“When you go to the Middle East looking for oil, you don’t need to stop in Israel. But if you go looking for brains, for energy, for integrity, It’s the only stop you need to make” – Warren Buffett 

For decades following on from the Second World War, Jews from Europe in particular, and all around the world, made the journey to Israel. This migration of the Jewish diaspora – known as the aliyah (simply ‘return’ in Hebrew) – peaked in the 1980s and contributed significantly to the economic boom of the same time, but has slowed down drastically in recent years, where it appears the opposite is occurring. This brain drain highlights the unique situation that Israel has come to find itself in, serving to in effect continue a cycle of immigration and emigration of the world’s more talented and educated Jews. What is most difficult about this situation for Israel is that its ‘pulling power’ of the past relied on appealing to a common sense of identity on top of the economic benefits. However, nowadays, in a highly globalised world where anti-semitism is appearing to be dwindling in traditional Jewish ‘outposts’ such as France and Germany, the brain drain seems to be happening due to economic and practical reasons, suggesting that there is little that Israel can do to prevent such activity. What this means for the future security of the Israeli economy is unclear, but it is certain to hinder its performance in one way or another.

Generous government backing in the 1990s of research and development in the technological sphere “nurtured” an “infectious” entrepreneurial spirit in Israel that facilitated the high-tech boom which earned Israel the nickname of “startup nation”. The military and its significant budget promised endless possibilities for innovative engineers to blossom in Israel, and there is evidence of its attractiveness as a developing centre of technological advancement as over a million Soviet immigrants arrived during and after the Cold War, and helped to stimulate the Israeli economy. An example that highlights the extent to which Israel is suffering from a brain drain is the fact that in the past eleven years, six winners of the Nobel prizes for economics and chemistry are Israelis based abroad.

Israel has consistently followed an aggressive economic development strategy, of which the launch of innovative firms is a crucial element, to allow them to compete economically. Today, Israel has the highest proportion of engineers per 10,000 people, with 135, demonstrating the successful approach towards the high-tech industry. However, as mentioned previously, it is those who are part of the high-tech industry being lured away to Europe, the United States, or elsewhere, to follow their career . According to Florida, Israel tops the list of countries measured by percentage of economic output invested into research and development, heading technological powerhouses such as Sweden, Finland, Japan, Germany and South Korea. In an index measuring patents per capita, Israel is placed fifth, only behind the United States, Japan, Switzerland and Finland. This affirms the reputation of Israel’s culture to be that of a highly entrepreneurial and innovative nature. The subsequent positive effects upon the state of the economy are clear to see.

A flipside to the suggestion that Israel’s brain drain has negatively affected the economy is the idea that Israel benefits when its most talented lives abroad through “brain circulation”. It is surmised that brichat hamochot – the escape of the brains in Hebrew – helps nations that invest heavily in education to thrive by encouraging and facilitating international knowledge networking capabilities. Research demonstrates a direct correlation between the level of foreign investment received by Israel and the country in which Israelis have emigrated to.

This is especially true of Israel’s relationship with the United States of America, where a large amount of foreign assistance comes from in the form of military aid.  The number of physicists who have immigrated from Israel to work in top-40 American faculties is a staggering 10% of the total number of physicists working in Israeli research facilities. The same can be said about chemists, where the figure is almost 12.5%. Even more revealing figures demonstrate the true extent of brichat hamochot. In 2004-05, 24.9% of the total number of scholars working in Israel had emigrated to the United States and were working in American universities. In 2008, the figure had risen to 29%. The disciplines that demonstrated this the most evidently were computer science, economics, physics, chemistry and biology. A significant reason for this is the pay available in such environments, where, relative to Israel, the salary is much higher. The same article suggests that nationwide expenditure per student has fallen dramatically. A common view on the reason for the brain drain is the occurrence of “the lost decade”, which represents the years 2002 up until 2010, a period in which higher education funds declined whilst the number of students grew. For Israel to recover from its current position as a ‘feeder’ of talent to other countries, specifically in the technological sector, it must arguably reform its university system as to not fall further behind other nations.

To summarise, Israel has historically had high levels of skilled immigration, but this trend is starting to slow down and even reverse. Highly skilled expats are achieving success elsewhere in the West, and whilst they can still contribute to Israeli economic development as drivers through investment and sending money back home, it would be more useful to retain these individuals domestically. Israel may have to reform its educational system and support for the high technology sectors in order to retain homegrown talent. Immigration has been a key driver of Israeli economic development, but may not remain so in the future.

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