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Israeli High Tech Adjusts to Asian Challenge

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The emergence of India and China is casting a shadow on the developed economies of Europe and North America, and is also posing a challenge to Israel. The country has quietly prospered as a global haven of innovation, and key players are asking whether the Asian giants might steal Israel's high-tech thunder.

Israel helped give the world instant messaging, voicemail, and Internet telephony. It boasts more companies on the Nasdaq exchange than any place outside North America, and houses R&D centers for multinational giants like Microsoft and Intel. Technology now accounts for an eighth of Israel's economy.

But there is increasing concern that just as Asia was able to seize a dominant slice of manufacturing—as well as outsourcing basic programming and call centers—so it might do with higher-level technology. With the populations of India and China each topping 1 billion, so much larger than Israel's, it's easy to see how a shift could comeby dint of sheer numbers alone.

From The Associated Press
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