Tuesday, October 7, 2014

Where's the Arab Silicon Wadi?

International Business Times notices that beleaguered Israel, surrounded by hundreds of millions of hostile Muslims, has managed to create the Middle East's most (only?) vibrant tech sector.
Israel's long-established tech sector is largely sheltered from the area's geopolitical strife. And it's almost impossible for campaigners to boycott. It's the Israeli economy's steel shield. Like the Iron Dome that protects its citizens from the Qassam rockets fired over the border by Palestinian militants, the tech sector snuffs out the economic threat of boycotts.
It's the old story of a despised and endangered minority creating its wealth in portable form;
Israel spends more on research and development as a portion of its GDP than any other country in the OECD, at 4.27%. The OECD average is 2.28%. Over half of the country's $82bn export industry is from tech and life sciences. It is also one of the top countries in the world for investments by venture capitalists and private equity firms.
Iow, investors have been willing to put their money where it would do them the most good. Funny that that hasn't been in Islamic countries which were once the world's leaders in scholarship and engineering.
The tech sector in Israel is iron-clad. The nature of the work, much of which relies on coding and other intellectual property, means it isn't exposed to crises, be they natural or man made. While other industries around it suffered as a new war between Israel and the occupied territory of Gaza flared up, particularly tourism, the tech sector was unscathed.
"The market has long ignored the geopolitical risk factor of investing in Israeli companies," said Adam Fisher, a partner at Bessemer Venture Partners, an American venture-capital firm with offices in Israel, to the Wall Street Journal.
"The more [intellectual property] is required to deliver the product, the less vulnerable it is to physical disruption, whether it's a war or an earthquake or a tsunami."
There ought to be a lesson there for Israel's neighbors.

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