Israel Japan | Business Guide | 2018

70 years of Israeli Innovation > High-Tech > 033 F or decades Israel ran chronic trade deficits and was dependent on US economic and military aid and cash from Jewish charities overseas to offset the damage. Nowadays, Israel runs substantial balance of payments surpluses - largely the result of the huge success of its high-tech industry. Israel’s economy grew by 3.3% last year,much of which can be attributed to the high-tech sector.The sector has been growing at more than double the pace of the rest of the economy for the past two decades. Israel’s Innovation Authority estimates high- tech sector employs 270,000 workers or approximately 8.3% of the total work force. The sector generates nearly 20% of the GDP, making it by far the most productive in the local economy.The Authority set a target for doubling the number of high-tech workers over the next decade. “The high-tech industry has in effect turned Israel into a country with a substantial balance of payments surplus and the acquisition of hundreds of Israeli technology companies over the past decade by foreign companies and investors has contributed significantly to the inflow of capital into the country,”said Dan Peled, a Haifa University economist and expert on the country’s high-tech industry. Foreign spending on Israeli high-tech reach record levels The past year was an exceptional one for the sector. According to Israel Venture Capital Research Center, the leading source of data on Israel’s high-tech industry for the past 20 years, foreign companies ponied up a record US$24 billion to acquire local high- tech companies including the largest deal ever,US$15.3 billion paid by Intel for Mobileye. 2018 is getting off to a good start on that front with the announcement on March 19, 2018 of the US$3.4 billion purchase of Orbotech by California-based KLA-Tencor. In 2017,high-tech accounted for over 45% of the country’s US$102.4 billion in industrial and services exports.For the first time,the export of high-tech services topped industrial high-tech exports,rising by 10% to US$23.7 billion,and is up 44% since 2013.The largest segment— software and computer related services—was up 15% reaching nearly US$15 billion. The Israel Export Institute is predicting that the trend of rapid growth will continue in 2018. Israel’s initial success in the high-tech field was largely the result of its military expertise and its adaptation for civilian uses.The intelligence units of the IDF like 8200 have become world renowned for being the breeding grounds for many of Israel’s high-tech startups. Israel’s Innovation Authority set a target for doubling the number of high-tech workers over the next decade. The major elements of the plan include the integration of women, Arabs, and ultra- Orthodox Jews into the work force, along with veteran engineers above the age of 45. Israeli High-Tech Keeps High-Tech Accounted for 45% of US$ 102.4 billion in Industrial and Services Exports in 2017 Growing!