Athens Journal of Mediterranean Studies- Volume 5, Issue 3 – Pages 137-150 https://doi.org/10.30958/ajms.5-3-1 doi=10.30958/ajms.5-3-1 Singular Factors behind the Growth of Innovation in Israel By Raphael Bar-El * , Dafna Schwartz † , David Bentolila ‡ Israel is known as one of the leading countries in innovation, mostly in terms of Research and Development (R&D) activity. We describe the growth of innovation activity and focus on the question about the leading factors that explain the rapid growth of innovation activity. Against the theoretical background of the rule of comparative advantage, we find that the innovation trend in Israel was mostly stimulated by comparative disadvantages. The explanation of the growth of innovative activities is mostly attributed to the characteristics of the national innovation ecosystem, and to the ability to understand its functioning and to derive appropriate policy measures. Using the data of 127 countries as gathered in the Global Innovation Index (GII), we propose a model for the explanation of the relative growth of innovation in Israel, and support it through an in-depth survey of the main leaders of innovation in the last years, from the fields of academy, industry and government. Keywords: Israel, Innovation, Ecosystem. Introduction The state of Israel is considered as one of the leading economies in innovation achievement. It is ranked 11 out of 127 economies by the Global Innovation Index (Dutta et al. 2018). However, this cannot be explained by the factors which are generally considered as strong contributors to innovation, as mostly explained by the “triple helix” concept, which was developed quite intensively by Etzkowitz (see for example Etzkowitz 2008) and empirically tested in a few cases (Jackson et al. 2018). Moreover, Israel has been subject since its establishment to a few problematic constraints that are generally considered as inhibitors of economic growth: a small and geographically isolated market, lack of natural resources, heavy security needs, massive immigration flows. In this article, we focus on the influence of exogenous constraints upon the ability to achieve innovation advance, beyond the well know influences of the classic factors of the innovation ecosystem. We use the case of Israel to show that constraints that are generally considered as negative factors by economic growth theories, may have an inverse influence upon innovation development. We relate to three specific issues. First, we relate to the constraint of a small market (about 600 thousand inhabitants at the establishment of the state in 1948, until about 9 million in 2019), which significantly imposes two important restrictions: the potential for * Professor, Ben-Gurion University, Israel. † Professor, Interdisciplinary Center (IDC) Herzliya, Israel. ‡ Coordinator of Management Division, Zefat Academic College, Israel.