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	Israel		Info-Prod Country Guide
CHARACTERISTICS   INDICATORS   THE ECONOMY   PRINCIPAL SECTORS   INVESTMENT ISSUES   PROJECTS   PROSPECTS

Principal Economic Sectors General Services make up the largest portion of the business sector product (about 40 percent), industry accounts for another 30 percent, transport and communications make up 13 percent, construction 9 percent and water and electricity 4 percent. Agriculture contributes the rest. Industry In view of the country's highly skilled labor force and lack of most basic raw materials, industry has concentrated on high added value manufacturing by developing products based on Israel's own scientific creativity and technological innovation. During the past few decades, Israel has made international strides in the fields of medical electronics, agrotechnology, telecommunications, fine chemicals, computer hardware and software, and diamond cutting and polishing. The highest growth rates are in the high-tech sectors, which are not capital intensive and require sophisticated production techniques as well as considerable investment in research and development. Traditional industrial branches include food processing, textiles and fashion, furniture, fertilizers, pesticides, pharmaceuticals, chemicals, and rubber, plastic and metal products. Transportation and Communications Contributing some 9 percent to GDP, the transportation and communications sector constitutes 11 percent of exports of goods and services and employs 6 percent of the country's labor force. Of this sector, 48 percent is in land transportation, 23 percent in shipping and aviation, 19 percent in communications and the rest in various services, including storage and parking. Construction In the early years of the State, residential building accounted for 84 percent of total construction output. Subsequently, it fluctuated between 70 to 75 percent until 1991 when it spiked to 86 percent to meet the needs of renewed waves of immigration. While initially almost all construction stemmed from government initiative and investment, the share of private investment rose gradually, from 33 percent in 1958 to 83 percent in 1989. This share temporarily declined recently as a result of the new immigrants' enormous demand for public housing, which was, to a large extent, government sponsored or subsidized. Agriculture Today, Israel meets most of its food needs through domestic production supplemented by imports, mainly of grain, oilseeds, meat, coffee, cocoa and sugar, which are financed by agricultural exports. Israel's farm production consists largely of dairy and poultry products as well as a large variety of flowers, fruit and vegetables. During the winter months, long-stemmed roses, spray carnations, melons, tomatoes, cucumbers, peppers, strawberries, kiwis and avocados are especially successful exports. Israel's agricultural success is a result of the close interaction between farmers and researchers who have cooperated in developing and applying sophisticated methods in all agricultural branches, as well as technological advancement, new irrigation techniques and innovative agromechanical equipment. Tourism In 1995, some 2.2 million people visited the country, attracted by its geographical diversity, archaeological and religious sites, almost unlimited sunshine and modern resort facilities. Most tourists to Israel come from Europe and the Americas. Tourism, with its enormous potential, is a major factor in Israel's economic plans to eliminate its balance of payments deficit. Tourism is a major source of foreign currency earnings. Some 70,000 employees are directly involved in the tourism infrastructure throughout the country. The Israeli tourism industry, however, is heavily dependent on the peace process and on Israel's ability to prevent terrorism. Indeed, in the immediate aftermath of the agreements with the Palestinians and Jordan, a record numbers of tourists visited Israel. Tourism, however, dropped precipitously following the rash of suicide bombings in the beginning of 1996. External Trade Due to its small size, Israel is dependent on foreign trade. The modest size of the domestic market limits the potential of economic growth and, accordingly, the possibility of realizing the full potential of production is limited. For this reason, exports play a leading role in the process of sustainable economic growth. A large part of the increase in the Israeli economy between the years 1992 and 1994 may be attributed to the rapid growth of Israeli exports, due mainly to the addition of new markets in Asia (China and India) and Eastern Europe. In 1994, the real growth of exports was approximately 11 percent, the same as in 1993. Israel imports 40 percent of its oil from Egypt, valued at approximately US$ 500 million per year. Another 50 percent originates in the Persian Gulf. Total oil imports amount to 9 to 11 million tons per year. Previous Chapter Contents Menu Next Chapter

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