Israel is a country of limited natural and financial resources. On the other hand it has been for several years on the forefront of research and development in advanced technologies. Israel is following the example of many other small countries that has sharply defined scientific and technological policies as a way of enhancing its competitive position and counterbalancing the limited natural resources that they have. The two main reasons behind the success of the Israeli high technology industry are the unmatched pool of highly skilled workers and the world-renowned research and academic capabilities that the country has.  Israeli authorities encourage the establishment of centres of excellence, whereas the scientists and engineers working on them constantly struggle with the challenge of quickly developing new and innovative solutions.   

The Israeli research and development (R&D) expertise has throughout the years expanded out of the military sphere where it was firstly concentrated. Currently universities and research institutes play an equal part in expanding the technological base of the country as dozens of government and public research institutes, medical centres conduct R&D. The most important of them are: the Technion and the Hebrew University the "Bar-Ilan University, Tel Aviv University, the University of Haifa the Ben-Gurion University of the Negev, the Hadassah Medical Center in Jerusalem and the Hebrew University's Faculty of Agriculture in Rehovot. Furthermore, in several cases, there is cooperation between high tech industrial parks and neighbouring universities. The most significant examples are: the Kiryat Weizmann Industrial Park and the Weizmann Institute in Rehovot; Jerusalem's Har Hotzvim and Malkah Technological Parks and the Hebrew University; the MATAM High Tech Park in Haifa and the Haifa Technion; and the Atidim High Tech Park and Tel Aviv University.

Israel is definitely a success story when it comes to R&D. This is highlighted by the fact that is 2nd (behind only the United States) on a per capita basis in its ability to generate new, technology-based companies with innovative market-focused products. One of the reasons of this success is without a doubt the importance that the Israeli government showcases in R&D. The government offers generous assistance to both high technology and other companies, to subsidize R&D and capital spending. According to the Israeli Ministry of Foreign Affairs the Office of the Chief Scientist (OCS) of the Ministry of Industry and Trade disburses to companies some $400 million annually in grants that cover between 30% and 66% of total development costs. The OCS recoups about $100 million per year in royalty payments from subsequent sales of successful products. As a result the amount that the country spent on research and development (R&D), in relation to its Gross Domestic Product (GDP), is among the highest in the world.

Apart from R&D the large pool of qualified personnel that Israel has is another reason why the country is performing well in advanced technologies. It is indicative that more than 20% of the country's workforce is university graduates.

An unusual source of talented people comes from the Israel Defence Forces. The army plays the role of a “big school” as it actually performs a nationwide screening program through which identifies young people with talent in advance technologies and puts them through rigorous training via elite programs and other military functions. Additionally, the army helps young people to establish personal networks that often form the basis for later partnerships in industry. Therefore in Israel, you can often find co-founders of many high tech companies began working together in the same army unit, something that can be fairly characterised as unique.

Israeli companies are global leaders in developing and implementing high technology solutions. They have developed the ability to foresee market needs and devise innovative, cost-effective software products in a rapid and flexible way. Skilled workforce and advanced R&D capabilities has been the key elements behind this procedure.