Israel has a long history of punching above its weight in various fields, and the high-tech sector is no exception. Companies such as Waze and Sodastream have become household names around the world, demonstrating the global reach of Israeli innovation. In addition, companies such as Teva Pharmaceutical Industries and ICL Group (global specialty minerals company) have established themselves as world leaders in their respective industries.
High-Tech Industry as a global Force
Israeli technology companies continue to make a significant impact on the global stage. According to the State of the High-Tech Industry in Israel 2023 report, technology accounts for more than half of all exports from Israel, and the sector contributes approximately 13.5 billion USD annually to the country’s economy.
The high-tech sector in Israel has become a key driver of economic growth, accounting for a significant share of the country’s exports. The industry is responsible for an impressive 48.3% of Israel’s total exports, amounting to a staggering 71 billion USD, the report says. This dominance in the export market has positioned Israel as a global leader in technological advancement.
Impressive economic Output
The growth trajectory of Israel’s high-tech industry is truly remarkable. From 2012 to the beginning of 2023, the sector experienced an average annual growth rate of 6.3% in the number of employees, outpacing the overall economy, which grew at a rate of 2.2%. In 2022, the high-tech sector contributed a significant 18.1% to Israel’s GDP, making it the largest sector in terms of economic output. Over the past decade, the output of the high-tech sector has more than doubled, reaching an impressive 290 billion shekels in 2022 (75 billion USD).
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A global Hub of Innovation
Israel stands out as a global hub of innovation, with a distinct advantage in research and development (R&D). It is the only OECD member country where more than 50% of R&D funding comes from outside sources. This influx of external investment has fueled the growth of Israeli startups, which will see a staggering fivefold increase in investment between 2013 and early 2023, totaling approximately 95 billion USD. As a result, Israeli innovation ranks sixth in the world in terms of capital raised for start-ups during this period.
Startup ecosystem
Israel’s startup ecosystem has gained global recognition, solidifying the country’s position as a prominent hub for entrepreneurial ventures. As of April 2023, there were 9,093 technology companies in Israel that had successfully raised funding from investors over the course of their existence. This remarkable figure ranks Israel’s startup ecosystem as the third-largest in the world, behind only San Francisco and New York. The active presence of some 9,000 startups in Israel further strengthens its reputation as a thriving centre for innovation and entrepreneurship.
Software Dominance and Future Innovations
Despite the growing diversification of sectors, Israel remains a software nation with a strong focus on organisational software, fintech, and cyber security. These areas account for more than 40% of the start-ups founded each year, and more than half of the investment flow. In 2022, a significant 70% of total investment in the technology industry was in software-related sectors, up from 48% in 2013.
