Conscripted Entrepreneurship, Israel and Singapore

I came across on this interesting article on entrepreneurship recently while scanning blogs of fellow Singaporeans (this one I happen to know):

Conscripted Entrepreneurship in Dominic Soon’s blog

In Dominic Soon’s blog, “Conscripted Entrepreneurship” discusses about Israel’s success as a technology cluster. Interestingly, the article made a small comparison to Singapore:

“Singapore’s attempt to establish itself as a biotechnology centre faces the challenge of encouraging risk-taking and entrepreneurialism in a highly conformist society.” (quoted directly from the article)

There are many interesting factors that attribute to Israel’s success. In “Funding Technology: Israel and the Virtues of Necessity” by Gill, Minshall, Rigby and Campell (2002, Wardour Communications), they cited a couple of other interesting factors other than the high level of military spending (9.4% of its GDP) and national service:

1. Relationship with US and Europe: The US is Israel’s strongest backer on its middle east foreign policy. Israel and USA has established a free trade agreement (FTA) with USA since 1985, and also with European Union in 1995. A more interesting fact is that Israel has also signed a FTA with Turkey (a Muslim country) in 1997.

2. Success through the growing network of Israeli entrepreneurs.

3. Increased immigration of Russian immigrants after the end of Cold War.

For a country, Israel does not appear to be a place that can be a leading knowledge based economy. First of all, it has a small population. It does not benefit at all from economies of scale open even to US states such as California or Texas. Second, it has limited export opportunities, considering its relationships with her neighbours around.

How did they turn their weaknesses into strength? Given the difficulty to trade significantly at the regional level, Israel adopted an internationalist attitude with most of its firms having operations in the US. These Israeli companies operate legally and commercially with look and feel of a US company.

From what we know about Israel, let us bring it to context to the Singapore case. Let’s examine some economic policies during the past few years:

1. FTA agreement with the US.
2. Import of foreign talent from India and China, similar to their approach to Russia, except that most Russians that migrate to Israel are mostly Jewish.
3. Moving out to China and US rather than establish more trade with our neighbours.
4. Growing network using Contact Singapore.

Are we adopting the Israeli model in retrospect? I will leave it to the readers to decipher for themselves.

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