There are a lot of nations which went from being Poor to Rich and even nations that went from Rich to Poor.
But there is a nation which went from literal nothing to the most developed economy in West Asia within 60 or so years, and that too despite all odds being stacked against. If you haven’t guessed it, it is Israel.
It was only a concept before 1948 and it’s birth was a through a bloody partition which led to a full-scale war between the new nation and almost all of Arab states which it survived but it also led to a boycott from almost all nations in West Asia and almost all states around it declared elimination of Isreal as a goal and was actively working towards it.
In a situation like this where stability is to be fought for, it will be almost impossible to achieve a functioning economy, let alone a developed economy, and looking at neighboring nations like Syria and Jordan, where even basic centralisation is still contested, Israel is almost at another league.
Note:- I would like to hereby say that i have tried to keep Politics out of it and try to solely focus on how the Economy of Israel works and i have to further clarify that i am a firm believer in International Law and this is my official stand on the issue.
David Ben-Gurion, the first PM of Israel and a Polish Migrant with Golda Meir, the first Female PM of Israel and an Ukranian Migrant
The first and best thing Israel got perfectly right was their immigration policy. The upside of Immigration is that their descendants are more likely to succeed in any fields than natives, and the downside of immigration is integrating their culture and customs with the the culture of the host nation.
For purely non-economic reasons, they managed to find the fine-line between this through “The Law of Return” which stupulated that anyone with Jewish Lineage is eligible for Israeli Citizenship, so what this meant is that Israel has a steady flow of enthusiastic migrants from all over the world but also shares some fundamental characteristics with the host population, As a result, 33% of Israel’s current population is born abroad and 90% of the Population is of Immigrant Descent.
Current PM of Israel Benjamin Netanyahu(R) serving on Israeli Special Forces, he later went to MIT for studies.
Another Non-Economic reason that contributed to Israel’s stipulation that almost all citizens of Israel, Male or Female, are required to serve in the military for 2 years, and Isreal is the only nation in the world to have compulsory Military Service for women.
The primary reason for this was to equip all the citizens to be reserve troops in case a conflict comes and was aimed to increase National Security and instill Patriotism. But a side effect of this was that the population learned many valuable life skills like Discipline, Management, Organisation, Survival Skills which will a huge help when someone is in R&D or is running a business.
Most Asian civilisations tend to have a rather ambivalent attitude towards risk taking and and on a sadder note, tends to cherish mediocrity.
But traditionally Jews have been a community who have been involved with money and finance and also highly educated (thank Catholic Church for that!) and when Israel came into being, this trait was inherited by higher spending on education which is something that is absent in other West Asian nations, this along with the attitude of Chutzpah, which resents mediocrity, made Israel a breeding ground for entrepreneurs.
This is not to say that Israel had a great smooth ride to development, most of Israel’s early economic policy was Socialist-Leaning in nature and this coupled with intermittent conflicts with neighbors and rampant instability made the functioning of the economy a messy affair.
However this changed after hyperinflation hit nearly a 100% in 1986 which forced the government to launch a new stable currency and this incident forced the government to rethink their strategies.They were forced to adopt pro-entrepreneur policies after nearly 800,000 people emigrated from the erstwhile Soviet Union and they needed jobs. For this, The Government was forced to encourage young Israelis to start businesses an employ as much as possible and used their global diaspora to attract Investment from all over the world.
All this was helped by the Peace Treaty signed by Fateh and Israel which brought relative stability to the otherwise volatile area. The Government instead of following laissez-faire attitude to businesses, continued their socialist legacy by investing in young companies until they became profitable, thereby acting as a de facto VC Fund and the ancient Jewish tradition of running Farming Communities called kibbutz was metamorphed into IT Parks and Industries. Maybe India can learn a thing or two here
Coincidentally, most of Israel’s tech industry is focused around the ancient community of Tel Aviv-Yafo, which is one of the leading areas for R&D in the world right up with Silicon Valley and also forms the Silicon Triad with Bengaluru the Silicon Plateau with the moniker of Silicon ‘Wadi‘ meaning valley in Hebrew
A kibbutz turned into Tech Incubator
Israel’s budget allocation for Research and Development per capita ranks #2 in the world just below South Korea and as a result top universities in Israel ranks highly in World Rankings despite being young and many tech giants like Intel, Microsoft and Google run a significant portion of R&D from Israel.
Another area where Israel pioneered is Agricultural Technology and their technology is now wanted in all parts of the world and they are perhaps the only nation which has managed to Greenify a desert and are behind innovations like Greenhouses
An influence of Geopolitics in Israeli R&D is seen in the field of Military Technology Espionage which was widely used by agencies like MOSSAD to advance their objectives and their tech is now wanted by many World Governments, mostly authoritarian and their nee clients now include old foes like Saudi Arabia
Israel’s GDP/Capita Growth, compared to their old oil rich rival Saudi Arabia
Israel’s GDP has risen ten-fold from 34 Billion to 370 Billion between 1986 and today and Israel has the highest living standards and the highest HDI score at anywhere in Middle East at 0.906 and Israel is considered as the only stable democracy in the area and Arabs in Israel, rather counterintuitively, enjoys more Political Rights and Opportunities than anywhere in West Asia which tells a lot.
Israel’s path to development is one of the most unique stories in the field of Development Economics where development happened not by following Economic Principles, but through a convergence of several outside unrelated factors, which when put into optimum usage, converted Israel into the behemoth it is today