Start-Up Nation: Examining Israel's Economic Miracle and its Complex Realities

Since the release of Start-Up Nation: The Story of Israel’s Economic Miracle by Dan Senor and Saul Singer, Israel’s approach to transforming its economy has inspired many small countries, aspiring to become the next “idea factory”, where startups are revered as the growth engine.

The book Start-Up Nation showcases a country that has a lot of lessons that any country can adopt - friend or foe. It was therefore not surprising to know that a number of business and government leaders, including in the Arab world, have been quietly studying Israel.

Why are they studying Israel? Well…for one, it is a very entrepreneurial country boasting the highest density of start-ups in the world (a total of 3,850 start-ups, one for every 1,844 Israelis).

The figures speak for themselves: In 2023, the high-tech sector accounted for nearly 20 per cent of Israel’s GDP, employing nearly 12 per cent of the country’s workforce. A recent report by Rise, an Israeli think-tank, reveals that tech startups showed signs of resilience despite the conflict sparked by Hamas 7 October attacks.

Dan Senor, Adjunct Senior Fellow for Middle East Studies at the Council on Foreign Relations, has been on the front lines of policy, politics, and business in the Middle East. In government, he was one of the longest-serving civilian officials in Iraq. He has also served in Qatar and studied in Israel. Senor’s pieces are frequently published by the Wall Street Journal.

Saul Singer is the editorial editor of the Jerusalem Post, for which he writes a weekly column, and the author of Confronting Jihad: Israel’s Struggle and the World after 9/11. For ten years, he served as a foreign policy advisor on Capitol Hill.

However, a new book, Dark Sides of the Startup Nation, offers another perspective, by challenging this celebratory discourse. The author, Sibylle Heilbrunn, Professor of Organisational Sociology and Dean of the Faculty of Social Sciences and Humanities at Kinneret Academic College on the Sea of Galilee, argues that persistent social hierarchies and structural barriers within the high-tech industry have resulted in a zero-sum game with clear winners and losers in the sector.

Prof Heilbrunn’s research triangulates neatly with the 2023 annual report by the Israel Innovation Authority: The high-tech sector has emerged as the largest contributor to Israeli exports, and has seen significant increases in salaries and employment.

The book begins by contextualising Israel’s high-tech industry within a neo-liberal framework, exposing “the problematic and sometimes contradictory myth that entrepreneurship is meritocratic”.

One such example, she writes, is that of “Ahmed”, an Arab Palestinian from a city near Tel Aviv. Despite impressive academic achievements at the Technion and Tel Aviv University, he had problems landing a job in high-tech because of his ethnicity and the fact that he did not serve in the military, a key gateway into the sector.

Prof Heilbrunn highlights the resilience of such self-made entrepreneurs of the so-called marginalised groups in criticising the high-tech sector’s exclusivity. However, the reality appears to be more a matter of choice than circumstance.

In an effort to address this contradiction, Prof Heilbrunn uses the example of various well-meaning government and NGO-led programmes, which have sought to increase high-tech industry participation from peripheral groups and regions with little success.

Ultimately, however, Heilbrunn does not quite get to the root of the issue. The dichotomy presented by the author’s relentless portrayal of an exclusive environment, and her liberal use of examples proving that those who want to succeed, can, is the crux of the matter.

Rather than “challenging the meritocracy myth”, she would be better served by delving into the agency exercised by the so-called “marginal” groups.

Israel is a controversial country. Many people have strong feelings about it. There are those who regard the country as divinely-backed on one extreme. That 40% of its people are secular is usually not enough for them to rethink this belief. On the other extreme are those who see the nation as an imposition by foreign powers on the Arab world, and as such is a parasite to be exterminated.

Well…

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