1).

In your view, what are the primary reasons for Israel's becoming such a hotbed for
innovation, particularly pertaining to the formation of start-up’s? Can you identify general
principles that make these factors potentially replicable in other countries?

Israel's investment in research and development is one of the primary reasons, in my

opinion, that it has become a hotbed for innovation. "Israel allocated the highest
percentage of GDP to R&D among OECD members," according to the article, "helping foster
a technological edge in security and the civilian high-tech sector." While Israel's
prioritisation of R&D may have stemmed from its focus on national security and defence
technology, the effects of its investment were clearly visible in the high-tech sector. The
high percentage of people working in research and development enticed business leaders to
set up shop in Israel, resulting in a high level of foreign direct investment in technology. The
article cites a number of prominent American technology corporations that established R&D
facilities in Israel, which not only aided Israel's economy but also created an environment
conducive to new Israeli-led enterprises. The lack of resources in other businesses led
citizens to create more and work in the hi-tech industry, which is another reason I believe
Israel is a hub for entrepreneurs. Because of its dearth of water supplies, Israel has become
a leader in desert agriculture, according to the article. Similarly, Israelis became leaders in
innovation as a result of their circumstances. In terms of allocating government money to
research and development, I believe Israel's achievement can be replicated in other
countries. While Israel's particular cultural circumstances led to a government emphasis of
technology, many other countries place a high value on both national defence and
technological innovation. If those countries invest their money in research instead of other
areas where they have a competitive advantage, I believe Israel's achievements can be
emulated to some extent. Other exporting industries would have to decrease as a result,
forcing the country to import more in other areas. I believe this is less viable for other
countries surrounding Israel, particularly in the Middle East, because they do not have the
same level of backing from other Western countries and the United States.

Q2. Regarding the primary reasons that you articulated above; can you identify general
underlying principles that make these factors potentially replicable in other countries
/geographic contexts?
In terms of allocating government money to research and development, I believe Israel's
achievement can be replicated in other countries. While Israel's particular cultural
circumstances led to a government emphasis of technology, many other countries place a
high value on both national defence and technological innovation.

If those countries invest their money in research instead of other areas where they have a
competitive advantage, I believe Israel's achievements can be emulated to some extent.
Other exporting industries would have to decrease as a result, forcing the country to import
more in other areas.

I believe this is less viable for other countries surrounding Israel, particularly in the Middle
East, because they do not have the same level of backing from other Western countries and
the United States.

Q3. What were your thoughts on the push for Israeli startups to scale and grow into self-
sustaining companies rather than to exit early? Is this a positive development with respect
to the innovation ecosystem in Israel?

I believe that encouraging Israeli start-ups to expand into larger, more sustainable
businesses is a long-term positive development for the Israeli economy. Israel loses a lot of
capital gains when Israeli nationals sell their start-ups to overseas investors.

While it may be more difficult for new start-ups to compete in a hi-tech environment
dominated by larger companies that employ a large number of people in the short term, this
can be offset by a reduced reliance on foreign investment, which is a greater hindrance for
Israeli start-ups because foreign firms will invest larger sums of money in a smaller number
of firms.

It's also a good thing for the innovation system because mature start-ups tend to broaden
their technology scope, which is exactly what Israel requires. Whereas Israel's previous
concentration was on cyber-security, the new landscape of diversified fields in technology
has the potential to spur more growth in other sectors and provide local employment to a
broader set of residents.
Q4. Do you feel that the Israeli innovation ecosystem is in danger of weakening in the
medium to long run? If so, what are the main reasons in your opinion?
Is Israel's environment approaching a tipping point, if not a crisis? For numerous reasons,
local entrepreneurs are concerned that it has.

The first reason is a talent deficit, as evidenced by the statistics. The Bank of Israel warns in
its most recent annual report that Israel's demand for qualified technology personnel
considerably outnumbers supply. Israel presently has a chronic shortfall of 15,000
experienced engineers, despite having a total high-tech workforce of less than 300,000
workers. And the situation isn't getting any better.

The second reason is a Workers who are overpaid - The second major source of concern for
local businesses is wage inflation. "Multinational corporations are rising compensation,"
adds Radinsky. "The remuneration is really generous. A startup cannot afford to hire a
software engineer that a large corporation can." Wages in the tech sector, which are already
more than double the national average, are growing at twice the rate of compensation in
other industries.
Q5. What actions, if any, would you recommend Prime Minister Netanyahu promote to
help sustain the Israeli innovation ecosystem going forward?
 Israel has developed a thriving start-up culture, with the world's highest per capita
concentration of innovation and entrepreneurship. It is true for the country that in
order to be realistic, one must believe in miracles in Israel.
 There are 3000 start-ups in the Israeli Tech Centre. It had the world's highest
concentration of start-ups.
 Israelis recycle 85 percent of their wastewater, the highest rate of any country on
the planet.
 The Israeli military was a hotbed of creative thinking and a training ground for many
entrepreneurs.
 Reserve duty aided in the formation of numerous business relationships.
 To smoothen and promote entrepreneurship, Israel's government created a better
work culture and policies for FDI and running businesses in the country.

Q6. What directions (sectors of focus and geographic markets) would you recommend for
Israeli entrepreneurs to pursue in the future?
The IIA uses a reverse innovation model, which starts with understanding the problem and
then works backwards to find solutions. This is the concept of reverse innovation.
Established corporations, for example, are invited to pitch their problems to start-ups. As a
result, joint ventures (sometimes between competing firms) are formed to address them.

Speakers stressed the importance of thinking globally from the start, while also emphasising
responsibility to the local community, in meetings with European delegates.

Give youth responsibility - In Israel, army service is an unmistakable cultural factor.

However, the most common explanation for its importance for entrepreneurship has
nothing to do with defence, but rather with the systematic scanning of schools for the
country's best talent, as well as the subsequent obligation to take responsibility early and be
held accountable. This is no small matter in a country where nearly half of the population is
under the age of 24. Schools follow the same logic, instilling in students a sense of
accountability for their actions, even if it's as simple as volunteering and keeping the school
clean. This empowers children and raises their aspirations.