Judy Maltz

Ten years ago, who even used the term "high-tech"? Back then, there were Israeli "knowledge-intensive" industries. A smattering of companies,

names beginning with "El" (Elron, Elbit, Elscint, El-op, Elta ...), they were cited as examples of how Israel could commercialize on technological know-how gained through the battlefield.

In those days, there was no such thing as venture capital. So averse were private investors to putting money into risky projects that the government had to set up its own venture capital firm, to promote initiatives by immigrant scientists. And the only foreign firms crazy enough to set up camp were those virtually blackmailed by government grants and tax breaks.

Terms like start-ups, angels, exits, options, vesting, and Internet had yet to infiltrate the Israeli lexicon (none has a proper Hebrew translation yet; nor, by the way, does high-tech). And the high-tech boom had yet to turn Israel's "Silicon Wadi" into one of the world's most fertile breeding grounds for dotcoms, and Israeli engineers and software specialists into

hot commodities on the international job market.

The Israeli economy has undergone monumental changes in the past decade. From inflation levels approaching 20%, we're now down to 1-2% a year - lower even than the U.S. From a controlled, protected economy, we've become an illustrious example of how free, open markets work. Even our big, bad monopolies are feeling the pinch of modernization.

But no phenomenon has left its imprint more vividly than the high-tech revolution. In the past three years, high-tech exports have grown by 12% per annum, other industrial exports by barely 4 percent. During this period, $11 billion worth of Israeli high-tech companies was sold to foreigners; this year alone, venture capital firms are expected to invest a record $3 billion in Israeli high-tech. Foreign investors are waiting in line for start-ups to take their money. A hundred Israeli companies (mainly high-tech) are traded on NASDAQ, more than any other country after the U.S. and Canada.

But newfound prosperity has not been the lot of all Israelis; barely 20 percent are employed in the so-called "new economy." The rest are still struggling away, unemployment is a real threat, income gaps have widened.

There's one obvious solution: investment in education and training, lots of it. That would give the less fortunate a chance to get ahead, and solve the labor shortage that's become the main obstacle to

high-tech development.