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Six Front War: As Israel Fights Multiple Battles, How Its Defense Firms Are Helping The War-Hit Economy Stay Afloat

With Israel now simultaneously fighting Hamas in Gaza, Hezbollah in Lebanon, Houthi rebels in Yemen, Iran-backed terrorists in Syria and Jordan and getting prepared to engage militarily with Iran, questions are being raised about the capacity of its mighty tech industry to withstand a wider war.

Many leading international publications and think tanks are wondering how Israel’s tech –sector, which accounts for over half of the country’s exports, a fifth of GDP—and a fifth of the reservists in the Israel Defence Forces (IDF), is managing to save the war-hit economy.

Their analyses suggest that the present situation may not last long, but at the moment, technologies related to defense and security are showing remarkable growth and greater signs of resilience than expected, thereby not only sustaining the country’s highly valued tech base but also adding an edge to it.

It may be noted that Israel’s tech industry represents 18% of GDP, compared to 10% in the U.S. and 6% in the European Union. The sector makes up 50% of all exports and contributes 30% of all tax revenues domestically.

Israel is said to be an entrepreneurial powerhouse and a hotbed for pioneering technologies, profitable business opportunities, and high investment returns.

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It is renowned as being the “start-up nation,” given the fact that it is the world leader for the number of start-ups per capita—“with 2,000 start-ups founded in the past decade, another 3,000 small and medium-sized start-up and high-tech companies, 30 growth companies, 50 large technology companies, and 300 multinational corporations R&D centers.”

Another distinct feature of the Israeli technological ecosystem is that Israel is ranked first in the world in R&D expenditure per capita. Israel invests about 6 (six) of its GDP in R&D, the highest in the world.

Israel also has the highest percentage of engineers and scientists per capita in the world and has one of the highest ratios of university degrees and academic publications per capita.

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Add to this the fact thatdue to mandatory military service, educated youth also receive advanced technical training during their conscription years. It is, therefore, not surprising to come across the stories of the likes of Ophir Dror, one of the founders of a newly formed Israeli cyber start-up, who was drafted to the Israeli army on his birthday last year — October 7.

“For four or five months, I was not available. I was in Gaza, I couldn’t even jump on Zoom calls, so it was just super hard not to be there and be part of a company I just founded and that came out of stealth while I wasn’t there,” Dror told The Times of Israel. “We were four founders and four employees at the outbreak of the war. As my army unit had a lot of missing equipment, one of the founders started fundraising. And for around a month and a half, the office was not really doing cyber security but buying various supplies, packing, and sending us boxes.”




Israel’s F-35 fighter jet – IDF

Despite all this, Lasso Security won the confidence of investors, raising the funds it needed to develop its product, and almost tripled its workforce during the war period.

Lasso is just one example of Israel’s economic and national resilience. Many reports indicate that, for the past year, start-up founders, investors, and employees have transformed and adapted. They have all attempted to keep fuelling Israel’s tech powerhouse, a major driving force for the growth of the country’s economy.

It is no wonder that despite fighting at “six fronts,” Israel’s tech sector, which depends considerably on foreign investment, still ranks third as a global hub for investments, attesting to its resiliency.

Recent data for 2024 shows that more than $4.5 billion was invested in the first six months, and the country seems to be on track for a $10 billion year, which represents almost a 50% increase. Such a trend is rare in the world.

Reports suggest that despite the perception that global sentiment is turning against Israel, foreign investors continue to back the country. According to the Start-up Nation Central report, foreign investors still represent 46% of the 217 active venture funds in Israel. They participated in 93% of all funding rounds in the first half of 2024, marking a seven-year high.

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Author and veteran journalist Prakash Nanda has been commenting on Indian politics, foreign policy on strategic affairs for nearly three decades. A former National Fellow of the Indian Council for Historical Research and recipient of the Seoul Peace Prize Scholarship, he is also a Distinguished Fellow at the Institute of Peace and Conflict Studies. He has been a Visiting Professor at Yonsei University (Seoul) and FMSH (Paris). He has also been the Chairman of the Governing Body of leading colleges of the Delhi University. Educated at the Jawaharlal Nehru University, New Delhi, he has undergone professional courses at Fletcher School of Law and Diplomacy (Boston) and Seoul National University (Seoul). Apart from writing many monographs and chapters for various books, he has authored books: Prime Minister Modi: Challenges Ahead; Rediscovering Asia: Evolution of India’s Look-East Policy; Rising India: Friends and Foes; Nuclearization of Divided Nations: Pakistan, Koreas and India; Vajpayee’s Foreign Policy: Daring the Irreversible. He has written over 3000 articles and columns in India’s national media and several international dailies and magazines. CONTACT: prakash.nanda@hotmail.com
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