The Giant Corporations That Nurtured Israel’s Success as a “Start-Up Nation” May Now Be Undermining It

In the past two decades, the Jewish state has produced numerous small companies specializing in innovative technology, bringing economic growth to the country and exporting new devices and software abroad. The most successful of these companies have been bought by large, multinational corporations, which have also been setting up their own research centers in Israel, hoping to tap into Israeli talent. But, explains Matthew Kalman, such international investment, while it has benefited the country in the short term, may be undermining its now-famous start-up ethos:

There is certainly evidence to suggest that the influx of multinational interest and investment is taking the fizz out of Israel’s start-up ecosystem. The number of start-ups founded each year is falling, while the number that close each year is rising. The total amount of capital raised by Israeli high-tech continues to climb, but the number of deals has fallen by 10 percent since 2015. . . .

[Furthermore], foreign firms don’t benefit the Israeli economy nearly as much as home-grown ones do. A recent trend has been for multinationals to buy Israeli companies and turn them into research-and-development branches. . . . Statistics show that for each employee of an Israeli high-tech manufacturer, two more local jobs are created. For each research-and-development center employee, [however], only one-third of another job is created. When a growing local company turns into a research-based subsidiary of a foreign corporation, then, those potential jobs are lost. So are any intellectual-property revenues and taxes that the independent local business might have generated. . . .

But the corporations won’t stop coming. That’s because they need Israel’s innovation. The converse is true as well, though: people with a start-up mentality need big organizations, says Saul Singer, one of the two authors of [the book] Start-Up Nation. “Start-ups are great at innovation, but it’s very hard for them to scale up,” he says. “Big companies are very good at scaling—but it’s hard for them to innovate.”

The Israel Innovation Authority, a branch of the Ministry of the Economy, is taking steps that could counteract some of these problems, while some Israel businessmen have begun initiatives of their own.

Read more at MIT Technology Review

More about: Israel & Zionism, Israeli economy, Israeli technology

What a Strategic Victory in Gaza Can and Can’t Achieve

On Tuesday, the Israeli defense minister Yoav Gallant met in Washington with Secretary of State Antony Blinken and Secretary of Defense Lloyd Austin. Gallant says that he told the former that only “a decisive victory will bring this war to an end.” Shay Shabtai tries to outline what exactly this would entail, arguing that the IDF can and must attain a “strategic” victory, as opposed to merely a tactical or operational one. Yet even after a such a victory Israelis can’t expect to start beating their rifles into plowshares:

Strategic victory is the removal of the enemy’s ability to pose a military threat in the operational arena for many years to come. . . . This means the Israeli military will continue to fight guerrilla and terrorist operatives in the Strip alongside extensive activity by a local civilian government with an effective police force and international and regional economic and civil backing. This should lead in the coming years to the stabilization of the Gaza Strip without Hamas control over it.

In such a scenario, it will be possible to ensure relative quiet for a decade or more. However, it will not be possible to ensure quiet beyond that, since the absence of a fundamental change in the situation on the ground is likely to lead to a long-term erosion of security quiet and the re-creation of challenges to Israel. This is what happened in the West Bank after a decade of relative quiet, and in relatively stable Iraq after the withdrawal of the United States at the end of 2011.

Read more at BESA Center

More about: Gaza War 2023, Hamas, IDF