The economy of Israel is a developed free-market economy.  It has the second-largest number of startup companies in the world after the United States, and the third-largest number of NASDAQ-listed companies after the U.S. and China. American companies such as Intel, Microsoft, and Apple built their first overseas research and development facilities in Israel.

The following tables and chart will tell the change details in last 5-10 years:

Israel Distribution of workforce from the last 5 years:

Sector 2016 2017 2018 2019 2020
Agriculture 1.02% 0.99% 0.95% 0.92% 0.9%
Industries 17.5% 17.36% 17.17% 16.99% 16.82%
Services 81.48% 81.65% 81.88% 82.08% 82.28%

Israel Distribution of GDP across economic sectors:

Sector 2015 2016 2017 2018 2019
Agriculture 2.52% 2.47% 2.4% 2.33% 2.28%
Industries 25.9% 26.23% 26.5% 26.8% 26.75%
Services 68.95% 69.30% 69.5% 69.82% 70.55%

Here attached the last 10 years chart of Israel GDP: (amount in billion USD):


3 Sectors of the Economy – Agriculture, Industry and Services:

  • Agriculture:

Agriculture is an important part in the Israel’s economy. Israel is almost self-sufficient in food products with just only 20% of the land area is arable. It employs almost 0.9% of the total workforce and contributed almost 2.25% in GDP.

Every year Israel exports more than $2 billion worth of vegetables and fruits. Mostly are exported in Europe.

Major Products In this Sector:

Fruits and Vegetables: Israel is one of the world’s leading fresh citrus producers and exporters, including oranges, grapefruit, tangerines and a hybrid of a grapefruit and a pomelo, developed in Israel. Israel is the second leading producer of loquat after Japan.

Israel is a World Leader in Agriculture Technology:

Israel is a world leader in agricultural research and development, which has led to dramatic increases in the quantity and quality of the country’s crops. The drive to increase yields and crop quality has led to the development of new seed and plant varieties, as well as to innovations such as a soil conditioner substance (vermiculite) which, when mixed with local soils, boosts crop yields, and drip irrigation.

Agriculture Subsidy in Israel:

Every year government give more than NIS 4 billion in subsidies to farmers. The current level of agricultural producer support, an indicator of the annual monetary value of gross transfers from consumers and taxpayers to support agricultural producers in Israel is 17% of farmers’ gross receipts, below the OECD average of 23%, but considerably higher than in the United States (10%).

Israel government is more heavily involved in the agriculture sector than in virtually any other sector, mainly through protectionist quota policies. Israel’s import tax on agricultural produce is three times higher than that levied on non-agricultural products. Average tariffs in the dairy sector are 108% and can in some cases reach 160%.

  • Industries:

Industries plays a major role in the Israel’s economy. It contributes almost 26.75% in the GDP and employs almost 16.82% of the total Israel’s workforce.

Major Industries in this sector:

Diamond Industry: Israeli diamond industry is an important part of the manufacturing sector. The country is one of the leading centers for diamond cutting and polishing in the world, with the industry accounting for 23.2% of all export products. Cut diamonds were Israel’s biggest export product in 2019 and accounted for 12% of the world’s production. The US is the largest market for the Israeli diamond, accounting for 36% followed by Hong Kong at 28% and Belgium at 8%. 

Health Care: Israel’s healthcare technology market is estimated at $6.2 billion, of which devices account for $2.4 billion and pharma $3.8 billion. Every year Israel exported $5.64 of health care products. Germany is the biggest market for Israeli healthcare products, accounting for 15.3% followed by Switzerland 12.5% and Belgium 8.3%.

  • Services:

Service sector is a significant part in the Israel’s economy. It contributes almost 70% in the GDP and employed almost 82% of the total Israel’s workforce.

Major Industries in this sector:

Finance: This sector contributes almost 20% in the Israel GDP. 6 out of Top 10 Companies in Israel are from financial Sector. Israel GDP to debt ratio is 59.98% which is very low if we compared with many developed countries. Israel also has a small but fast-growing hedge fund industry. Within five years, the number of active hedge funds have doubled to 60 while the total asset values that the funds control have quadrupled in the same period.

Tourism: The tourism industry is one of the major sources of foreign revenues for Israel, attracting over 4.55 million visitors in 2019. The growth of this industry is not showing any sign of slowing down. The tourism industry employs about 200,000 people or about 6% of the workforce. Israel has numerous historical and religious sites, beaches, and museums that have played a key role in the growth of the tourism industry. The largest percentage of tourists came from the United States accounting for 19% of all tourists, followed by Russia, France, Germany, the United Kingdom, China, Italy, Poland, and Canada.

Top Companies in Israel:

Company Name Sector Forbes 2000 Rank
Teva Pharmaceutical Industries Pharmaceuticals 751
Bank Leumi Banking 883
Bank Hapoalim Banking 959
Check Point Software 1302
Israel Discount Bank Banking 1508
Bank Mizrahi-Tefahot Banking 1669
Migdal Insurance Insurance 1863
FIBI Holdings Banking 1918
Delek Conglomerate 1954


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