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The country’s economy is an innovation center that produces products such as flexible stents and ideas that help people around the world.
Published May 17, 2024 • 5 minute read
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Chicago police hold back activists as workers clear a pro-Palestinian encampment on the DePaul University campus on May 16, 2024 in Chicago, Illinois.Photo by Scott Olson/Getty Images
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On Tuesday, Israel celebrated its 76th anniversary. Reaching 76 wasn’t easy. Since the terrorist group Hamas’ vicious and unprovoked attack on October 7, Israel has been on the defensive, both in terms of its security and its international reputation. As of May 9, the number of soldiers and other security force members killed since last Memorial Day was 716, up from 1,200 civilians killed in Hamas attacks in October. In addition. How can Israelis celebrate the founding of their nation when more than 130 hostages, living and dead, are held by Hamas? A two-state solution, the goal since the end of the British mandate in 1948, looks more remote than ever.
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But Israel’s 9.2 million people celebrated, albeit in a modest way. The rest of the world should do the same. Israel has made significant contributions that have saved millions of lives and helped lift millions of others out of poverty around the world. Its revolutionary success is a tonic for the “River to Sea” protesters who want nothing more than to boycott Israel and make it disappear while harassing Jews in the diaspora.
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I was recently looking at World Bank data on gross national income (GNI) per capita, trying to measure Canada’s progress compared to the situation in other countries. To find GNI, start with the gross domestic product (GDP), or the value of what is produced within the country, subtract payments to foreigners, and add payments received by residents from abroad. (In fact, Israel’s GDP and GNI in 2022 were about the same; payments from abroad essentially equal payments abroad).
Looking at the country as a whole, I was surprised to find that Israel’s GNI per capita is higher than Canada’s. Measured in US dollars, smoothed to eliminate fluctuating exchange rates, he earned US$55,140 in 2022, the last year for which data is available. Canada was USD 53,310. In 1970, Canada’s GNI per capita was more than twice that of Israel. Since then, Israel has grown more than twice as fast as her Canadian counterpart.
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For economists, this rapid growth is something of a surprise. Since 1948, Israel has devoted significant resources to defense and security. Economics 101 teaches that resources are allocated between guns and butter: more time spent on defense means less consumption and investment. But Israel has clearly done very well with the investments that it has been able to make so far.
Israel’s unique growth is explained by many factors, but its innovative culture as a start-up nation is key. Adjusting for economy size, Israel has been the developed country’s largest spender on research and development each year since 1999. R&D expenditure in 2022 was 6.01% of GDP, far exceeding second place South Korea (5.21%) and third place Taiwan. (3.96%), more than three times the number of 21st place Canada (1.71%).
Since the first wave of immigration in 1882, Jews who settled in “southern Syria” (as the Ottoman Turks called it) adopted a spirit of innovation to overcome harsh living conditions. His 437,000 immigrants who arrived from Europe between 1882 and 1939 included large numbers of engineers, scientists, doctors, lawyers, architects, and musicians. As Maristella Botticini and Zvi Eckstein highlight in their 2012 book A Chosen Few: How Education Shaped Jewish History (70-1492), education It has been an important part of Jewish life dating back to Roman times, when Jewish children were taught to read and write well. The expansion of children into other cultures, both then and in subsequent centuries.
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However, Israel’s GDP, which doubled between 1950 and 1970, stagnated for the next 20 years and fell into hyperinflation. The Consumer Price Index exceeded 100% every year from 1980 to 1985, reaching a peak of 445% in 1984. Because of this, many Israelis immigrated to Silicon Valley, ultimately creating closer ties between American and Israeli innovators. Eventually, Israel was restored to health with a stabilization plan that included debt reduction, spending cuts, and the privatization of many state-owned enterprises. Financial markets were deregulated, capital controls were abolished, and trade barriers were largely removed.
After the collapse of the Soviet Union and the communist governments of Eastern Europe, Israel resumed growth in the 1990s due to a large-scale emigration of scientists and other professionals. Rather than abandon these new professionals, the Israeli government retrained many of them to become computer hardware and software scientists. It also launched the Yozma program in 1992, which created 16,000 startups with partial equity funding, and then reduced capital gains taxes in 2004 (this is a lesson Canada should learn). ). As of 2011, over US$3 billion of capital was managed by his Yozma companies.
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A key element behind Israel’s culture of innovation is chtzpah. From early childhood education to military conscription, Israelis are taught not to be afraid to question their superiors. After acquiring Israeli startup FraudSciences in 2007, PayPal President Scott Thompson said: Our younger employees had no qualms about challenging the way we had been doing things for years. ”
Among the many innovations for which Israel is famous are flexible medical stents, computer firewalls, micro-irrigation, sophisticated bee breeding, clean water produced from the air, road safety (such as Waze), and non-toxic pest control. , Iron Dome, etc. defense system.
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This year, four Israeli companies made it into the top 50 most innovative companies in the world, according to a ranking. His four are: Viz.ai is a medical imaging company that uses AI deep learning technology to analyze CT scans for faster treatment. Papaya Global has technology that allows multinational companies to pay their employees in their home currency. Uvey is an AI system that performs automated vehicle inspections. GrayMatters Health’s FDA-approved Prism device helps patients deal with post-traumatic stress disorder.
These and many other Israeli inventions are used all over the world today. When protesters call for a boycott of Israel, does that include denying them access to Israeli inventions that may one day save their lives? Boycotting is rarely the answer to anything. They certainly won’t stop Israeli innovation. Rather than boycotting, Canadians should access and emulate Israeli ideas, talent and technology to improve their country’s lagging productivity.
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