10 Takes on Investing in Israel

If you read my checklist for how to research investing in Latin America, then you are aware of my "BrISK" (Brazil, Israel, South Korea) investment theme, which is vastly different from the popular "BRIC" (Brazil, Russia, India, China) theme.

That said, let's continue our exploration of specific investment opportunities outside the United States.

Next stop, Israel.

Understanding the "I" in BrISK

Israel is a nation of approximately 7.3 million people. In 2007, according to The Economist, Israel's real gross domestic grew 5.3% and is projected to grow 3.9% in 2008. In addition, the country has a current account surplus.

Investing in Israel requires an understanding of an immensely complex set of issues which contribute to the fiber of the country and economy. Yes, Israel is at the center of much international controversy -- both positive and negative -- however, investing is about making money, not influencing politics.

Here are three very important factors which are the foundation of Israeli culture and economics:

1. The Law of Return: The country's declaration of independence, when translated into English states: "The State of Israel will be open for Jewish immigration and for the ingathering of the exiles." This was later codified in the country's "Law of Return."

So, as investors, why should we care about this?

Over the last few decades, some of the brightest minds from the world have immigrated to Israel. The more recent émigrés came from the former Soviet Bloc nations, many of which were scientists, doctors and engineers. Thus, Israel has a culture rich with the intellectual capacity to develop technological and biotechnological products and advancements.

2. American Support: Support from the United States takes two forms: political and cultural. On the political front, the U.S. is one of Israel's closest allies. Culturally, Jewish and non-Jewish Americans both look toward Israel for spiritual relief and in turn, provide the country with economic support. This comes from tourism, trade and direct monetary support.