Israel's Main Economic Sectors

Today, the state of Israel is highly industrialized, with sectors including technology, tools, research and development, manufacturing and agriculture. In this short guide, you will learn more about Israel's main economic sectors.

Israel's industrial sector is both diversified and dynamic, and it developed from smaller workshops that were originally started to make farm tools and to process agriculture's products. There were two incentives that started the transition from small shops to larger factories; the increased demand for industrial machinery during World War II, and the influx of engineers and entrepreneurs from Germany in the thirties. The Allies needed things like canned goods and clothing, and the citizens of Israel needed things that could not be imported because of wartime conditions.

Until the 70s, industries like textiles, fashion, furniture, pesticides, fertilizers, food processing, plastic, rubber and metal provided the bulk of Israel's output. During that time, most of Israel's resources were devoted to the development of food production and processing, the laying of infrastructure, and putting an unskilled, immigrant labor force to work.

The next industrial phase in Israel was focused on the business development and manufacture of arms needed for its defense, and it was helped along because of various arms embargoes. The investment in arms and aviation laid the groundwork for Israel's current industrial base; today, the medical, electronics and software, and telecom sectors are thriving.

During the 1980s, Israeli expatriates from Silicon Valley returned to their home country, opening centers for companies like Microsoft and IBM. In the 90s, an influx of technicians, medical workers and scientists from the former USSR helped bring Israel's economy to its current level.

Because of its lack of raw materials and natural resources, the main advantage Israel has is its professional and educated labor force, its various universities, and research and development centers. Today, Israel's industrial sector focuses on making products with higher added value, using the creativity and innovation the state is known for.