Eastern Mediterranean Innovation Shows Promise of Regional Hubs

  • Middle East Policy

    Middle East Policy has been one of the world’s most cited publications on the region since its inception in 1982, and our Breaking Analysis series makes high-quality, diverse analysis available to a broader audience.

By Middle East Policy

High-tech collaboration can also provide “a valuable instrument for overcoming deeply rooted conflicts” in the Middle East, argues new journal article. 

Discoveries of large oil and natural-gas deposits in the eastern Mediterranean over the last decade have heightened tensions through competing maritime claims. The dispute between Israel and Lebanon over drilling rights, resolved after threats of violence by Hezbollah, attests to the stakes for the region.  

But collaboration among firms, governments, and international capital has the potential of fostering better relations. At a meeting of the leaders of Cyprus, Israel, and Greece earlier this month, Cypriot President Nikos Christodoulides stated that “The energy sector, particularly natural gas, electricity and renewable energy, is a solid foundation for regional cooperation.”   

An article recently published in Middle East Policy contends that this need not be limited to the energy sector. Innovation in a wide range of high technology is possible in the region, despite scholars’ traditional focus on major economies in the West and Asia. The collaboration that this requires could spill over into other parts of the Middle East, and into areas like politics. 

Ioannis N. Grigoriadis and Olgu Dervişler study the cases of Israel’s Silicon Wadi, Turkey’s METU Technopolis, and Cyprus’s tech ecosystem to understand how states with relatively small economies can punch above their weight. They find promise in “subnational innovation systems,” where tech startups, institutions of higher learning, and capital and knowhow from places like Silicon Valley can create the conditions necessary for high-tech development. 

They contend that there are limitations in the typical analyses of innovation, which focus on two types of national-level systems. One is the liberal market economy, such as in the United States, where light regulation drives competition and there is little networking or cooperation across businesses. The other is the coordinated market economy, such as Germany, which has more labor regulation and industry-specific education, which tends to support traditional industries and to have less innovation.  

However, the authors write, this binary is limited: The literature’s “focus on national-level coordination and institutional complementarities disregards the potential for innovation due to subnational factors.” 

Grigoriadis and Dervişler, of the Department of Political Science and Public Administration at Bilkent University, show that Israel, Turkey, and Cyprus feature hubs with enough concentrated networking and wealth to encourage startups and innovation. 

Israel’s Silicon Wadi, a center of technology research and development that dates back to the 1970s, is a key example. With a strong history in data communications and defense, government and foreign investment in building infrastructure and connecting companies, universities, and venture capital have turned the Wadi into “a global innovation hub.” Indeed, the authors say, “In 2021, one in four multinationals operating in Israel were headquartered in California.” 

Similarly, though to a lesser extent, Turkey and Cyprus both have subnational hubs featuring cross-national cooperation among stakeholders, from governments to corporations and individuals. The METU Technopolis in Ankara is a regional leader in software and IT, and Cyprus’ openness to startups through its ecosystem has earned it the nickname “island of innovation.”  

Grigoriadis and Dervişler conclude that these systems, “with innovative firms—local and multinational—operating in emerging high-tech areas,” could not only provide economic boosts but also “trigger closer government cooperation across the region, which in turn can pave the way not only for cross-regional policies that promote innovation but also for the resolution of other conflicts.” 

Among the major takeaways readers can find in Ioannis N. Grigoriadis and Olgu Dervişler’s Middle East Policy article, “From Silicon Valley to the Levant: Innovation in the Eastern Mediterranean”: 

  • Studies of innovation have focused on two types of systems: 

    • Liberal market economies (for example, in the United States, Britain, Canada) 

      • Feature light regulation, flexible labor markets, and top-down management. Incentives for innovation are driven by the market.  

      • Economies are future-oriented and more likely to encourage innovation. 

    • Coordinated market economies (Germany, Switzerland, Netherlands) 

      • Stronger state action, strong trade unions, and consensual decision making, with robust networking between firms. 

      • Economies are associated with traditional or declining industries. 

  • These studies neglect some potential advantages of subnational innovation systems. 

    • For example, Silicon Valley demonstrates the potential for clusters of firms concentrated in a subnational area to rapidly innovate. 

    • These systems take advantage of local knowledge, relationships across firms, and ties with innovation systems in other regions. 

    • The close relationships allow knowledge to be created and used more quickly. 

  • Case studies demonstrate the effectiveness of subnational innovation systems. 

    • Cyprus: In the 2000s, the island moved away from the reliance on international tourism and offshoring to its economy and now has upwards of 500 startups in fields such as big data, mobile app development, gaming, and renewable energy.  

    • Israel: has a significant regional innovation system, known as Silicon Wadi, which has become the most successful tech startup economy outside the US.  

      • The subnational system features collaboration between Silicon Valley and Silicon Wadi, with a quarter of multinational corporations operating in Israel maintaining HQs in California.  

    • Turkey: The Middle East Technical University Technopolis is the country’s first and highest-performing tech hub and subregional innovation system.  

      • Key businesses are in software and IT, electronics, mechanics and design, medical technologies, energy, and environment. 

      • The technopolis creates a link between Turkish entrepreneurship and Silicon Valley.  

  • These subnational systems can foster collaboration in the eastern Mediterranean on technology and the green economy. 

  • Deeper regional cooperation and the involvement of western firms and capital can foster leaps in innovation and create models for other parts of the Middle East.  


You can read “From Silicon Valley to the Levant: Innovation in the Eastern Mediterranean” by Ioannis N. Grigoriadis and Olgu Dervişler in the Fall 2023 issue of Middle East Policy

  • Middle East Policy

    Middle East Policy has been one of the world’s most cited publications on the region since its inception in 1982, and our Breaking Analysis series makes high-quality, diverse analysis available to a broader audience.

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