World Country Guide

Business Profile

Economy
Israel has a diverse and sophisticated manufacturing economy that, in many respects, rivals that of western Europe (this much is recognised by the IMF which in 1997 reclassified Israel’s economy as ‘industrial’ rather than ‘developing’). Agriculture is relatively small – about 4.2 per cent of GDP – with citrus fruit as the main commodity and export earner. The industrial sector is concentrated on engineering, aircraft, electronics, chemicals, construction materials, textiles and food-processing. Mining is also small but set to expand through production of potash and bromine. There is a small indigenous oil industry. The infrastructure is well-developed and tourism, in which there has been considerable investment, has become an important sector of the economy.
Israel’s economic difficulties, which were particularly serious during the 1970s and 1980s, were largely the product of political circumstances: specifically very heavy defence expenditure (estimated at around 40 per cent of GDP) and the cost of resettling Jewish arrivals. Other important factors are a large and relatively inefficient state sector and a substantial annual aid package from the USA, estimated at around US$10 billion per year. Israel is the single largest recipient of US aid, which accounts for about 10 per cent of GDP. The economy performed relatively well during the 1990s in the wake of economic reforms introduced at the beginning of the decade, including deregulation and some privatisation. However, Israel was experiencing serious recession by 2000. This lasted until 2002 when the economy contracted by 1 per cent; since then a mild recovery has been under way: growth for 2003 was 0.8 per cent. Under the Sharon government, economic reforms have continued unevenly. Israel has free trade agreements with the EU and the USA: the latter is its largest trading partner, followed by Belgium/Luxembourg, Germany and the UK.
The areas under the control of the Palestinian Authority have not shared in Israeli prosperity; economic development under the Palestinian Authority was managed in a haphazard and often corrupt manner, especially regarding the use of foreign aid. Since the Sharon administration came to power in Israel, the Palestinian areas have been effectively sealed off; the wall currently under construction around the West Bank (at huge cost) merely confirms that strategic decision. Large areas under nominal Palestinian control have been completely destroyed and those remaining are barely able to function economically. Equally damaging, Palestinians with jobs in the Israeli territory have been unable to pursue them properly through punitive security measures. Much of the population now relies on assistance from aid organisations.

Business
Business can be frustrating, as in many instances it is difficult to get a direct reply to a question. Appointments are usual, as is the use of business cards. Normal courtesies should be observed, although business meetings tend to be less formal than in Britain. Office hours: Business hours vary owing to the different religions practised. Some offices are open half a day on Friday.

Commercial Information
The following organisation can offer advice: Federation of Israeli Chambers of Commerce, PO Box 20027, 84 Haashmonaim Street, Tel Aviv 67132 (tel: (3) 563 1010; fax: (3) 561 9027; e-mail: chamber@chamber.org.il; website: www.chamber.org.il).

Conferences/Conventions
The Ministry of Tourism's brochure, Israel Conventions & Congresses 1996-2000, states that ”about 2000 years ago, some of the greatest conventions were held near Tiberias where it was recorded that 5000 were amply catered for. Israel’s record as a contemporary international conference centre began in 1963, and the country now attracts about 150 international meetings a year with 50,000 delegates; scientific and academic meetings account for about half the meetings, though religious and sporting events are on the increase. In 1992, 55 per cent of meetings were held in Jerusalem. Apart from hotels and the convention centres in Jerusalem, Eliat and Tel Aviv, opportunities exist to hold meetings in kibbutzim. For further information, contact the International Conventions Department at the Ministry of Tourism (see Contact Addresses section); or the Jerusalem International Convention Centre (JICC), Binyaney Ha’ooma, PO Box 6001, Jerusalem 91060 (tel: (2) 655 8558; fax: (2) 538 3064; e-mail: infoicc@iccjer.co.il; website: www.iccjer.co.il).