By World Wide News Desk - Posted on 21 November 2010




Israel's Asian challenge

The Next Silicon ValleyJERUSALEM, Israel -(AP) — It's well known that the emergence of India and China is casting a shadow on the developed economies of Europe and North America. Less famous is the challenge facing Israel: With the Jewish state having quietly prospered as a global haven of innovation, key players here are asking whether the Asian giants might steal their high-tech thunder.

The laundry list of Israeli achievements is surprising for a country of just 7.6 million. The country helped give the world instant messaging, voicemail, and Internet telephony. Its nanotechnology has enabled great advances in medicine.

It boasts of more companies on the technology-focused Nasdaq exchange than any other place outside North America, and houses research and development centers for multinational giants like Microsoft and Intel.



All this has fueled economic growth and given the Jewish state, for all its troubles with the Arab world around it, a first-world standard of living. Technology now accounts for an eighth of Israel's economy and has pushed the per capita output up to a respectable $30,000 – more than many countries in Europe, and just under Japan, at about $32,000.

But there is increasing concern that just as Asia was able to seize a dominant slice of manufacturing – as well as outsourcing basic programming and call centers – with cheap labor, so it might do with higher-level technology.

Entrepreneurs here generally seem confident that they will maintain, at least for a while, an edge in the ability to innovate – a quality Israelis ascribe to a combination of circumstances, including the need to develop military technology and a societal bent to break the rules and challenge the established order.

But with the populations of India and China each topping 1 billion, so much larger than Israel's, it's easy to see how a shift could come quickly, by dint of sheer numbers alone.

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