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Israel's Economy 101



Against all odds, Israel has built a leading economy with strong emphasis on foreign trade. Although international focus has historically been on Israel's security issues, it is fundamentally important for the world to see the strength and potential of the Israeli economy. Since the 1970's Israel has implemented a mass privatization of previously state-owned companies, a result embodied in the 1985 Stabilization Program. Aimed to increase competition within Israel, this program has launched Israel into the forefront of the world's manufactured goods and software industries (comprising 97% of Israel's exports), and reflects Israel's commitment to free trade.

Consequently, Israel is a member of the WTO and has signed free trade agreements with the US, the EU & the EFTA countries. With Israel's problem of inflation during its infancy now surmounted, a strong and transparent fiscal policy in effect, and innovative monetary policy aims, there are no fears of financial crises such as those that struck East Asia. Israel and its trade partners are ready to usher in an age of free trade.

Interesting facts about the Israeli economy

Israel, the 100th largest country, with less than 1/1000th of the world's population, can make claim to the following:

  • In proportion to its population, Israel has the largest number of startup companies in the world. In absolute terms, Israel has more startup companies than any other country in the world, except the US (3,500 companies mostly in hi-tech).

  • Israel is ranked #2 in the world for venture capital funds, right behind the US.

  • Israel has the highest average living standards in the Middle East. The per capita income in 2000 was over $17,500, exceeding that of the UK.

  • Israel's $100 billion economy is larger than all of its immediate neighbors combined.

  • Israel has the third highest rate of entrepreneurship - and the highest rate among women and among people over 55 - in the world.

Information Technology & Communications

  • With more than 3,000 high-tech companies and start-ups, Israel has the highest concentration of hi-tech companies in the world (outside of Silicon Valley).

  • Israel produces more scientific papers per capita than any other nation by a large margin - 109 per 10,000 people - as well as having one of the highest per capita rates of patents filed.

  • Israel leads the world in the number of scientists and technicians in the workforce, with 145 per 10,000, as opposed to 85 in the US, over 70 in Japan, and less than 60 in Germany. With over 25% of its work force employed in technical professions. Israel places first in this category as well.

  • The cell phone was developed in Israel by Motorola, which has its largest development center in Israel.

  • Most of the Windows NT operating system was developed by Microsoft-Israel.

  • The Pentium MMX Chip technology was designed in Israel at Intel.

  • Voice mail technology was developed in Israel.

  • Both Microsoft and Cisco built their only R&D facilities outside the US in Israel.

  • Four young Israelis developed the technology for AOL Instant Messenger in 1996.

  • The first PC anti-virus software was developed in Israel in 1979.

  • A small Israel company developed a revolutionary electro-optic processor, which operates one thousand times faster than any known Digital Signal Processor.

  • An Israeli-developed algorithm enabled NASA to transmit images from Mars.

  • Israel hosts IBM's largest R&D facilities outside the United States.

Agriculture & Environment

  • In response to serious water shortages, Israeli engineers and agriculturists developed a revolutionary drip irrigation system to minimize the amount of water used to grow crops.

  • A team of Israeli and US researchers has designed a watermelon-picking robot endowed with artificial vision to do the job of harvesting.

  • An Israeli company has developed sensors that pick up signs of stress in plants.

  • An Israeli company is providing the technology behind an American all-electric bus for urban use.

  • Israeli, American and Canadian researchers are working together to develop nanotech-based solutions to the water shortage in the Middle East.

  • An Israeli company is developing cotton plants that are resistant to adverse salinity conditions and drought.

  • An Israeli two-flush system has the potential to save billions of gallons of water a year.

Security and Defense

  • According to industry officials, Israel designed the airline industry's most impenetrable flight security. US officials now look to Israel for advice on how to handle airborne security threats.

  • Israel has designed the first flight system to protect passenger and freight aircraft against missile attack.

  • Israeli-developed security precautions have been adopted in Maryland and Washington.

  • Israeli researchers have developed an engine-less, nano-RPV (remote piloted vehicle).

Life Sciences

  • An Israeli company has unveiled a blood test that diagnoses heart attacks via telephone.

  • The Israeli-developed Ex-Press shunt is providing relief for American glaucoma sufferers.

  • An Israeli research team has found that the combination of electrical stimulation and chemotherapy makes cancerous metastases disappear.

  • Israeli scientists developed the first fully computerized, no-radiation, diagnostic tools for breast cancer.

  • An Israeli company developed a computerized system for ensuring proper administration of medications, thus removing human error from medical treatment.

  • Israel developed the first ingestible video camera, so small it fits inside a pill. Used to view the small intestine from the inside, the camera helps doctors diagnose cancer and digestive disorders.

  • Researchers in Israel developed a new device that directly helps the heart pump blood, an innovation with the potential to save lives among those with congestive heart failure. The new device is synchronized with the heart's mechanical operations through a sophisticated system of sensors.

  • Israeli researchers are playing an important role in identifying a defective gene that causes a rare and usually fatal disease in Arab infants.

  • An Israeli company has been given a US grant to develop an anti-smallpox first aid treatment kit.

  • Israeli microbiologists have developed the first passive vaccine against the mosquito-borne West Nile virus.

  • Israeli medical research indicates that lycopene - the red pigment found in tomatoes - lowers blood pressure.

  • Israeli stem-cell technology is being used in the U.S. to regenerate heart tissue.

  • An Israeli company has developed a device that could enable millions of American diabetics to painlessly inject themselves with insulin.

  • Scientists in Israel have used strands of DNA to create tiny transistors that can literally build themselves.

  • An Israeli company has developed a new device for monitoring coronary disease that will be integrated into future generation of cell phones.

  • An Israeli has invented a 'bone glue' that will reduce the need for bone transplants and heal bone defects caused by cancer.

  • Israeli scientists have created a DNA nano-computer that not only detects cancer, but also releases drugs to treat the disease.

  • Israeli scientists have alleviated Parkinson's-like symptoms in rats.

  • Israeli scientists are developing a nasal spray that will provide a five-year flu vaccine.

  • Israeli scientists have discovered how to turn mismatched cells into cancer fighters.

  • An Israeli-developed device can painlessly administer medications through microscopic pores in the skin.

  • Israeli researchers have created a 'biological pacemaker', which corrects faulty heart rhythms when injected into the failing hearts of pigs.

  • Two Israelis won the 2004 Nobel Prize for Chemistry for their groundbreaking work in cancer research.

  • Israeli researchers have proven that Prozac can improve the effectiveness of chemotherapy.

  • An Israeli-developed elderberry extract is one of America's best-selling flu prevention medicines.

  • An Israeli company has developed a simple blood test that distinguishes between mild and severe cases of MS.

  • Israeli research has found that citrus oils may hold the key for asthma treatment.