Travel Reference
In-Depth Information
for basic innovations. Today, Israel has about 300 biotechnology companies, most of them
start-ups. About two-thirds of them are dedicated to developing new therapeutic drugs, the
remainder to developing diagnostic kits and research tools.
Defense
Faced with high defense costs even in times of relative peace, as well as the threat of embargos
by foreign suppliers, Israel came inevitably to develop and produce its own arms and defense
materials. Although the Israel Defense Forces relies on the United States for its principal weap-
ons platforms, Israeli companies develop and manufacture technologies to enhance them.
They also produce missiles, drones, communications equipment, and a host of other military-
electronics equipment and even make the IDF's main battle tank, the Merkava. Unlike Israel's
other industrial sectors, most of the defense industry is under government control. Among the
largest state-owned companies are Israel Aerospace Industries (drones, missiles, and defense
electronics, as well as civilian business jets and satellites), Rafael (defense electronics), and
Israel Military Industries (ammunition, missiles, defense electronics). Elbit Systems, a maker
of defense electronics, is the biggest private-sector company.
Though large by international standards, Israel's defense procurements are insuffi cient to
cover the costs of developing new military technologies. The industry therefore has emerged as
a major exporter to the United States, Europe, Asia, and Latin America. In many cases, Israeli
companies have to set up local subsidiaries or joint ventures with local partners to meet do-
mestic production requirements. Although reliable dollar fi gures are diffi cult to obtain, Israel
is probably among the world's fi ve largest arms exporters.
Fashion and Textiles
Israel's textile industry has declined since the days of government backing. The companies that
survived did so by adopting strategies to reduce costs and upgrade their product lines. Many
have moved part of their production out of Israel, most often to Jordan or Egypt, where labor
is cheaper than at home. Typically, companies have garments designed and cut in Israel and
send the most labor-intensive sewing operations to neighboring countries. The other strategy
is to employ proprietary technology, like that developed by Tefron to make seamless undergar-
ments, to ensure a competitive advantage of lower-cost rivals. Other companies have concen-
trated on the highest end of the apparel market, where costs are less of an issue than design and
quality, or niches, as Gottex did with swimsuits.
Like Israel's other leading industries, the textile industry is geared toward exports. Free-
trade-area agreements with its two biggest markets, the United States and Europe, entitle
Israeli-made products to tariff- and quota-free access, helping to offset higher costs of pro-
duction. Israeli plants in Jordan and Egypt are located in qualifi ed industrial zones (QIZs)
that give them duty-free access to the U.S. markets so long as a minimum percentage of the
garment's value is produced in Israel.
Energy
Israel's natural resources only recently came to include natural gas. Israel imports most of its
energy, which is both very costly and carries major security risks. The Arab boycott prevents it
