Summary

Israel currently endures a difficult political and economic situation. It has suffered from the same economic setbacks as other linked Innovation Economy regions , such as Ireland and Taiwan, caused by the dot-com meltdown, the recession of 2001, and the aftereffects of the September 11 terrorist attacks. In addition, Israel is hurt by ongoing terrorist activity, which has taken its toll on foreign confidence in its short- term attractiveness. However, Israel is still perceived as an R&D hotbed of innovation. The fundamentals of military transfer of technology to civilian application, well-run university incubators for start-ups, a huge Russian Jewish immigrant cadre of engineers and scientists, vibrant venture capital, and entrepreneurial champions are all in place for its continued integration as a world leading region for the Innovation Economy.