Israel has a diverse and
sophisticated manufacturing economy.
High-technology is the largest
sector. In 2005, almost US$12
billion of high tech products were
exported. High-tech services form
about 20% of Israeli businesses. The
rest of the industrial sector is
concentrated on engineering,
aircraft, electronics, chemicals,
biotechnology, textiles and
Agriculture is relatively small
(about 4.2% of GDP) with citrus
fruit and cut flowers as main
exports. Mining is expanding through
production of potash and bromine.
There has been considerable
investment in tourism, which however
is sensitive to political
developments and currently stands at
only about 2% of GDP. Many Israeli
companies are listed both on the Tel
Aviv Stock Exchange and the NASDAQ
or the New York Stock Exchange.
The labor force is about 2.5
million. Around 10% of workers are
employed in the defense industry.
Unemployment stands at about 9%.
The economy benefits from the steady
influx of immigrants who are highly
An annual aid package from the USA
in 2006 stands at an estimated US$3
billion in military aid, US$240
million in civilian aid (about half
the 2004 figure) and US$9 billion in
The impact of Hizbollah’s war in
summer 2006, with the subsequent
loss to the economy of over US$2
billion, caused a reduction in
estimated annual growth for 2006
from 5.7% to 4% of GDP, still
regarded as a satisfactory figure.
Israel has a parliamentary
system of government, with a
single chamber, the 120-seat
Knesset, elected every four
years by universal adult
suffrage. The Knesset
passes legislation and appoints
a President as head of state.
Executive power rests with the
cabinet, led by the Prime
Minister – normally the leader
of the largest party – which
takes office after a vote of
confidence from the Knesset.