The former prime minister of Israel – and its most decorated soldier – Ehud Barak said yesterday that Americans need not be alarmed by reports of economic sluggishness in his country and that their investments in high-tech and life sciences were especially welcome and would fetch rich dividends.

“Israel offers a huge potential,” Mr. Barak told The New York Sun in a brief interview after a luncheon appearance at the Council on Foreign Relations, where he spoke mainly on security issues in the Middle East. “Our technology industry is at the cutting edge – aside from Silicon Valley and perhaps New York, there’s no other place in the world where so much research and innovation is being done.”

His allusion was to the fact that high-tech has accounted for much of Israel’s growth, particularly since the mid 1990s when other sectors of the $120 billion economy started showing signs of stagnation. According to the Bank of Israel, high-tech accounts for two-thirds of Israeli industrial output and 80 percent of its industrial exports. Overall Israeli exports – including high-tech, fruits, weaponry and other items – are around $40 billion annually, and high-tech exports account for nearly $8 billion of this amount.

Mr. Barak seemed upbeat about the prospects for high-tech growth even though the annual economic growth rate has hovered around 4%, a respectable figure but hardly one to cause anxiety in other emerging countries – such as neighboring Turkey and, further away, Thailand and India – that are also vigorously promoting their high-tech sectors.

“The key to the dynamism of our high-tech sector, and of life-science, is the young generation in Israel,” he told The Sun. “There’s enormous talent in our country.”

Israel, in fact, has the highest number of engineers per 10,000 citizens than any country. Its figure is 135, compared to 85 per 10,000 people in America. Contributing to this high figure is the emigration of skilled men and women from the former Soviet Union.

Mr. Barak’s optimism about high-tech could have been based on the fact that, in the third quarter of 2004 – the most recent for which reliable figures are available – 113 Israeli high-tech companies raised $438 million from venture capitalists domestically and internationally, up 30% from the $338 million raised by 91 Israeli companies in the previous quarter of last year. That figure was also 55% higher than the $283 million raised by 103 high-tech companies in the third quarter of 2003. Indeed, Israeli high-tech companies obtained 43% more in venture capital during the first three quarters of 2004 compared to the same period in 2003.

A new high-tech company is formed every 36 hours in Israel. Said Mr. Barak, “If you are in high-tech, Israel is where you’d want to be right now.”