In honor of Israel’s Independence Day, the Israel Export Institute issued a retrospective on the country’s accomplishments in exports since its founding 66 years ago. The institute reported that exports climbed several thousandfold during the period.
With a relatively minuscule domestic market and hostile neighbors, Israel was forced to develop a strong export-oriented economy early on. What seemed to be a near-impossible situation in the early days of the state has enabled Israel to develop a prosperous, advanced economy. In 1948, Israel exported a total of $6 million in goods and services, while in 2013, exports totaled $95 billion, representing a 16,000-fold increase in 66 years.
The numbers show steady growth in all areas of the export economy, with exports rising an average of 7.7 percent each year since 1990, when exports totaled $17.3 billion. Before 1990, Israeli exports were dominated by agricultural, industrial and electrical products, but since then services, including software, Internet and security technology, have become an important export sector. In 1990, products accounted for $12.7 billion of Israeli exports, growing an average of 5.5% annually to reach $61.7 billion in 2013. In the same period, service exports grew an average of 9% annually, growing from $4.6 billion to $33.1 billion.
Pharmaceuticals, chemicals, electronic parts, software, aircraft and telecom have been the strongest export performers, especially since 1990, the institute said. Pharmaceutical exports amounted to $140 million in 1990, and by 2013 were worth $6.8 billion — a 48-fold increase, with exports growing at an annual average clip of 18%. A significant portion of that increase was due to exports by Teva, which has become one of the largest pharmaceutical companies in the world.
Electronic components, such as those used in advanced machinery, were another Israeli specialty that took off during the period. While the electronics export market was strong before 1990, the sector performed very well over the past 24 years. In 1990, Israel exported $200 million in electronic components and grew to $4.75 billion by 2013 — a 23-fold increase.
Telecom equipment has also been a strong export sector for Israel over. In 1990, the country exported $450 million worth of equipment. By 2013, that figure had grown to $2.3 billion — a 411% increase, the institute said.
There were a number of industries that did not grow as aggressively over the past 24 years. Among them were food and beverages, which grew an average of 1.8% annually since 1990, and textiles, which grew just 0.1% during the period.
“The rapid growth in exports in recent decades was due to export of services, which, as exports of products slowed, have turned into an engine of growth for the economy,” the institute said.