Travel Reference
In-Depth Information
High technology has led export growth as the total value of Israeli exports (not counting diamonds) climbed
to $34.3 billion in 2007, about three times the level in 1995.
High tech: computers, electronics, aircraft, and pharmaceuticals
Medium-high tech: chemicals, machinery, electrical gear
Medium-low tech: rubber/plastic, metals, jewelry
Low tech: food, textiles, paper
(Data: Israel Central Bureau of Statistics. Chart: David Rosenberg. Drawing by Bill Nelson.)
The second factor is the growth of service exports, which include items ranging from con-
sulting services to tourism (a hotel providing a room or a restaurant serving a meal to a for-
eigner is considered a service export). Service exports grew about threefold in the same period,
and since 2002, Israel's current account has consistently been in surplus. The same increase
can be looked at from another perspective: Israelis have in recent years begun to invest far
greater amounts abroad (to export capital) than foreigners have invested in Israel, leading to a
defi cit in the country's fi nancial account. This, many economists believe, has been the driving
force behind the economy's shift into current account surpluses.
After 1948, Israeli policymakers saw the solution to the country's trade challenges in a highly
regulated trade regime aimed at discouraging imports and aiding exporters. In the late 1980s,
however, Israel jettisoned the old policies, and it has gradually put into practice the principles
of a liberalized system. The centerpiece is a series of bilateral free-trade area (FTA) agreements,
which bar tariffs, quotas, and other restrictions on trade. The most important FTAs are with
the European Union (1975) and the United States (1985), but Israel also has accords with fi ve
other countries and the European Free Trade Association. It is pursuing others.
Along with the rest of the world, Israel has liberalized its trade regime as well. Starting in
1990, it removed nontariff barriers, such as compulsory licensing for importers, on manufac-
