Manuel Trajtenberg
Manuel Trajtenberg - 
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Scott Jagow: Last week, we found out how hard it is to start a business in Egypt. But in Israel, start-ups are booming -- especially technology companies.

I spoke with Manuel Trajtenberg, the head of Israel's National Economic Council. And I asked him why the tech sector has taken off.

Manuel Trajtenberg: We are talking about entrepreneurial talent, combined with technological proficiency. The second is we have the second largest VC, venture capital industry in the world. And third, we have a long history of government policies that are very conducive to these sort of developments.

Jagow: OK, so obviously there are things that are driving the Israeli economy in a good direction. Still, there are concerns. As head of the National Economic Council, what troubles you?

Trajtenberg: First and foremost these days is the slowdown in the U.S. Our growth has been based mostly, but not only, on the growth in exports. And therefore if there is a slowdown in the world markets originating in the U.S., that for sure will affect our economy.

Jagow: What about inside the country?

Trajtenberg: The main problem lays in the lack of employment for the very poor. And those are concentrated in two populations: the ultra-orthodox and the minorities, they are a population. So what we are trying to do is create employment opportunities for those populations to provide them with the tools to incorporate into the modern economy.

Jagow: This issue of the ultra-orthodox population, can you explain exactly how that affects the labor force?

Trajtenberg: Well, we're talking about 8 percent of the population. The ideal of that society is the learned man, the continued study and excels in the study of the bible. And the end result is they don't have the basic education needed to integrate themselves into the work force.

Jagow: Mr. Trajtenberg, in the bigger picture -- some of your neighbors across the way in the Gulf are getting a lot of attention these days for their economic growth. How much pressure does Israel feel to keep up with the Dubais?

Trajtenberg: I think it's great that there are moderate Arab countries that see economic development as the main goal. The economy is always a good, fertile ground for corporation, so I wish there were more Dubais around us.

Jagow: Manual Trajtenberg, head of Israel's National Economic Council. Thanks for joining us.

Trajtenberg: Thank you.