The State of Israel is located in Middle East (Western Asia) on the southeastern coastline of the Mediterranean Sea and northern shore of Red Sea, with total area of 21,640 sq km². The landscape is mixture of coastal lowland, central hillside area, Jordan Valley and Negev Desert, which occupies one-half of the total land. Taking into account the population (which at the moment of the creation of the Israeli state is 806,000 habitants), as well as, the large area of desert land, the Israelis faced two challenges: to increase the population (with aim to increase labor force and territorial settlement) and find a sustainable method to use and recycle water (as a key element for agricultural development). To accomplish the first goal, on July 5, 1950, the Israeli Assembly approved the Law of Return, which gives Jews the right to come and live in Israel, while for realization of the second goal, the largest contribution comes from the innovations of agricultural communities, known as kibbutz. The first part of the paper identifies Israel's immigration policies and Kibbutz water innovations that contributed to the development of the state. In order to find out whether population and water are factors for development in the Macedonian reality, the second part of the paper presents the situation of the population and the phenomenon of emigration, as well as the real state of the water resource and its use in agriculture. The research has demonstrated a completely different situation in the Macedonian case. While Israel is pursuing a liberal immigration policy to unite all Jews in its country, the Macedonian state faces constant emigration of its citizens to other countries. Low salaries and lack of a concrete strategy to motivate young people to stay in their country are the cause of increased emigration. Regarding the second factor, although there are good conditions for development of agriculture (such as climate, fertile soil and water) this sector is not a leader in contributing to the economy of the country and the state is ranked between the first countries to irrational use of water. The purpose of this paper is to examine how population factor and water factor-related to innovations and their use in the agricultural sector, have contributed to the development of the Israeli economy and whether Israeli experience can be applied to macedonian case.