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Ministry of Foreign Affairs

Media and Public Affairs Division

Information and Visual Media Department

Director: Mordehay Rodgold

Project Managers: Ariella Charny and Michal Gur-Aryeh

Executive Manager: MGS Language Services

Creative and Project Manager: Visual-Trigger

Design: Hashchuna

Content Research: Maof Creative

Writing: Yoav Fisher

FACTS ABOUT

ISRAEL

GLOBAL, OPEN AND ROBUST 2

DIVERSE SECTORS 6

THE START-UP NATION 10

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GLOBAL, OPENAND ROBUST

The Economy | Global, Open and Robust

Israel's economic miracle is the story of an economy built essentially from scratch, surviving numerous crises, and emerging as a global, high-tech powerhouse. What it lacks in natural resources, it makes up for with its human capital, and the creativity and determination of its people. With a highly educated workforce and adaptive policies to stimulate innovation, Israel has created a marketplace that is robust, open, and highly integrated.

Following the global financial crisis in 2008, as leading economies faced downturn, Israel proved its unprecedented stability and economic strength. Increasing GDP per capita, decreasing debt, stimulating current account surplus, and reducing unemployment,Israel weathered the recession with astounding resilience.

Today, the Israeli economy isflourishing; it is diversified, service-oriented and export-driven

The high-tech sector continues to thrive, accounting for over 11% of GDP – more than that of any other OECD country – and is backed by robust governmental investment in R&D. Israel is a heavyweight in a variety of industries, including cyber, med-tech and ICT.

Like all modern economies, Israel is not without its challenges. The government is continuously striving to maintain a healthy workforce, to bridge socio-economic gaps, and to remaincompetitive in the global marketplace.

s

s

Israel’s economy has consistently grown over the last decade.

Main Economic Indicators (2016)

GDP growth rate

2.8%

GDP/ CapIn thousands

Unemployment

34.3USD

4.4%

Inflation

-0.7

Current account balance to GDP

6.3%

Credit rating

A+

Economic Stability Since the 2008-09 Economic Recession

-6.0%

6.0%

8.0%

-4.0%

4.0%

-2.0%

2.0%

0.0%2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Israel OECD

Foreign Direct Investment Israel is a prime destination for Foreign Direct Investment. FDI quickly recovered after the 2008-2009 bubble, and accounted for 4.5%of GDP in 2013, well above the OECD average of 1.4%.

FDI inflow $M FDI inflow % of GDP

1995

1996

1997

1998

1999

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

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200

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200

9

2010

2011

2012

2013

$2,000

$ 0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

View above Tel Aviv and Ramat Gan

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Unemployment rate among select OECD countries, 2016

Israel has one of the lowest unemployment rates in the world

6.5%Chile

5.7%Australia

4.4%Israel

11.6%Turkey

4.6%switzerland 3.6%

Korea 4.7%United States

The Economy | Global, Open and Robust

Did You Know? Israel is home to the world's largest diamond exchange, which incorporates some 2,800 diamantaires members in the trading, cutting, marketing, brokerage, import and export markets. The Diamond Exchange District in Ramat Gan houses the world's largestdiamond trading floor.

In September of 2010, Israel became the 33rd country to join the OECD – a testament to the country’s successful transition from a developing to a developedeconomy.

Imports and Exports, 2015

Imports

Israel maintains diversified trading relations acrossthe globe

Exports

27% EU

27% NorthAmerica

25%Asia

21% AllOthers

Isra

el 1

9

Jap

an 1

7

USA

10

Gre

ece

29

Ital

y 26

Ger

man

y 4

Arg

enti

na 4

5

Rus

sia

49

No

rway

1

Human Development Index Israel ranks 19th in the world on the Human Development Index, a composite statistic of per-capita income, education and life expectancy.

HD

I val

ue

47% Europe

14% NorthAmerica

29%Asia

10% AllOthers

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Fash 90

DIVERSE SECTORS

Israel's economy evolved rapidly from primary (agriculture) and secondary (industry) sector-driven to service-driven. Today, it is more competitive and export-oriented then ever, powered by a highly skilled workforce, an outward focus, and increased global integration.

In the first two decades of Israel’s existence, three main sectors dominated – agriculture, textiles, and chemicals. Israel’s transition into a modern economy was characterized by the expansion of higher education, the integration of new immigrants into the workforce, the continuous effort to build trading relationships across the globe, and government support for R&D. Its market has grown with increasedprivatization and liberalization since the early 1990's.

Israel’s economy is driven by “value-added” industries in services and high tech. Israeli companies excel globally, particularly in ICT (Information and Communication Technology), med-tech, fin-tech, agri-tech, cyber, semiconductors, aerospace, defense technologies and other fields. Israel ranks third in the world the number of companies it has listed on NASDAQ, and many of its largest companies are traded on the Tel Aviv Stock Exchange.

The Economy | Diverse Sectors

Orchards in the Arid Israeli south Tamar Gas Field

Tamar Gas Field

Natural Gas Israel was traditionally an importer of energy sources; however, significant reservoirs of natural gas were recently discovered in the Mediterranean Sea off the coast of Israel. The discoveries of the Tamar (2009) and the Leviathan (2010) natural gas fields have given Israel the opportunity to become energy-independent, reduce the need for coal, and develop a newsector in natural gas exportation.

2019

2025

2031

2015

2021

2027

2017

2023

2029

0%

10%

30%

20%

40%

50%

60%

70% Natural Gas Coal Renewables

The late President Shimon Peres examines the touchscreen computer Pixelsense used for space research at MicrosoftCorporation in Raanana, central Israel I Flash 90

Projected energy source for electricity (% of total production)

10 The Economy | Diverse Sectors

Domestic Product by Industry 7.1% Human health and social work 3.2% Arts, entertainment and recreation 11% Housing 1.1% Agriculture 11.4% Manufacturing 1.70% Electricity and water 6.3% Construction 12.4% Wholesale & retail 1.9% Transportation and storage 10.8% Information and communication 20.4% Financial; real estate; scientific & technical 5.9% Public and defenceadministration 6.7% Education

% Domestic product by sector

70.6% Services 22.2% Industry 6% Construction 1.2% Agriculture

Domestic Product (2015)

Manufacturing Exports by Tech Classification ($M)

1995

1996

1997

1998

1999

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

$$5,000

$10,000$15,000

$20,000$25,000$30,000$35,000$40,000$45,000$50,000

IT, Scientific, Professional and Finance Services as Percent of GDP

Knowledge and skill-intensive sectors of the economy, like IT and professional services, have quickly become the hallmarks of the Israel economy.

1995

1996

1997

1998

1999

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

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200

9

2010

2011

2012

2013

2014

2015

15.0%

250%

30.0%

20.0%

35.0%

High + Medium High Medium Low + Low

Israeli industry has evolved from small and mid-sized companies that engaged primarily in agricultural products and textiles,to a global, high-tech industry

Packaged medicines, including antibiotics, penicillins, hormones, and other medicaments, represent 9% of Israeli exports and are valued at over 3.86 billion dollars. Israeli market leader Teva Pharmaceuticals, one of the largest generic drug manufacturers in the world, is responsible for one out of every eight generic drugs sold in the United States. In 2017, American pharma company Gilead bought Israel’s cancer-treatment company Kite Pharma for 11.9 billion dollars.

Manufacturing Exports and Imports by Technological Intensity, 2015

Manufacturing export was 45 billion USD (42% pf the total revenue in manufacturing), and consisted mostly of high-tech products.

High technology

0

10

20

5

15

25

Medium-high technology

Medium-low technology

Low technology

Import Export

Israeli scientists at Regentis Biomaterials developing GelrinC for the repair of focal defects in cartilage and osteochondral defects

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THE START-UPNATION Israel, recognized as the Startup Nation, has more startups per capita than any other country, and an entrepreneurial environment backed by a strong Venture Capital sector. Tel Aviv with the surrounding metropolitan area is known as Silicon Wadi, and is ranked as the 5th best startup ecosystem in the world,and the top non-US location, according to the 2015 Global Startup Ecosystem report by Compass. Numerous Israeli companies have been acquired by global corporations, while leading multinational enterprises continue to open innovation and R&D centers across the country. There are over 250 international corporations with offices in Israel, including Google, Intel, Microsoft, Facebook, and Apple, as well as time-tested companies like General Motors, Bosch, and Barclays.

The Economy | The Start-up Nation

Tech Exits

Over 250 Multinational Corporations with R&D Centers in Israel (by Country), 2015

Israeli high-tech exits (M&A, IPO, VC-backed), outperform industry averages, drivenby continued confidence in Israeli companies.

International companies like Google, Nestle, Intel, Tata, and Xiaomi have all chosen to be part of the Israeli high-tech ecosystem.

66% US

6%UK

5% Germany

4%Switzerland

3% France

3%Canada

13%Other

0

4

8

2

6

10

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Exit Amount $B # of Exits

Self-Driving Cars Mobileye, an Israeli technology company that develops vision-based advanced driver-assistance systems (ADAS) for collision prevention, was acquired by Intel in 2017 for 15.3 billion USD, in the largest tech exit in Israeli history. Mobileye technology is currently in use for developing autonomous cars.

R&D as Percent of GDP (2017)

5.0%

4.5%

4.0%

3.5%

2.5%

2.0%

1.5%

1.0%

0.5%

0.0%

S.K

ore

a

Isra

el

Jap

an

Finl

and

Swed

en

Den

mar

k

Taiw

an

Aus

tria

Ger

man

y

Bel

giu

m

Slov

enia

OE

CD

Ave

rag

e

Fran

ce

Chi

na

Czec

h Re

publ

ic

Net

herl

and

s

Icel

and

No

rway

Ziv Aviram, CEO, Mobileye

IIVC Research Center

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Exits by Sector, 2012-2016 (averages)

Source for R&D expenditure

Internet companies led exits in 2016, with 55% of total exits in 144 deals valued at 9.5 billion USD

Total business R&D expenditure totaledover 12.5 billion USD

The Economy | The Start-up Nation

R&D in the Business Sector, by Industry (2014)

Civilian R&D in Israel receives support from alarge pool of sources.

40% Private

13%General Government

27%Communications

24% Enterprise software/IT

20%Internet

13%Life Sciences

35.7%Software

35.2% Scientific R&D

6%Pharmaceuticals

5.9% Measuring & testingequipment

4.9% Communication equipment

10% Semiconductors

2%Cleantech

3.9% Other

2%Private Non Profit

46%Foreign

2.8% Irradiation, electromedical, electrotherapeutic and surgical equipment

2.1%Electrical equipment

7.4%Other

IVC Research Center

Leading multinationals, start-ups, investors, experts and clients at the Cybertech Israel Conference and Exhibition in Tel Aviv, 2017 I Flash 90

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