Israel's Silicon Wadi

Abstract

Industry clusters consist of agglomerations of competing and collaborating industries in a region networking into horizontal and vertical relationships, involving strong common buyer-supplier linkages, and relying on a shared foundation of specialized economic institutions. “Cluster Based Economic Development: A Key to Regional Competitiveness,” Economic Development Administration, U.S. Department of Commerce, October 1997 INTRODUCTION: ISRAEL AS AN ICT CLUSTER By the end of the 1990s Israel was generally acknowledged to have developed a cluster of high-technology industries. For instance, Wired magazine (Hillner 2000), ranking locations by the strength of cluster effects, gave the Israeli high-tech cluster the same rank as Boston, Helsinki, London, and Kista in Sweden, second only to the Silicon Valley. As seen in Figure 3.1, the entire Israeli high-tech industry is close enough together, geographically, to be considered one cluster. Almost all high-technology activity is located in the densely populated areas of metropolitan Tel Aviv, Haifa, and Jerusalem. Some secondary areas with additional activity include the corridor to Beer Sheba, including Kiryat Gat, and the western Galilee – in all, an area that is no larger than 6,000 square kilometers, perhaps half of the extended Silicon Valley's geographical coverage. Its proximity has prompted a high-tech nickname: because, wadi means canyon or gorge and is commonly used in Hebrew and Arabic, Silicon Wadi has become the Israeli moniker of its technology cluster. At the core of the Israeli cluster lies the information and communication technologies (ICT) of software, data communications, electro-optics, hardware design, and Internet technologies.

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