In most countries, war devastates the economy. It drives capital away, halts production, and weakens entire industries. But Israel is not most countries. Amid the war in Gaza, instead of collapse, Israel has seen a surge in technological innovation and a surprising rise in foreign investment. While the cost of conflict—human, emotional, and economic, is very real, Israel’s high-tech sector has emerged as a stabilizing force and platform for transformation.

High-tech contributes 14 percent of Israel’s GDP and forms a crucial part of its national security. According to Brigadier General (Res.) Nati Cohen of the IDSF HaBithonistim movement, this is no coincidence. “The economy isn’t a byproduct of national defense—it’s one of its foundations,” he explains. Israel’s security and prosperity are deeply intertwined, and the war has only reinforced that connection.

Innovation in Crisis

Tens of thousands of tech workers were called into reserves, many for extended tours. Startups and tech firms faced disruption, and yet, foreign investment in Israeli technology rose by 77 percent over the past year. Investors saw what many in Israel already understood: crises expose urgent needs, and urgent needs drive innovation. Gaps in defense systems, logistics, and communication created an environment where entrepreneurs could develop practical,…