Aug 6, 2007 4:05 pm


I am sure Al Qaeda and the Islamists must be thrilled. They aided Israeli high tech boom. Yoram Etinger reports:

AIG’s CEO, Martin Sullivan: Israel’s economic indicators supersede political and security considerations, when it comes to investment decisions. When I examine Israel I notice a superb human factor, an impressive progress in the high tech and pharmaceuticals areas, a major flow of overseas investments – including from the US – and a negative inflation.

1. ISRAEL RANKS 3RD in the world, following California and Massachusetts, ahead of New York and Texas in the volume of high tech investment. According to Price Waterhouse-Coopers, $626MN was invested by VC funds in Israel’s high-tech (161 companies) during the first half of 2007 – the highest since 2001 ($885MN). $618MN was invested during the first half of 2006 (149 companies). ISRAEL IS A PREFERRED SITE – along Canada, China and India - for investments by 46% of US VC funds, which invest overseas (The Marker, July 16, 2007). According to Israel Venture Capital, $842MN was invested in Israel’s high-tech during Jan.-June, 2007 (Globes, July 17, 2007).

2. ALL TIME HIGH INVESTMENT IN ISRAEL’s REAL ESTATE by overseas investors - $784MN during Jan.-June, 2007 ($1.57BN annually), compared with $1.44BN in 2006 and $1.2BN in 2005 (Globes, July 10).

There is no doubt, Netanyahu's liberalizing reforms and the country's superb human capital are its major attractions. But in the past, security concerns scared away many investors. No longer:

UBS’ CHIEF ECONOMIST, Reinhardt Klaus: “9/11 demonstrated that Israel was not the most risky site on earth, and that the entire globe is a risky place for business… Political uncertainties do not deter investors, since – unlike most other sites - they would be satisfied with the political alternative to the current government… Notwithstanding the absence of natural resources, Israel’s economy is stronger than all background noises in the Middle East… Growth, low deficit and decreased unemployment have been sustained in spite of regional and domestic events… Investors who did not enter the Israeli market during the Lebanese War, and in its aftermath, could only watch the market booming…(The Marker, June 21).

Yes, indeed. Building trumps destroying. But will the Middle Easterners ever learn?!

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