can you say the same?
If I am a Jew hater then you must be ...an American hater.
kayjay
Your math is off. I can't be bothered to adjust for inflation, but even without that, the last 14 years of aid to Israel = the aid to Iraq since invasion. Before 1995 Israel was still getting 1 to 3 billion a year.
Of course, that's not really that much money. Since the US spends so little on Foreign Aid (0.08% of Federal Budget), it's a bit silly to think that that could be the reason for Israel's economic success. About as silly as crediting mandatory military service (since plenty of less economically successful countries have the same -- Greece, Turkey, etc). I think some form of government service is a good idea, but I'd say a reduction of crime and increased sense of civic duty are more legitimate arguments for it.
Raymond-in-DC
Israel has gotten some $3 billion annually since the 1979 Camp David agreement. Egypt gets some $2.4 billion; Jordan and Lebanon a few hundred million each; the Palestinians a billion or so. So Israel's immediate neighbors combined get even more. What do they do for the US, and why don't you complain about *those* expenditures? Israel at least gives back and does a heck of a lot for the US.
Re-Horakhty
You have to be kidding me with this bogus article.
Talk about low self esteem. The Israel is a sham goverment with a few money hungry Zionist calling the shots.
I wish they would fight a war without American support. But we all know that Americas pet project needs daddies help always.
GPatton
Israeli women are HOT! George Patton
OOOWWW
Dan Senor is an idiot. Always was and always will be.
mdargo
Dan Senor works for Dick Cheney and he is married to CNN's Campbell Brown .... 'nuff said.
sonofloud
The problem with basing your economy on war is that eventually everyone is dead.
booksnob123
Hmm...funny Senor would say this even though he himself has never served in the military. This idea may have more credibility if it came from someone who actually experienced it.
lsg280
The problems with Americans is their refusal to learn from other cultures. Israeli culture is obsessed with technology, science, and entrepeneurship. They would be like this despite military service and despite American money. Its part of their cultural values. America should adopt that view point since it is science and technology that is going to save the economy and save the environment.
Countries from the the former Soviet Union, and from east asia are also very interested in math and science. These are good qualities that Americans need to adapt in order to survive in a globalized economy with a globalized workforce.
People should stop trying to stop trying to shoot people down for trying to help Americans by learning about other cultures. Its a good thing. In order to do better, we need to learn from people who are doing better than us in certain domains, not shoot the messenger. You don't have to support Israel to recognize that it has some things to offer. China has a horrible human rights record, that doesn't mean we can't learn something about chinese discipline and education.
jomama
Though the Isreali economy may have faltered less, it's still pretty crappy with a GDP/capita sub Western standards - and that's saying nothing of the social issues regarding getting all of our kids geared into fascist training camps at age 12 to kill our religious enemies from a safe distance with weapons. Oh - wait a minute, isn't that terrorism?
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