Israel’s growth was the result of a unique amalgamation of conditions, some replicable, and some not. There are many factors unique to Israel which do not lend themselves to replication: Massive amounts of aid from extant developed nations (especially the United States), unheard-of levels of high-skilled immigration, a uniquely overdeveloped military research complex, and a total inability to trade with any directly bordering nation because of fractious geopolitics. However, the unique aspect of Israel that many commentators argue is the single biggest factor in Israel’s success can be summed up in a single Hebrew word: chutzpah. These will each be elaborated upon in turn below. However, there are also a few replicable lessons to be gleaned from a review of Israel’s growth. These include the importance of fiscal austerity, deregulation where it matters, research & development, and the importance of a large state-backed, state-funded venture capital effort to jump-start highspeed growth as Israel has seen. These, too, will be elaborated upon below.

1. Lessons Learned from Israel, the Start-Up
Nation
Erick Brimen and Trey Goff
NeWAY Capital
1875 Connecticut Ave NW,
10th Floor, Washington, DC 20009
Israel’s growth was the result of a unique
amalgamation of conditions, some
replicable, and some not. There are many
factors unique to Israel which do not lend
themselves to replication: Massive amounts
of aid from extant developed nations (es-
pecially the United States), unheard-of lev-
els of high-skilled immigration, a uniquely
overdeveloped military research complex,
and a total inability to trade with any direct-
ly bordering nation because of fractious
geopolitics. However, the unique aspect of
Israel that many commentators argue is the
single biggest factor in Israel’s success can
be summed up in a single Hebrew word:
chutzpah. These will each be elaborated
upon in turn below.
However, there are also a few replicable les-
sons to be gleaned from a review of Israel’s
growth. These include the importance of
fiscal austerity, deregulation where it matters,
research & development, and the impor-
tance of a large state-backed, state-funded
venture capital effort to jump-start high-
speed growth as Israel has seen. These, too,
will be elaborated upon below.
EXECUTIVE SUMMARY
May 1st
, 2018

2. 2
May 1st
, 2018
pic phenomena that often defy unitary explana-
tions. All of the factors mentioned below work
together in a dynamic and synergistic fashion to
craft Israel into what it is today; as such, none of
the factors below should be considered alone,
but rather in conjunction with the amalgam of
other circumstances which have influenced the
unique creation that is modern-day Israel.
FOREIGN AID
Foreign aid has played a massive role in the de-
velopment of Israel, especially when the coun-
try was in its infancy and especially in the realm
of military and defense. This aide begins as far
back as 1952, a mere four years after the cre-
ation of Israel when West Germany began pay-
ing reparations to the country of Israel for the
war crimes committed by the Germans against
the Jews in WWII. From 1950 until 1965, Isra-
el’s real GNP grew by an average annual rate of
over 11% thanks almost entirely to American
aide and German reparations payments.2
This
aide gave Israel the income to become a social-
ist state, which eventually resulted in the afore-
mentioned economic collapse of 1984. It is im-
portant to note that, to date, the Germans have
paid over $89 billion in reparations to the Israels
since 1952, with payments still ongoing today.3
The United States has also given—and contin-
ues to give—Israel massive amounts of aid in
the form of direct transfers, low-interest loans,
and military aid. To date, the United States has
given at least $128.9 billion in aid to Israel since
1948, with much more being possible from a
INTRODUCTION
Israel has earned the moniker “Start-Up Na-
tion” for a good reason: it is home to the most
start-ups per capita in the world by a large mar-
gin and has more companies listed on the Nas-
daq exchange than the entire European conti-
nent. For a relatively small country of roughly
8,000mi2
that was conjured out of thin air in
1948, this is a mind-blowing achievement. How-
ever, possibly even more amazing is the rapidity
with which this development occurred: Israel
was more similar to Zimbabwe than the Unit-
ed States as recently as 1984 when inflation was
averaging around 450% in the small country.1
This begs the question: what, exactly, is it that
has propelled Israel from 3rd
-world conditions
a mere 35 years ago to the home of the most
engineers and the highest research and devel-
opment spending on the planet today, and can
such success be replicated?
IRREPLICABLE CATALYSTS FOR
GROWTH
If extraordinary claims require extraordinary
evidence, then Israel’s extraordinary growth
requires extraordinary explanations. Many of
these are unique to the cultural, historical, and
sociological aspects of Israel’s development,
and as such do not carry many lessons for the
next aspiring “Start-Up Nation.” However, in
examining all of these, it should be ever held
in mind that social and economic development
is startlingly complex, multivariate, and entro-

3. 3
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one-third of the total population.
Although the overall flow of immigration has
been sustained since Israel’s founding, it has ex-
perienced some bursts of hyperactivity which
directly contributed to Israel’s economic mira-
cle. The primary growth-boosting burst came
from 1990 to 2000, when over 800,000 Jews
from the former Soviet Union fled to Israel after
the fall of the Berlin wall. What’s more, 30% of
these immigrants were doctors, 20% were engi-
neers, and many were highly educated in other
fields. “In fact, according to the Organisa-
tion for Economic Co-operation and Devel-
opment (OECD), 45 percent of Israelis are
university-educated, which is among the
highest percentages in the world.” Accord-
ing to Singer and Senor, “Russians with PhDs
and engineering degrees were arriving in such
overwhelming numbers that they could not find
jobs in their fields, especially while they were
still learning Hebrew.”8
This could do much to
explain the anomalous level of research & de-
velopment and technological innovation which
has sprung forth from Israel in the last 30 years.
This massive and sustained inflow of immi-
gration Israel has received since its inception
has undoubtedly played an outsized role in its
extraordinary development. One of the most
widely accepted empirical findings of the field
of economics is the overwhelmingly positive
economic impact immigration has on every-
thing from entrepreneurship to wage growth
to productivity growth and unemployment.9
In
particular, immigrants have a powerful impact
collaboration between classified military pro-
grams of the two nations.4
The aide has most
likely played a significant role in the econom-
ic growth of Israel. This is made apparent by
the fact that from 1984-2016, the very years in
which the Israeli economy grew to what it is to-
day, America aide averaged $3.1 billion per year
split fairly evenly between military and econom-
ic aid. That means US aide made up as much as
10% of Israel’s GDP until 1990, at which point
the economy began growing so fast that US aide
became an ever-shrinking proportion of Israel’s
GDP.5
Although the overall economic impact of aid
remains a hotly contested topic amongst aca-
demic economists,6
aid played a vital role in the
development of the Israeli economy. US aid and
German reparations have enabled Israel to off-
load much of the costs of defending itself in
one of the most hostile environments on the
planet, freeing up its tax revenues for expendi-
ture in other areas such as venture capital and
research & development. This will be explained
in more detail below.
IMMIGRATION
Israel has experienced one of the most prolif-
ic levels of high-skilled immigration the world
has ever seen, largely as a consequence of its
unique position as a haven for oft-persecuted
Jewish minorities. Israel’s population has grown
ninefold since it’s founding, with the population
doubling in the first three years of its existence.7
In modern Israel, foreign-born citizens are over

4. 4
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, 2018
drone market and is one of the largest exporters
of arms on the planet.
However, beyond this direct economic impact,
Israeli military R&D has large and immeasurable
impacts on overall innovation in the economy.
Many revolutionary innovations which changed
the landscape of the modern economy originat-
ed from military research. Everything from the
internet to space travel to commercial jet aviation
are spinoffs or direct results of military research
efforts in the United States. It follows from this
observation that the country which spends the
most on military R&D by such a large margin
must be seeing great spillover effects into over-
all innovation and economic growth. This, in
combination with all of the other factors listed
here, could explain why Israel has the highest
number of technology-focused start-ups in the
world, is ranked 2nd
on Research and Develop-
ment on Bloomberg’s Innovation Index,13
and
has one of the highest output levels of scientific
papers in the world.14
HOSTILE NEIGHBORS
Although Israel’s position amongst a gang of
hostile nations may seem on its face to be a
detriment for Israel, it is, in fact, a blessing in
disguise. First, it has caused Israel to develop
robust global trade networks, and second, it has
had an indelible impact on Israel’s culture that
has uniquely contributed to its productivity.
It is no exaggeration to say that every nation
bordering Israel harbors deep hostility for the
on rates of self-employment, entrepreneurship,
innovation (for example, 51% of all US patents
in 2013 were filed by immigrants).10,11
Howev-
er, many of those findings are based upon the
immigration of low-skilled workers from vastly
different cultures. The economic growth poten-
tial of immigration is exponentially increased
when a majority of those workers are highly ed-
ucated, have massive amounts of human capi-
tal, and are all members of the most productive
culture on the planet (more on this later). All
these factors came together to create the perfect
storm of economic growth in Israel. This com-
pletely irreplicable fact of Israel’s past has pow-
erful explanatory power for Israel’s economic
miracle of the last 35 years.
There is, however, a lesson in Israel’s his-
tory of immigration that does carry over to
any nascent Start-Up Nation: focus on at-
tracting high-skilled, highly-educated im-
migrants to facilitate the development of a
robust research & development industry.
MILITARY RESEARCH &
DEVELOPMENT
Israel has the highest spending on research and
development of any nation on earth, with 4.5%
of its annual GDP going to R&D—double the
OECD average.12
However, 30% of that goes
to military R&D, which is double the percentage
the US spends on military R&D and is the high-
est percentage of spending on military R&D
on the planet by a factor of four. This explains
why Israel has cornered over 60% of the global

5. 5
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started the year by launching numerous missile
and gas attacks on Israel. In response, the Israeli
government had ordered that no Israelis leave
their homes until the attacks abated. Frohman,
however, knew that Intel’s trust in him specif-
ically and Israel more broadly would be weak-
ened if the plant were to shut down because of
these attacks. As such, he did the only thing a
chutzpah-filled Israeli could do in the situation:
kept the plant running while the missiles rained
down around it. Frohman announced to his em-
ployees that work was to continue as usual, but
that no one would be punished for not showing
up to work amidst an ongoing missile barrage.
80% of his employees showed up to work on
time and as expected, and the plant’s output
continued unabated.
As Dov Frohman’s story makes clear, Israel’s
hostile neighbors have instilled in the Israeli’s a
sense of toughness, diligence, and tenacity that
makes Israel’s some of the hardest and most
productive workers on the planet. Israel’s ene-
mies are inadvertently responsible for inculcat-
ing in Israel the very cultural factors which are
responsible for its astounding economic growth
and prosperity.
CULTURE: CHUTZPAH AND DAVKA
Cultural institutions are, according to some
economists such as Nobel Prize-winning Doug-
las North, the single most crucial factors which
determine the success or failure of a nation.18
However, cultural institutions are also notori-
small nation ranging from a simple desire for
ostracization all the way to a fervent desire for
the destruction of the nation of Israel. This has
caused Israel to be perpetually plagued by secu-
rity fears from the day of its inception. One ob-
vious and direct implication of this fact is that
Israel cannot trade with its neighbors in any way.
However, the health and prosperity of nations
are largely dependent upon their capacity to
trade. Realizing this fact, Israel has from an ear-
ly stage in its development focused on creating
robust trade networks with nations around the
globe to make up for its lack of trade with neigh-
boring nations. The fruits of this are borne out
in Israel’s trade figures: it runs an annual trade
surplus with the rest of the world of nearly $5.5
billion, and exports make up 31% of the Israe-
li economy.15,16
Israel would not have so deeply
entrenched itself in global trade networks were
it not forced to by the hostile environment in
which the nation finds itself.
Israel’s hostile neighbors are also partially re-
sponsible for the creation of the very culture
which has enabled the small Jewish nation to
be so economically successful. The hostility of
their neighbors forced Israelis to become large-
ly self-sufficient and develop a sense of self-re-
liance that is still powerfully felt in the culture
today. A story more easily conveys this concept
than aggregate economic and statistical data.17
Israeli Intel employee Dov Frohman had a tough
decision to make in January of 1991. The Intel
chip manufacturing plant he oversaw had recent-
ly become the backbone of Intel’s world-leading
chip production. However, Saddam Hussein had

6. 6
May 1st
, 2018
in most cases—lack of effort or action is the
only that brings swift and powerful recrimina-
tion. Israeli culture is not concerned with cre-
dentials or titles, but instead in one’s history of
“doing;” Israelis want to hear what you have
created, not what title’s you’ve earned or boxes
you’ve checked. Chutzpah is not confined to any
one demographic or sector of the population,
either; the entirety of the Israeli population is
defined by chutzpah.
That, at its core, is what has driven such inno-
vation, creation, and entrepreneurship in Israel.
It’s as if the culture of a select few hyper-pro-
ductive Silicon Valley firms were magnified and
amplified, then applied to a population of over
8 million people.
This chutzpah is then, in turn, complemented
by davka. Davka has no direct English transla-
tion either but is something along the lines “the
more they attack us, the more we will succeed.”
Davka is a unique aspect of Israeli culture that
is borne of out of decades of direct and ac-
tive hostility by all of Israel’s neighbors. Davka
could be said to drive some of the force behind
chutzpah in Israel.
A keen-eyed observer may object that other fac-
tors here neglected have caused Israel’s growth,
and not its culture. For instance, some commen-
tators have stated that it is Israel’s mandatory
military service and not its culture which creates
the innovative atmosphere in Tel Aviv. Howev-
er, this does not hold up to scrutiny: if that were
the case, then why aren’t Scandinavian countries
ously hard to quantify and measure, so econo-
mists have often shied away from studying their
effects on economic growth. Once all other
variables are controlled for, the only factor left
to explain Israel’s economic miracle lies in the
culture of its people.
Israeli culture is defined by chutzpah. Chutzpah
does not have a perfectly direct translation to
English, but it is similar to “shameless, auda-
cious, gutsy, bold, or impudent.” To have chutz-
pah is the have the boldness and confidence to do
that which is right or needed regardless of how
it may seem to others. Chutzpah is characterized
by a constant questioning, constant evaluation,
and constant challenging of ideas, notions, and
hierarchies without regard for custom or defer-
ence. To have chutzpah is to tell the CEO of your
company he is wrong in front of everyone while
you are merely an engineer. To have chutzpah is
to refuse to “go along to get along,” but instead
to fight for the absolute best outcome of any
given scenario. Chutzpah is to defy all social and
cultural norms and pursue that which is dear to
you irrespective of the judgment of others. It
is a norm of norm-violation. Hierarchy is nigh
nonexistent in Israeli society precisely because
Israeli society is defined by chutzpah. “Asser-
tiveness versus insolence; critical, independent
thinking versus insubordination; ambition and
vision versus arrogance—the words you choose
depend on your perspective, but collectively
they describe the typical Israeli entrepreneur.”19
Chutzpah celebrates innovative failure. In fact,
in the Israeli military, failure is not punished

7. 7
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FISCAL AUSTERITY
Things were looking grim for Israel in 1984.
Inflation was cresting 450% as the Israeli gov-
ernment attempted to maintain a fully socialist
workers state. The government was spending
nearly 60% of Israel’s GDP, and worker’s wag-
es were directly tied to the cost of living in the
country. This caused a never-ending cycle of
hyperinflation as the central bank printed more
money, which drove up prices, which then drove
up wages, which then drove up prices, ad infini-
tum. However, they rapidly realized that such a
state of affairs would lead toward certain ruin.
To avoid this fate, government leaders came to-
gether in 1985 and crafted a plan which set Isra-
el on the path to prosperity.
The plan was simple: government spending was
massively slashed, and the legal linkage between
wages and the cost of living was severed. Israel
then continued to reduce government spend-
ing year after year, continuing to do so into the
present day.
Figure 1: Israeli Government Expenditures
since 198420
which also have mandatory military service as
innovative and rapidly growing as Israel?
Or maybe the massive amounts of aid money
Israel have received is responsible for its growth.
However, if that were the case and it were only
aide which propelled Israel’s growth, then why
hasn’t massive amounts of aid caused Israel-like
growth across Africa or South America?
This exercise could be repeated ad nauseum,
but the outcome will always be the same: after
controlling for all other possible explanatory
variables, the only thing left that differentiates
Israel is its incredibly unique culture of chutzpah
and davka.
The combination of all of those above
unique historical and economic aspects of
Israel’s development combined with Isra-
el’s culture has created the perfect (and ir-
replicable) storm for miraculous economic
growth and innovation.
REPLICABLE CATALYSTS FOR
GROWTH
Although many of the factors which drove the
exponential growth of Israel are impossible
to replicate, there are still many lessons to be
learned that can be transferred to an aspiring
Start-Up Nation. These include fiscal austerity,
deregulation in targeted industries, research &
development, and state-backed venture capital
funds.

8. 8
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, 2018
DEREGULATION
Soon after the paradigm shift which occurred
in 1985, Israel found that its global comparative
advantage lies in the technological development
enabled by the high levels of human capital and
research and development funding in the nation.
However, these industries found themselves sti-
fled by both regulation and a lack of investment
capital with which to launch new enterprises.
To facilitate the development of this industry,
the Israeli government took two decisive ac-
tions: the founding of state-funded venture
capital partnership, and the creation of a “tax
and regulatory environment that, while favoring
technology start-ups and foreign investors, did
not offer the same support for the rest of the
economy.”22
The benefits of deregulation are well known
in the field of economics. The intuitive appeal
of reducing regulations is obvious: by reducing
the barriers and hurdles through which entre-
preneurs must pass; they are encouraged to do
more, innovate more, and create more, all at a
lower cost than is possible with the heavy hand
of regulation. Regulation also costs the world
economy trillions of dollars per year; some
studies have shown that since 1949, regulation
in the United States alone has cost the nation
almost $40 trillion.23
This logic applies to Israel
as well: so long as there are barriers to entrepre-
neurs founding and attracting funding for their
firms, they will be discouraged from doing so
and can only do so at a high cost which must be
This fiscal austerity was coupled with target-
ed deregulation for the industries and facets
of the market which the government chose to
develop (more on this below). These reforms
worked wonders for the Isreali economy, as the
graph below makes clear (notice the massively
increased growth after these reforms in 1985):
Figure 2: Israeli GDP Growth21
The lesson here for a nascent Start-Up Nation is
clear: start with government expenditures as
low as possible and keep them that way. This
formula for success has proven successful not
just in Israel, but in every jurisdiction which has
attempted it. It is no coincidence that the period
of most rapid economic growth and prosperity
in the United States was the very same period in
which government spending was almost nonex-
istent: 1870-1910.

9. 9
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, 2018
STATE-BACKED VENTURE CAPITAL:
BIRD AND YOZMA
Israel’s government engineered its economic
miracle in a surprising way: by bootstrapping
businesses into being with state-backed invest-
ment funds.
The first of these programs was called the Bi-
national Industrial Research and Development
Foundation (BIRD) and was a joint endowment
between the US and Israel. Bird “Gave modest
grants of $500,000 to $1,000,000, infused over
two to three years, and would recoup funds
through small royalties earned from successful
projects.”24
According to one of the founders
of BIRD, it acted as a sort of “dating service,”
matching Israeli technological developments
with American firms that could market and dis-
tribute it. “To date, BIRD has invested over
$250 million in 780 projects, which has re-
sulted in $8 billion in direct and indirect
sales.”25
By 1992, 75% of the Israeli firms on
the NASDAQ exchange were BIRD-funded en-
deavors.
The government also funded some enterpris-
es through a more direct and piecemeal fash-
ion. After the flood of high-skilled immigrants
came in from the former Soviet Union in the
1990’s, the Israeli government tried to find
some way to help these immigrants become en-
trepreneurs themselves. To that end, the Israeli
government-funded “hundreds” of small com-
panies based on the technological innovations
of these immigrants. Although this was helpful,
recouped later.
Israel solved this problem by deregulating only
the industries which the government targeted
and recognized as high-growth potentials: tech-
nology and the venture capital funding needed
to facilitate it. This could do much to explain
why Israel has the 4th
highest level of foreign
direct investment in the world and the highest
density of start-ups in the world.
This should not be mistaken as an endorsement
of such a targeted deregulation regime, however.
Deregulation in all industries could compound
Israeli’s growth even farther, and insofar as the
rest of the economy is tightly regulated, Israel
is held back from unleashing its full potential. It
is worth noting, however, that if a government
is to deregulate, beginning the process in the
most high-impact industries where such dereg-
ulation will have the highest margin impact and
then moving to other, less impactful sectors of
the economy is the most rational and efficacious
way to achieve deregulation in a gradual, piece-
meal process.
The lesson here is simply that deregulation
can unleash the latent powers of human in-
genuity and innovation, and that this impact is
particularly acute if done in the industries where
the jurisdiction has the largest natural compara-
tive advantage.

10. 10
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, 2018
1997 raised just over $200 million with the help
of government funding. Those funds were
bought out or privatized within five years,
and today they manage nearly $3 billion of
capital and support hundreds of new Israeli
companies. The results were clear. As Erel
Margalit put it, “Venture capital was the
match that sparked the fire.”
By providing government funding to buttress
VC firm selection, the Israeli government
kick-started the entire start-up industry in Isra-
el. The method by which they did this was par-
ticularly clever: recognizing that governments
will never be as adept as VC firms at identify-
ing which start-ups have potential and which
do not, the government allowed the market to
pick the “good” firms by forcing the Israeli VC
partners to raise a substantial amount of funds
before the government money was added. In this
way, the market mechanisms of VC firm selec-
tion and guidance still works unabated, but are
simply aided by a larger pool of state funds.
This lesson echoes the experiences seen in Sin-
gapore as well, with the tiny nation bootstrap-
ping its way to prosperity with the massive Te-
masek investment fund. The trend is clear:
the most successful geographically limited
new jurisdictions utilize state funds to strike
the match which then lights the fires of eco-
nomic development and prosperity (provid-
ed that a good institutional and regulatory
environment does not choke out the fire of
prosperity before in can grow).
it still was not seen as good enough; after all,
the government could give these entrepreneurs
funding, but not the business acumen needed to
make a start-up successful.
Yozma was created to fill this gap. The gov-
ernment of Israel invested $100 million in 10
new venture capital funds. “Each fund had to
be represented by three parties: Israeli venture
capitalists in training, a foreign venture capital
firm [with experience], and an Israeli investment
company or bank.” These ten funds were round-
ed out by one, final fund of $20 million that
would invest directly into tech companies. Se-
nor and Singer explain how the funds operated:
“The Yozma program initially offered an almost
one-and-a-half-to-one match. If the Israeli part-
ners could raise $12 million to invest in new Is-
raeli technologies, the government would give
the fund $8 million. There was a line around the
corner. So the government raised the bar. It re-
quired VC firms to raise $16 million in order to
get the government’s $8 million. The real allure
for foreign VCs, however, was the potential up-
side built into this program. The government
would retain a 40 percent equity stake in the
new fund but would offer the partners the op-
tion to cheaply buy out that equity stake—plus
annual interest—after five years, if the fund was
successful. This meant that while the govern-
ment shared the risk, it offered investors all of
the rewards. From an investor’s perspective, it
was an unusually good deal…
The ten Yozma funds created between 1992 and

11. 11
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REFERENCES
1
https://www.theatlantic.com/business/ar-
chive/2012/08/its-not-just-the-culture-stupid-4-rea-
sons-why-israels-economy-is-so-strong/260610/
2
https://eh.net/encyclopedia/a-brief-economic-histo-
ry-of-modern-israel/
3
https://www.timesofisrael.com/germany-increas-
es-reparations-for-holocaust-survivors/
4
http://www.jewishvirtuallibrary.org/total-u-s-foreign-
aid-to-israel-1949-present
5
https://data.worldbank.org/indicator/NY.GDP.
MKTP.CD?end=2016&locations=IL&start=1984
6
See The Tyranny of Experts by William Easterly for
more.
7
Senor, Dan, and Singer, Saul, Start-Up Nation: The
Story of Israel’s Economic Miracle, Chapter 7
8
Senor, Dan, and Singer, Saul, Start-Up Nation: The
Story of Israel’s Economic Miracle, Chapter 7
9
Clemens, Michael, Economics and Emigration: Tril-
lion-Dollar Bills on the Sidewalk?, Journal of Economic
Perspectives, 2011
10
https://www.inc.com/jeremy-quittner/foreign-pat-
ents-and-united-states-innovation.html
11
Fairlie, Robert W.; Lofstrom, Magnus (2015) : Immi-
gration and Entrepreneurship, CESifo Working Paper,
No. 5298, Center for Economic Studies and IfoInstitute
(CESifo), Munich
12
https://nypost.com/2017/01/29/why-isra-
el-has-the-most-technologically-advanced-mili-
tary-on-earth/
CONCLUSION
Israel has had a meteoric and unique ascension
among the world’s most rapidly developing and
competitive economies. Surrounded by enemies
and filled with a historically persecuted people,
Israel has become the world’s most innovative
nation in spite of seemingly insurmountable
hardships. Many of the catalysts which drove
this economic growth are unique accidents and
coincidence of history which do not provide
many lessons for the nascent Start-Up Nation
wishing to emulate Israel’s growth.
However, a few lessons can be gleaned from Is-
rael’s economic miracle: the importance of fiscal
austerity, the lightest regulatory burden possible,
the importance of state-backed venture funds
for new jurisdictions, the importance of high-
skilled, highly-educated immigrants, and the im-
portance of developing a culture of innovation
and entrepreneurship.
It may be impossible to exactly replicate the
unique amalgam of circumstances which cat-
alyzed Israeli growth, but application of these
lessons will almost certainly put any aspiring
Start-Up Nation on the path to prosperity and
human flourishing.

12. 12
May 1st
, 2018
13
https://www.bloomberg.com/graphics/2015-innova-
tive-countries/
14
https://www.haaretz.com/.premium-israeli-scientif-
ic-studies-declining-1.5328140
15
https://atlas.media.mit.edu/en/profile/country/isr/
16
https://globaledge.msu.edu/countries/israel/trades-
tats
17
Senor, Dan, and Singer, Saul, Start-Up Nation: The
Story of Israel’s Economic Miracle, Chapter 9
18
North, Douglass C. 1991. “Institutions.” Journal of
Economic Perspectives, 5 (1): 97-112. https://www.
aeaweb.org/articles?id=10.1257/jep.5.1.97
19
Senor, Dan, and Singer, Saul, Start-Up Nation: The
Story of Israel’s Economic Miracle, Chapter 2
20
https://www.theatlantic.com/business/ar-
chive/2012/08/its-not-just-the-culture-stupid-4-rea-
sons-why-israels-economy-is-so-strong/260610/
21
https://data.worldbank.org/indicator/NY.GDP.
MKTP.CD?end=2016&locations=IL&start=1960
22
Senor, Dan, and Singer, Saul, Start-Up Nation: The
Story of Israel’s Economic Miracle, Chapter 10
23
Dawson, John, and Seater, John, Federal Regula-
tion and Aggregate Economic Growth, 2013. http://
www4.ncsu.edu/~jjseater/regulationandgrowth.pdf
24
Senor, Dan, and Singer, Saul, Start-Up Nation: The
Story of Israel’s Economic Miracle, Chapter 10
25
Ibid.