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The Startup Nation, Israel in trouble: an opportunity for new countries?

Israel is known as the “Startup Nation” because of the number of technological enterprises that emerged in the country of only 9 million inhabitants. This title came even without the gigantic investments of more than US $ 100 million that flood other poles like Silicon Valley thanks to the impulses that the government gave to the startups, but now the miracle is in trouble.

The country produces a large number of successful technologies. Some of the best-known cases are Waze, the navigation application that ended up being purchased by Google in 2013 for US $ 1,150 million and the autonomous vehicle company Mobileye, for which Intel paid US $ 15,000 million last year.

But despite being 12 thousand kilometers from California, it faces a similar challenge that could jeopardize its entrepreneurial culture: how to adapt to its increasingly diverse population. While three out of four people living in Israel profess the Jewish religion, Arabs living in the country already make up almost the fourth remaining.

The problem is that they only make up 3% of the technology industry’s workforce and there is a huge salary gap that separates them from the Jews. The average Arab gains are 40% less than the average Jew.

According to Itzik Frid, an Israeli entrepreneur and investor, the country could lose its advantage if it fails to integrate minorities into the technological scene. In a dialogue with Business Insider, the CEO of Takwin Labs, an incubator focused on startups led by Arab entrepreneurs, explained that beyond being a minority and must promote their development, doing so could mean more than US $ 60 billion per year to the country.

To remedy the situation, the government developed a five-year plan in 2015, during which it will invest US $ 4,300 million in the Arab sector. This generated that almost all the companies of the technology of the portfolio of Takwin receive investments and subsidies of the Authority of Innovation, the agency in charge to develop the scientific and technological industry.

In turn, the ultra-Orthodox Jewish sector also presents its challenges. Like the Arabs, their level of education is below average. Most of them study in schools that do not teach basic subjects such as mathematics.

According to an OECD report, it is estimated that these two sectors are aimed at becoming a majority part of Israeli society and not integrating them into the country’s economy, the average salary could fall up to 30% below the average of the OECD.

Meanwhile, Argentina – and mainly Buenos Aires – seeks to position itself in the world as a new player for those who want to launch their startups, with its Buenos Aires technological hub, as well as with the number of companies that were created in its midst. Not for nothing the country has four unicorns: MercadoLibre, Despegar, OLX, and Globant.

In fact, we must consider that the Argentine capital sent a delegation headed by the Head of Government Horacio Rodríguez Larreta to the US west coast consisting of 15 local companies, most of them representatives of technology-based companies, such as Infotechnology here.

In favor of Buenos Aires is that being historically the capital of the country, it is structurally different from the rest of the Argentine cities: together with Rosario and Córdoba, it is responsible for 80% of the GDP, according to a study by the McKinsey Global Institute.

That is to say that the problem of wage differences has always faced them and, in addition, has a population that allows them to face any labor demand that is put in front of them.

Published inFintechStartupsTechnology

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