Small Miracle
How one tiny, endangered nation became an economic giant.


Clifford D. May

People forget how small Israel is. Its entire population is a little more than 7 million — smaller than Lima, Peru. Its land area is about 8,000 square miles, smaller than New Jersey or Belize. By comparison, Jordan, its neighbor to the east, occupies 35,000 square miles; Egypt, its neighbor to the West, covers 386,000 square miles.

There are more than 20 Arab states, which have a combined population of 325 million, and more than 50 majority-Muslim states, which have a combined population of well over a billion. By contrast, Israel is the world’s only Jewish-majority state — and 20 percent of its population is Arab, most of them Muslim.

So why is so much attention — and firepower — focused on this tiny nation? Israel’s many enemies and critics say it is because the Jewish state has deprived Palestinian Arabs of a homeland. But Jordan, situated on the three-quarters of historic Palestine lying east of the River Jordan — from which the country took its name when it was created in the 1920s — is populated, not surprisingly, mostly by Palestinians. As for the royal family that rules there, it was exiled from its ancestral home in Mecca, after the Saudis — a warrior clan subscribing to Wahhabism, a radically fundamentalist version of Islam — conquered the lion’s share of the Arabian Peninsula and named it after themselves.

Palestinians also inhabit Gaza, from which Israel withdrew every settler and soldier four years ago. And, under various peace proposals, Israel has offered to remove its citizens from more than 90 percent of the West Bank, a territory occupied in 1967 at the end of a war with Egypt (from which it took Gaza), Jordan (from which it took the West Bank), and other Arab neighbors whose explicitly stated goal was Israel’s eradication.

Defenders of Israel argue that it is despised for different reasons, not least because it is an outpost of Western values in a region, the broader Middle East, engaged in a long-term project of religious and ethnic cleansing. One country after another has become inhospitable toward its minorities. As a result, Jews, Christians, Baha’i’s, and Zoroastrians are among the minority groups that have been eliminated, decimated, or compelled to flee to more tolerant corners of the world.

There also is the fact that, economically, Israel punches way above its weight. As Dan Senor and Saul Singer describe and document in a fascinating new book, Start-Up Nation: The Story of Israel’s Economic Miracle, the “greatest concentration of innovation and entrepreneurship in the world today” is found in the Jewish state: a higher percentage of GDP devoted to research and development than anywhere else in the world; more high-tech start-ups per capita than any other country; 80 times as much venture capital investment per capita as in China; more companies on NASDAQ than all of Europe combined.

What’s more, Senor and Singer believe the conventional and sometimes stereotypical explanations for this success — e.g. Jews work hard, Jews are smart — are either wrong or insufficient.