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Israel a hub for high-tech advances

From CNN's Richard Quest

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Micro drones that fit in a backpack are among UAVs crucial to modern warfare.

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(CNN) -- Israel's security needs have forced the country to fast track its high-tech solutions, meaning one of its key industries is in the area of defense developments.

Israel Aircraft Industries (IAI) is a prime example of how the country has adapted to its needs. In 1975, it pioneered the unmanned aerial vehicle (UAV), better known as the drone.

The drone and related technologies were born out of experience in the Yom Kippur War.

Now, from giants like the predator that can fly for two days non-stop, to micro drones that fit in a backpack, these UAVs are recognized as a crucial part of modern warfare and a top seller for Israel.

Getting data from the drone is only half the problem -- distributing it and making it meaningful is the real challenge.

These days, technology means that one person can effectively control the battlefield with the push of a button or the pull of a joystick, known as "network-centric warfare."

IAI Corporate vice president Dany Kleiman told CNN that his company's products were typical of Israel's accomplishments born out of necessity.

"In order to buy from Israel and be sole source for U.S. prime customer or any customer you must be very strong in quality, very strong in delivery and most important you need to come with the most innovative product to make sure you can capture the eye of a customer," Kleiman said.

"Twister" is one of the company's cutting edge of battlefield innovations. It is a three-dimensional moving map of military campaigns in real time.

Shlomo Dovrat is a high-tech entrepreneur who founded Israeli technology venture capital firm Carmel Ventures.

He told CNN that the country's compulsory military service had created a large pool of tech-savvy motivated young workers -- all eager to develop their own ideas.

"There's a lot of very good cultural as well as technological, managerial and entrepreneurial training for anyone who comes out of the army and goes out and is very passionate about what they do," Dovrat said.

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Compulsory military service has helped create a large pool of tech-savvy engineers.

He said the conveyor belt of young entrepreneurs leaving military service is one reason why Israel has proportionately twice the engineers of the USA or Japan.

Medical technology company Mediguide is typical of ex-defense know-how now being exploited commercially.

The company is currently building a GPS system for the human body.

Company president and CEO Gera Strommer told CNN that he and his business partner were working for a defense company when they came up with the idea.

"We saw a lot of very intriguing technology that can be used in various applications and we found out that there is a big need for these kind of capabilities in the medical arena."

If it sells, Mediguide hopes to join the other 120 Israeli companies quoted on the U.S. Nasdaq.

With 55 percent of Israel's exports now technology based, regional dominance in this field is likely to interest investors for many years to come.

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