"Start-up Nation' - cover image
"Start-up Nation' - cover image Israel News photo: (Amazon.com)

A new book examines why Israel leads the world in innovation, attracting "over twice as much venture capital investment as the U.S. and thirty times more than Europe," as the book's promotional material notes. Start-up Nation: The Story of Israel's Economic Miracle concludes that "Israel is not just a country, but a comprehensive state of mind."

They would choose to hire the average post-army Israeli over young people anywhere else.

Israeli society has some built-in - and some hard-earned - advantages, according to authors Dan Senor, an adjunct senior fellow at the Council on Foreign Relations, and Saul Singer, a former adviser in the United States Congress and editorial page editor for the Jerusalem Post. It is these advantages that facilitate Israel's generation of more start-up companies than Japan, China, India, Korea, Canada and the UK, as well as Israel's boasting the second highest number of companies listed on the NASDAQ stock exchange, after the United States itself. In fact, as noted by Senor and Singer, "more than all of Europe, India, and China combined."

"Israel is the fastest growing, one of the most dynamic entrepreneurial and innovation-based economies on the planet, that barely got hit by the economic crisis," Senor told CNBC in an October 28 interview. Start-up Nation identifies Israeli leadership across the fields of computers, security, communications, medical device patents, clean-technology and biotechnology.

Observing Israel's success, Senor said that he and Singer wondered "how the Israelis pulled it off in the least likely of places, surrounded by enemies, in a state of war since its founding, no oil, no access to regional markets." They then asked themselves, "What can we in the West learn from it at a time that we are trying to reboot out own innovation economy...." To answer that question they interviewed Israeli business and economic leaders, using their experiences to drive the investigation.

In Start-up Nation, Senor and Singer identify and analyze eight factors that have contributed to Israel's success. Among these are: Israel's proactive and welcoming immigration and assimilation policies; Israel spends more on civilian research and development than any other country; the military experience in which young people get "the most incredible leadership and entrepreneurial experience," according to Senor; a culture of overcoming adverse circumstances; and informal, flattened hierarchies, among others.

Senor, who was awarded the highest civilian honor by the Pentagon for his service in Iraq, bemoaned what he sees as American society's inability to integrate soldiers who have returned from Iraq in the economy, to take advantage of their rich experience.

Asked by a CNBC correspondent if Israel's success was primarily due to its small size, Senor replied that it is more likely due to Israel's "national ethos". When faced with the economic meltdown of 2008, Israeli entrepreneurs, he explained, "just wouldn't give up in ways that their peers were giving up around the world. During war time, they stay open...."

According to Senor, CEOs of many of the world's leading firms all agree that, if given the choice, they would choose to hire the average post-army Israeli over young people anywhere else, because the Israeli "capacity to manage and lead at a young age and deal with real problems and have real perspective is unlike anything in the world."