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The Shekel
Hi-tech Industries
The Diamond Industry
Trade and Economy
@@"He who tills the land shall be satisfied with bread..." (Proverbs 12:11)

@@A positive upsurge in Israel's economic activity - led by a remarkable 6.4% growth rate of the Gross Domestic Product (GDP) - was last registered in the year 2000. Deteriorating security circumstances have since been the chief cause of a distinct slow-down in almost all branches of economic activity. For the first time in close to five decades, the GDP actually decreased in 2001: its real growth being -0.6% took the country far away from its heyday (in the first half of the 1990s), when it was listed as enjoying the fastest GDP-growth-rate among world economies. Israel's per capita GDP ($US 18,400 in 2000 which placed it 22nd in the world) has fallen to $US 17,300 in 2001.

@@With a population of only 6.5 million, Israel has been internationally acclaimed throughout the years, in particular for its extraordinary achievements in agriculture, irrigation, and various high-tech industries and electronic start-ups. Free trade agreements with Europe (EU and EFTA) and the United States during the past two decades facilitated Israel's expanding exports of goods and services (which exceeded $45 billion in 2000), as well as its participation in international business enterprises (which contributed to the country's accelerated growth during most of the 1990s).

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The Shekel
@@The shekel, Israel's unit of currency (valued at $0.21 in August 2002) was known as early as the second millennium BCE as a unit of weight for means of payment in gold and silver. It is recorded in the Bible that Abraham negotiated the purchase of a field "and a cave that was therein," at Machpela (in Hebron) saying:

 @@"I will give thee money for the field; take it of me, and I will bury my dead there. Ephron, the land-owner, replied: the land is worth four hundred shekels of silver... and Abraham weighed to Ephron?four hundred shekels of silver, current money with the merchant." (Genesis 23:13, 15-17)

Hi-tech Industries
@@The fastest growth rates are to be found in the high-tech sectors, which are skill and capital intensive and require sophisticated production techniques as well as considerable investment in R&D (the quality of which is ranked, according to the U.N. experts, among the highest in the world). A successful contribution to both these requirements is available thanks to academic research institutes, which provide much of the basic R&D, and venture capital funds, the number of which has grown from two to sixty since 1993. In 2000 they administered over $4 billion invested in some 160 start-ups.

@@ National expenditure on civilian R&D exceeded $4.8 billion in 2001 (similar to the 2000 figure) and double the sum allocated in 1991. The economy's investment in venture capital funds amounts to approximately 3 percent of its GDP (compared to only 0.3 percent in an advanced economy like the United States).

@@The significance of high-tech firms may be illustrated by the following: whereas they accounted for only 37 percent of the industrial product in 1965 and for 58 percent in 1985, they now exceed two thirds of it. Three quarters of the high-tech product are exported (providing some 80 percent of industrial exports excluding diamonds) while the more traditional, low-tech firms export only close to 39 percent of their product. High-tech exports quadrupled from $3 billion in 1991 to $12.3 billion in 2000; however, their remarkable 69 percent jump during 2000 was followed by a 12.6 percent fall, to $11 billion in 2001.

@@Over 90 percent of the annual $1.4 billion public budgets for R&D are allocated to the high-tech industries, much of which is channeled via joint venture capital funds. In recent years, the government has been collecting fair dividends on its shares in these funds, over and above repayment of loans granted to successful start-up companies.

@@The age of information technology (the Internet, electronic commerce, etc.) placed Israel's economy, and particularly its high-tech industries, in the forefront of world development in these fields. A number of internationally recognized Israeli companies have been bought by top business conglomerates in multi-billion dollar transactions.

@@The number of new start-ups is very high (more than 4000 at the beginning of the new millennium) due to the extraordinary innovation talents in Israel, coupled with the availability of highly skilled manpower. In some industries (hardware as well as software) this growth rate was, until 2001, even higher than in the Californian Silicon Valley, with foreign investors pouring some $6 billion into the industry during 1998-99. The growing presence of Israeli firms on Wall Street and the European Stock Exchanges is yet another manifestation of the respect with which Israel's high-tech industry is regarded.

High-Tech Opportunities in Israel

How Israeli High-Tech Happened

The Diamond Industry
@@Israel's Diamond Industry exports amounted to $7.51 billion in 2001, producing about 80 percent of the world output of small polished stones, which comprise most of the gems used in jewelry settings. It is also responsible for 40 percent of the polishing of diamonds of all sizes and shapes, making Israel the world's leading diamond-polishing center in terms of both production and marketing.

@@Israel now operates four bi-national funds for cooperation in funding industrial R&D: with the US (BIRD); with Canada (CIIRDF); with Singapore (SIIRD); and with Britain (BRITECH). In addition, it has agreements for joint funding of R&D projects with Austria, France, Germany, Holland, Ireland, Portugal and Spain.

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