Many developed states are striving to enhance their global competitiveness by fostering knowledge industries. Unlike traditional industries, knowledge industries primarily rely on intellectual capabilities. While middle powers have significant potential in this area, this article focuses on the unique role of knowledge industries in boosting the influence of small and medium-sized (SMS) developed states. Recent studies highlight technology as a key element for middle powers, yet the concept lacks a clear definition, particularly regarding SMS states like Israel, Singapore, Sweden, and the UAE, which leverage technology for economic and political power. This article aims to address this theoretical gap by examining how SMS states develop competitive knowledge industries to elevate their global standing. It utilizes Christos Kassimeris's perspective that SMS states often lack not power, but the opportunity to display it, highlighting the heightened risks associated with their limited resources and dependence on foreign trade. The article uses Israel's experience in satellite, cybersecurity, and artificial intelligence as a case study, arguing that a perception of existential threat shaped a unique Israeli approach to securitizing civilian knowledge development, resulting in significant government intervention to preserve critical knowledge and cultivate sustainable knowledge industries. Israel's success, despite resource constraints and regional instability, demonstrates how an SMS state can achieve remarkable technological advancements and become a digital middle power.

The literature on science, technology, and international relations explores the impact of government policies and the international environment on state technological development and competitiveness. A significant body of work examines technology policy implementation challenges and gaps between declared policy and actual outcomes. Another strand focuses on the interplay between national technology governance frameworks and global competition in various technological domains, highlighting the critical role of governments as regulators, capacity builders, and partners in knowledge industry development. The literature also shows the dominance of the US and China in critical technologies due to significant government investment in infrastructure. However, the discourse on technology and middle powers is underdeveloped, partly due to the lack of a consistent middle power definition, leading to inconsistent identification of middle powers based on varied criteria such as economic strength, soft power, and functional characteristics. This necessitates further exploration of technology's role in understanding the influence and potential of middle powers in global politics.

This article employs a theory-centric research method, using evidence from Israel's policymaking processes in satellite, cybersecurity, and AI industries to test the applicability of securitization theory to its broader technological policy. The research design focuses on these three technological domains as representative case studies, reflecting different stages of technology autonomy. By comparing policies across these areas, the study aims to generalize about Israel's approach to enhancing national intellectual capabilities. The analysis doesn't evaluate the effectiveness of Israeli technology policies but seeks to explain their political motivations. The empirical analysis involves examining primary documents and academic sources, including Knesset committee records, government policy papers, State Comptroller reports, and memoirs of Israeli leaders. The selection of satellite, cybersecurity, and AI industries allows for an examination of how Israel's technological development progressed across different time periods and levels of technological complexity. The study acknowledges the crucial role of audience acceptance in constructing Israel's narrative, but it primarily focuses on the government's role in the securitizing discourse surrounding knowledge industries. The path-dependent nature of policy development is also considered, enabling incremental examination of developments within a sequence of events.

Israel's knowledge industries are deeply intertwined with its military and political history. The satellite industry emerged from the need to compensate for intelligence gathering limitations following the peace agreement with Egypt. The cybersecurity industry's growth benefited from a confluence of factors, including increased US-Israel security cooperation, the privatization of defense industry companies, the spread of the internet, and government initiatives like Yozma and the establishment of national technological incubators. The AI industry's development faced initial challenges due to political instability, but government initiatives through bodies like the TELEM forum and the Innovation Authority aimed to address gaps in human capital, infrastructure, and regulation. The government's approach to these industries reveals two main motivations: direct threat mitigation and capitalizing on global opportunities. The satellite industry primarily addressed a direct security threat, while the cybersecurity industry evolved from a defensive posture to a significant civilian sector. The AI initiative aimed largely at maintaining high-tech competitiveness. Israel's approach contrasts with other developed SMS states that have employed more market-driven approaches. A key finding is that after mitigating a specific risk, SMS states should actively seek global opportunities using the technological foundation already established. This was successfully achieved in cybersecurity, but less so in the satellite sector. The study concludes that while many factors influence the success of such opportunities, the general principle of leveraging existing technological investments is crucial for SMS states.

The findings highlight the significance of government intervention in shaping the development and success of knowledge industries in SMS states. Securitization of these industries, driven by both direct threats and the pursuit of global competitiveness, plays a crucial role. Israel's case suggests a strategic approach where initial investment motivated by security concerns can subsequently lead to broader economic and geopolitical gains. The study underscores the limitations of existing middle power theories in capturing the unique dynamics of technologically advanced SMS states. The study challenges the existing theoretical framework by demonstrating the significant influence SMS states can wield in global politics, specifically in the realm of technology. The ability of these states to successfully leverage technology-driven innovation directly impacts global power dynamics.

This article demonstrates how SMS states, by strategically securitizing civilian knowledge industries and leveraging existing technological investments, can significantly enhance their global influence and challenge traditional notions of middle power status. Israel's experience in satellite, cybersecurity, and AI industries serves as a compelling case study. Future research should further explore the applicability of this model to other SMS states, investigating the various factors influencing the success of this approach across different geopolitical and economic contexts and exploring the long-term sustainability of such initiatives. Further research could also delve deeper into the role of international cooperation and collaboration in supporting the development of knowledge industries in SMS states.

The study's focus on Israel as a single case study limits the generalizability of its findings. While the chosen case is richly detailed and insightful, further research is needed to confirm whether these patterns hold true for other SMS states with varying geopolitical contexts and economic structures. The analysis primarily focuses on government actions and narratives, overlooking the crucial roles of private sector actors and societal factors in shaping technological development. Further research could incorporate a more nuanced examination of the interplay between government policies and market dynamics.