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Last updated : Nov 2009
Israel Business
Israel Business Overview - TravelPuppy.com

Israel has a varied and sophisticated manufacturing economy that, in many respects, rivals that of western Europe (this much is recognised by the IMF which in 1997 reclassified Israel’s economy as industrial rather than developing).

Agriculture is relatively small, about 4.2 % of Gross Domestic Products, with citrus fruit as the main commodity and export earner. The industrial sector is concentrated on aircraft, chemicals, engineering, electronics, construction materials, textiles and food processing.

Mining is also small but set to increase through production of potash and bromine. There is a small indigenous oil industry. The infrastructure is well developed and tourism, in which there has been substantial investment, has become an important sector of the economy.

Israel’s economic difficulties, which were predominantly serious during the 1970's and 1980's, were largely the product of political circumstances, particularly very heavy defence expenditure (estimated at around 40 % of Gross Domestic Products) and the cost of resettling Jewish arrivals.

Other significant factors are a large and relatively inefficient state sector and a substantial annual aid package from the United States of America, estimated at around US $10 billion per year. Israel is the single largest recipient of United States aid, which accounts for about 10 % of Gross Domestic Products.

The economy achieved relatively well during the 1990's in the wake of economic reforms introduced at the beginning of the decade, including deregulation and some privatisation. However, Israel was experiencing serious recession by 2000.

This lasted until 2002 when the economy contracted by 1 %, since then a mild recovery has been under way, growth for 2003 was 0.8 %. Under the Sharon government, economic reforms have continued irregularly. Israel has free trade agreements with the EU and the United States of America, the latter is its largest trading partner, followed by Belgium / Luxembourg, Germany and the United Kingdom.

The areas under the control of the Palestinian Authority have not shared in Israeli success, economic development under the Palestinian Authority was managed in a haphazard and often corrupt manner, especially regarding the use of foreign aid.

Since the Sharon administration came to power in Israel, the Palestinian areas have been successfully sealed off, the wall currently under construction around the West Bank (at huge cost) merely confirms that strategic decision.

Large areas under nominal Palestinian control have been totally destroyed and those remaining are barely able to function economically. Equally damaging, Palestinians with jobs in the Israeli territory have been powerless to pursue them properly through punitive security measures. Much of the population now relies on help from aid organisations.


Business can be frustrating, as in many cases it is difficult to get a direct reply to a question. Appointments are usual, as well as the use of business cards. General courtesies should be observed, although business meetings tend to be less formal than in Britain.

Business hours can differ owing to the diverse religions practised. Various offices are open half a day on Friday.

Commercial Information

The following association can offer advice:

Address: Federation of Israeli Chambers of Commerce, PO Box 20027, 84 Haashmonaim Street, Tel Aviv 67132

Telephone: (3) 563 1010

Facsimile: (3) 561 9027

Email address: chamber@chamber.org.il

Website address: www.chamber.org.il