Economy of Israel
The Diamond Exchange District in Ramat Gan
Rank	50th (PPP) / 41st (nominal)
Currency	Israeli new shekel (NIS; ₪‎)
Fiscal year	Calendar year
Trade organisations	BIS, CLS, EBRD, IADB, ICC, ISO, ITUC, OECD, UN economic bodies, WCO, WFTU, WTO.
Statistics
GDP	$235.446 billion (PPP; 2011 est.) $245.266 billion (nominal; 2011 est.)[1]
GDP growth	4.8% (2011 est.) (81st)
GDP per capita	$31,005 (PPP; 2011 est.) (26th) $32,298 (nominal; 2011 est.) (27th)[1]
GDP by sector	agriculture: 2.5%, industry: 31.2%, services: 64.7% (2011 est.)
Inflation (CPI)	3.2% (2011 est.) (59th)
Population below poverty line	19.9% (2008)[2]
Gini coefficient	39.2 (2008) (69th)
Labour force	3.227 million (2011 est.) (100th)
Labour force by occupation	agriculture: 2%, industry: 16%, services: 82% (September 2008)
Unemployment	5.6% (2011 est.) (56th)
Main industries	high-technology products (including aviation, communications, computer-aided design and manufacturing, medical electronics, fiber optics), wood and paper products, potash and phosphates, food, beverages, and tobacco, caustic soda, cement, construction, metals products, chemical products, plastics, diamond cutting, textiles, footwear
Ease of Doing Business Rank	34th (2012)[3]
External
Exports	$62.5 billion f.o.b. (2011 est.) (54th)
Export goods	machinery and equipment, software, cut diamonds, agricultural products, chemicals, textiles and apparel
Main export partners	United States 32.1%, Hong Kong 6.3%, India 5.1%, Belgium 5.1% (2010)
Imports	$70.62 billion f.o.b. (2011 est.) (47th)
Import goods	raw materials, military equipment, investment goods, rough diamonds, fuels, grain, consumer goods
Main import partners	United States 12.8%, China 8.1%, Germany 6.3%, Belgium 5.8%, Switzerland 4.6%, Italy 4.2% (2010)
FDI stock	$82.82 billion (2011 est.) (43rd)
Gross external debt	$112 billion (31 December 2011 est.) (40th)
Public finances
Public debt	74% of GDP (2011 est.) (28th)
Budget deficit	-3% of GDP (2011 est.) (105th)
Revenues	$68.29 billion (2011 est.)
Expenses	$75.65 billion (2011 est.)
Credit rating	Standard & Poor's:[4] AA- (Domestic) A+ (Foreign) AA (T&C Assessment) Outlook: Stable[5] Moody's:[5] A1 Outlook: Stable Fitch:[5] A Outlook: Stable
Foreign reserves	$78.93 billion (31 December 2011 est.) (26th)
Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars

GNI per capita:

  Israel (25,740$)

  Higher GNI per capita compared to Israel

  Lower GNI per capita compared to Israel

The economy of Israel is a technologically advanced market economy,^[6] including rapidly-developing high-tech and service sectors. As of 2010, Israel has the 24th largest economy in the world,^[7] and ranks 17th among 187 world nations on the UN's Human Development Index, which places it in the category of "Very Highly Developed".

The major industrial sectors include metal products, electronic and biomedical equipment, processed foods, chemicals, and transport equipment. Israel diamond industry is one of the world's centers for diamond cutting and polishing. Relatively poor in natural resources, Israel depends on imports of petroleum, coal, food, uncut diamonds and production inputs, though the country's nearly total reliance on energy imports may change with recent discoveries of large natural gas reserves off its coast.^[8] Israel is a world leader in software, telecommunication and semiconductors development. The high concentration of high-tech industries in Israel, which are backed by a strong venture capital industry, gave it the nickname "Silicon Wadi", which is considered second in importance only to its Californian counterpart.^[9][10] The country was the destination for Berkshire Hathaway's first investment outside the US when it purchased ISCAR Metalworking, and the first research and development centers outside the USA for companies including Intel and Microsoft. Israel is also a major tourist destination, with 3.45 million foreign tourists visiting in 2010.

In September 2010, Israel was invited to join the OECD.^[11] Israel has also signed free trade agreements with the European Union, the United States, the European Free Trade Association, Turkey, Mexico, Canada, Jordan, Egypt, and on 18 December 2007, became the first non-Latin-American country to sign a free trade agreement with the Mercosur trade bloc.^[12][13]

History[link]

The first survey of the Dead Sea in 1911, by the Russian Jewish engineer Moshe Novomeysky, led to the establishment of Palestine Potash Ltd. in 1930, later renamed the Dead Sea Works.^[14] In 1923, Pinhas Rutenberg was granted an exclusive concession for the production and distribution of electric power. He founded the Palestine Electric Company, later the Israel Electric Corporation.^[15] In 1937, there were 86 spinning and weaving factories in Israel, employing a workforce of 1,500. Capital and technical expertise were supplied by Jewish professionals from Europe. The Ata textile plant in Kiryat Ata, which went on to become an icon of the Israeli textile industry, was established in 1934.^[16] The industry underwent rapid development during World War II, when supplies from Europe were cut off while local manufacturers were commissioned for army needs. By 1943, the number of factories had grown to 250, with a workforce of 5,630, and output increased tenfold.^[17]

After the establishment of the state[link]

After statehood, Israel faced a deep economic crisis. As well as having to recover from the devastating effects of the 1948 Arab-Israeli War, it also had to absorb hundreds of thousands of Jewish refugees from the Europe and the Arab world. Israel was financially overwhelmed and faced a deep economic crisis, which led to a policy of austerity from 1949 to 1959. Unemployment was high, and foreign currency reserves were scarce.^[18]

In 1952, Israel and West Germany signed an agreement stipulating that West Germany was to pay Israel for the persecution of Jews during the Holocaust, and compensate for Jewish property stolen by the Nazis. Over the next 14 years, West Germany paid Israel 3 billion marks. The reparations became a decisive part of Israel's income, comprising as high as 87.5% of Israel's income in 1956.^[18] In 1950, the Israeli government launched Israel Bonds for American and Canadian Jews to buy. In 1951, the final results of the bonds program exceeded $52 million. Additionally, many American Jews made private donations to Israel, which in 1956 were thought to amount to $100 million a year. In 1957, bond sales amounted to 35% of Israel's special development budget.^[19]

The proceeds from these sources was invested in industrial and agricultural development projects, which allowed Israel to become economically self-sufficient. Among the projects made possible by the aid was the Hadera power plant, the Dead Sea Works, the National Water Carrier, port development in Haifa, Ashdod, and Eilat, desalination plants, and national infrastructure projects.

After statehood, priority was given to establishing industries in areas slated for development, among them Lachish, Ashkelon, the Negev and Galilee. The expansion of Israel's textile industry was a consequence of the development of cotton growing as a profitable agricultural branch. By the late 1960s, textiles were one of the largest industrial branches in Israel, second only to the foodstuff industry. Textiles constituted about 12% of industrial exports, becoming the second-largest export branch after polished diamonds.^[17] In the 1990s, cheap East Asian labor decreased the profitability of the sector. Much of the work was subcontracted to 400 Israeli Arab sewing shops. As these closed down, Israeli firms, among them Delta, Polgat, Argeman and Kitan, began doing their sewing work in Jordan and Egypt, usually under the QIZ arrangement. In the early 2000s, Israeli companies had 30 plants in Jordan. Israeli exports reached $370 million a year, supplying such retailers and designers as Marks & Spencer, The Gap, Victoria's Secret, Wal-Mart, Sears, Ralph Lauren, Calvin Klein, and Donna Karan.^[17]

The Kibbutzim, collective communities in Israel traditionally based on agriculture, played an important role in Israel's economy until the late 70s.

In its first two decades of existence, Israel's strong commitment to development led to economic growth rates that exceeded 10% annually. The years after the 1973 Yom Kippur War were a lost decade economically, as growth stalled, inflation soared and government expenditures rose significantly. Also worthy of mention is the 1983 Bank stock crisis. By 1984, the economic situation became almost catastrophic with inflation reaching an annual rate close to 450% and projected to reach over 1000% by the end of the following year. However, the successful economic stabilization plan implemented in 1985^[20] and the subsequent introduction of market-oriented structural reforms^[21][22] reinvigorated the economy and paved the way for its rapid growth in the 1990s and became a model for other countries facing similar economic crises.^[23]

Two developments have helped to transform Israel's economy since the beginning of the 1990s. The first is waves of Jewish immigration, predominantly from the countries of the former USSR, that has brought over one million new citizens to Israel. These new immigrants, many of them highly educated, now constitute some 16% of Israel's 7.5 million population. The second development benefiting the Israeli economy is the peace process begun at the Madrid conference of October 1991, which led to the signing of accords and later to a peace treaty between Israel and Jordan (1994).

Despite the Second Intifada, which cost Israel billions of dollars in economic terms,^[24] Israel managed to open up new markets to Israeli exporters farther afield, such as in the rapidly growing countries of East Asia.

In the past few years there has been an unprecedented inflow of foreign investment in Israel, as companies that formerly shunned the Israeli market now see its potential contribution to their global strategies. In 2006, foreign investment in Israel totaled $13 billion, according to the Manufacturers Association of Israel.^[25] The Financial Times said that 'bombs drop, yet Israel's economy grows'.^[26] Moreover, while Israel's total gross external debt is US$84 billion, or approximately 44% of GDP, since 2001 it has become a net lender nation in terms of net external debt (the total value of assets vs. liabilities in debt instruments owed abroad), which as of June 2009 stood at a significant surplus of US$54 billion.^[27][28] The country also maintains a current account surplus in an amount equivalent to about 3% of its gross domestic product in 2010.

Stanley Fischer, current Governor of the Bank of Israel

The Israeli economy withstood the late-2000s recession, registering positive GDP growth in 2009 and ending the decade with an unemployment rate lower than that of many western countries.^[29] There are several reasons behind this economic resilience, for example, the fact, as stated above, that the country is a net lender rather than a borrower nation and the government and the Bank of Israel's generally conservative macro-economic policies. Two policies in particular can be cited, one is the refusal of the government to succumb to pressure by the banks to appropriate large sums of public money to aid them early in the crisis, thus limiting their risky behavior. The second is the implementation of the recommendations of the Bach'ar commission in the early to mid-2000s which recommended decoupling the banks' depository and investment banking activities, contrary to the then-opposite trend, particularly in the United States, of easing such restrictions which had the effect of encouraging more risk-taking in the financial systems of those countries.^[30]

OECD membership[link]

In May 2007, Israel was invited to open accession discussions with the OECD.^[31] In May 2010, the OECD voted unanimously to invite Israel to join, despite Palestinian objections.^[32] It became a full member on 7 September 2010.^[11][33] The OECD praised Israel's scientific and technological progress and described it as having "produced outstanding outcomes on a world scale."^[32]

Challenges[link]

One of the biggest challenges facing the future of the Israeli economy is the growing number of Ultra-Orthodox Jews who have a low level of official labor force participation amongst men, and this situation could lead to a materially lower employment-to-population ratio and a higher dependency ratio in the future.^[34] The governor of the Bank of Israel, Stanley Fischer, stated that the growing poverty amongst the Ultra-Orthodox is hurting the Israeli economy.^[35]

According to the data published by Ian Fursman, 60% of the poor households in Israel are of the Haredi Jews and the Israeli Arabs. Both groups together represent 25–28% of the Israeli population.

Sectors[link]

Agriculture[link]

Lemon orchard in the Galilee.

2.8% of the country's GDP is derived from agriculture. Of a total labor force of 2.7 million, 2.6% are employed in agricultural production while 6.3% in services for agriculture.^[36] While Israel imports substantial quantities of grain (approximately 80% of local consumption), it is largely self-sufficient in other agricultural products and food stuffs. For centuries, farmers in Israel have grown varieties of citrus fruits, such as grapefruit, oranges and lemons. Citrus fruits are still Israel's major agricultural export. In addition, Israel is one of the world's leading greenhouse-food-exporting countries.^{[citation needed]}

Financial sector[link]

Israel's venture-capital industry has rapidly developed from the early 1990s, and has about 70 active venture capital funds (VC), of which 14 international VCs have Israeli offices. Israel's thriving venture-capital and business-incubator industry played an important role in the booming high-tech sector.^[37] In 2008, venture capital investment in Israel, rose 19 percent to $1.9 billion.^[38]

Between 1991 and 2000, Israel's annual venture-capital outlays, nearly all private, rose nearly 60-fold, from $58 million to $3.3 billion; companies launched by Israeli venture funds rose from 100 to 800; and Israel's information-technology revenues rose from $1.6 billion to $12.5 billion. By 1999, Israel ranked second only to the United States in invested private-equity capital as a share of GDP. Israel led the world in the share of its growth attributable to high-tech ventures: 70 percent."^[39]

Technology sector[link]

Weizmann Institute of Science, Rehovot

Science and technology in Israel is one of the country's most developed sectors. The percentage of Israelis engaged in scientific and technological inquiry, and the amount spent on research and development (R&D) in relation to gross domestic product (GDP), is amongst the highest in the world.^[40] Israel ranks fourth in the world in scientific activity, as measured by the number of scientific publications per million citizens. Israel's percentage of the total number of scientific articles published worldwide is almost 10 times higher than its percentage of the world's population.^[41]

Israeli scientists have contributed to the advancement of agriculture, computer sciences, electronics, genetics, medicine, optics, solar energy and various fields of engineering. Israel is home to major players in the high-tech industry and has one of the world's most technologically-literate populations.^[42] In 1998, Tel Aviv was named by Newsweek as one of the ten most technologically-influential cities in the world.^[43]

Energy[link]

As of 2009, Israel relied on external imports for meeting most of its energy needs, spending an amount equivalent to over 5% of its GDP per year on imports of energy products.^[44] The transportation sector relies mainly on gasoline and diesel fuel, while the majority of electricity production is generated using imported coal. The country possesses negligible reserves of crude oil but does have abundant domestic natural gas resources which were discovered in large quantities starting in 2009, after many decades of previously unsuccessful exploration.^[45][46]

Natural gas[link]

Until the early 2000s, natural gas use in Israel was minimal. In the late 1990s, the government of Israel decided to encourage the usage of natural gas because of environmental, cost, and resource diversification reasons. At the time however, there were no domestic sources of natural gas and the expectation was that gas would be supplied from overseas in the form of LNG and by a future pipeline from Egypt (which eventually became the Arish–Ashkelon Pipeline). Plans were made for the Israel Electric Corporation to construct several gas-driven power plants, for erecting a national gas distribution grid, and for an LNG import terminal. Soon thereafter, gas began to be located within Israeli territory, first in modest amounts and a decade later in very large quantities located in deep water off the Israeli coastline. This has greatly intensified the utilization of natural gas within the Israeli economy, especially in the electrical generation and industrial sectors.

Gas discoveries[link]

In 2000, a modest discovery was made when a 33-billion-cubic-metre (BCM), or 1,200-billion-cubic-foot, natural-gas field was located offshore Ashkelon, with commercial production starting in 2004. As of 2012 however, this field is nearly exhausted—earlier than expected to due increased pumping to compensate for the loss of Egyptian gas in the wake of unrest associated with the fall of the Mubarak regime in 2011. In 2009, a significant gas find named Tamar, with proven reserves of 188 BCM or 6.6×10^¹² cu ft (275 BCM probable) was located in deep water approximately 90 km (60 mi) west of Haifa, as well as a smaller 15 BCM (530×10^⁹ cu ft) field situated nearer the coastline.^[48][49][50] Furthermore, results of 3D seismic surveys and test drilling conducted in 2010 confirmed that a 480 BCM (17.00×10^¹² cu ft) natural-gas deposit exists in a large underwater geological formation nearby the large gas field already discovered in 2009.^[51][52] As of 2012, the Tamar gas field is undergoing development and is expected to be connected to Israel's domestic gas distribution grid in 2013.

The large gas discoveries so far have confirmed that the Levant basin of the Eastern Mediterranean contains significant quantities of natural gas and, potentially, crude oil. Consequently, additional exploration for oil and gas off Israel's coastline is continuing.^[46][53] A source close to Prime Minister Benjamin Netanyahu has valued Israel's natural gas reserves at $130 billion.^[54] The businesses involved in exploration aim to export a share of future production, but others argue that it would be preferable, on geopolitical grounds, to use the gas within the country instead of other energy sources.^[55] In early 2012 the Israeli cabinet announced plans to set up a sovereign wealth fund that would allocate part of the royalties from energy exploration to education, defense and overseas investments.^[56]

Electricity[link]

The Negev Desert is home to the Israeli solar research industry, in particular the National Solar Energy Center and the Arava Valley, which is the sunniest area of Israel.

As of 2010, the Israel Electric Corporation (IEC), a state-owned enterprise, produced nearly all of the electricity generated in Israel. The IEC has an aggregate installed generating capacity of 11,690 MW, virtually all of it produced from fossil fuels. The company sold 52,037 GWh of electricity in 2010. The IEC is in the midst of adding several thousand megawatts of generating capacity due to increased demand and a low operating reserve, though a debate is currently raging with respect to how much should be generated from new coal-fired versus gas-fired plants, a determination complicated by the fact that some of the company's capital investment decisions predate the recent discoveries of significant reserves of natural gas offshore. In addition, in order to encourage competition in the electricity market, the government of Israel is currently (mid-2010) considering proposals from four private companies to generate up to 3,640 MW of electricity in 11 new sites, most of which would be gas-fired combined cycle power stations.

A chronic problem faced by Israel's electricity market is a persistently low operating reserve, which is mostly the result of Israel being an "electricity island". Most countries have the capability of relying on power drawn from producers in adjacent countries in the event of a power shortage. Israel's grid however, is unconnected to those of neighboring countries. This is mostly due to political reasons but also to the considerably less-developed nature of the power systems of Jordan and Egypt, whose per-capita electric generation is one quarter to one fifth that of Israel's. That said, rolling blackouts, even at periods of extreme demand in Israel are rare. However, to help alleviate the low reserve situation and to enable the potential of electricity exports when surplus electricity is available, Israel and Cyprus are considering implementing the proposed EuroAsia Interconnector project, which involves laying a 2000MW HVDC undersea power cable between them and between Cyprus and Greece, thus connecting Israel to the greater European power grid.^[60]

Solar energy[link]

Solar power in Israel and the Israeli solar energy industry has a history that dates to the founding of the country. In the 1950s, Levi Yissar developed a solar water heater to help assuage an energy shortage in the new country.^[61] By 1967 around one in twenty households heated their water with the sun and 50,000 solar heaters had been sold.^[61] With the 1970s oil crisis, Harry Zvi Tabor, the father of Israel's solar industry, developed the prototype solar water heater that is now used in over 90% of Israeli homes.^[62] Israeli engineers are on the cutting edge of solar energy technology,^[63] and its solar companies work on projects around the world.^[64]

Industrial sector[link]

Israel has a well-developed chemical industry with many of its products aimed at the export market. Most of the chemical plants are located in Ramat Hovav, the Haifa Bay area and near the Dead Sea. The Dead Sea Works in Sdom is the world's fourth largest producer and supplier of potash products.^[65] The company also produces include magnesium chloride, industrial salts, de-icers, bath salts, table salt, and raw materials for the cosmetic industry.^[65]

One of the country's largest employers is Israel Aerospace Industries which produces mainly aviation and defense products. Another large employer is Teva Pharmaceutical Industries, one of the world's largest drug makers.

Diamond industry[link]

Israel is one of the world's three major centers for polished diamonds, alongside Belgium and India. Israel's net polished diamond exports in the first quarter of 2010 jumped 55 percent from 2009, to $1.45 billion, after a 37 percent drop in all of 2009 to $3.92 billion.^[66]

Communications[link]

Transportation[link]

Tourism[link]

Tourism is one of Israel's major sources of income, with 3.45 million foreign tourists in 2010, an all-time high.^[67] Israel offers a plethora of historical and religious sites, beach resorts, archaeological tourism, heritage tourism and ecotourism. Israel has the highest number of museums per capita in the world.^[68] The most popular paid site is Masada.^[69]

External trade[link]

Map of Israeli exports in 2006.

For 2006, Israeli exports grew by 11%, to just over $29 billion; the hi-tech sector accounted for $14 billion, a 20% increase from the previous year.^[25]

Graphical depiction of Israel's product exports in 28 color coded categories.

The United States is Israel's largest trading partner; two-way trade totaled some $24.5 billion in 2010, up from $12.7 billion in 1997. The principal U.S. exports to Israel include computers, integrated circuits, aircraft parts and other defense equipment, wheat, and automobiles. Israel's chief exports to the U.S. include cut diamonds, jewelry, integrated circuits, printing machinery, and telecommunications equipment. The two countries signed a free trade agreement (FTA) in 1985 that progressively eliminated tariffs on most goods traded between the two countries over the following ten years. An agricultural trade accord was signed in November 1996, which addressed the remaining goods not covered in the FTA. Some non-tariff barriers and tariffs on goods remain, however. Israel also has trade and cooperation agreements in place with the European Union and Canada, and is seeking to conclude such agreements with a number of other countries, including Turkey, Jordan and several countries in Eastern Europe.

In regional terms, the European Union is the top destination for Israeli exports. In the four-month period between October 2011 and January 2012, Israel exported goods totalling $5 billion to the EU – amounting to 35% of Israel's overall exports. During the same period, Israeli exports to the Far East came to $3.1 billion.^[70]

Until 1995, Israel's trade with the Arab world was minimal due to the Arab League boycott. Beginning in 1945, Arab nations not only refused to have direct trade with Israel (the primary boycott), but they also refused to do business with any corporation that operated in Israel (secondary boycott), or any corporation that did business with a corporation that did business with Israel (tertiary boycott).

Israel is one of the world's major exporters of military equipment, accounting for 10% of the world total in 2007. Three Israeli companies were listed on the 2010 Stockholm International Peace Research Institute index of the world's top 100 arms-producing and military service companies: Elbit Systems, Israel Aerospace Industries and RAFAEL.^[71][72]

Rankings[link]

As of 2010, Israel has the 24th largest economy in the world,^[7] and ranks 15th among 169 world nations on the UN's Human Development Index, which places it in the category of "Very Highly Developed". Israel's economy also ranks 17th among the world's most economically developed nations, according to IMD's World Competitiveness Yearbook rankings. The Israeli economy was ranked as the world's most durable economy in the face of crises, and was also ranked first in the rate research and development center investments.^[73]

The Bank of Israel was ranked first among central banks for its efficient functioning, up from the 8th place in 2009. Israel was ranked first also in its supply of skilled manpower.^[73]

Israeli companies, particularly in the high-tech area, have enjoyed considerable success raising money on Wall Street and other world financial markets: as of 2010 Israel ranked second among foreign countries in the number of its companies listed on U.S. stock exchanges.^[74]

Having moved away from the socialist economic model since the mid-1980s and early 1990s, Israel has made dramatic moves toward the free-market paradigm. As of 2011^[update], Israel's economic freedom score is 68.5, compared to a world average of 59.7, making its economy the 43rd freest in the 2011 Index of Economic Freedom. Israel's economic competitiveness is helped by strong protection of property rights, relatively low corruption levels, and high openness to global trade and investment. Income and corporate tax rates remain relatively high.^[75]

As of 2009^[update], Israel ranks 32nd out of 180 countries in Transparency International's Corruption Perceptions Index. Bribery and other forms of corruption are illegal in Israel, which is a signatory to the OECD Bribery Convention since 2008.^[75]

Additional information[link]

Average wages in 2007 hover around $109–133 per day.^[76]

See also[link]

	Israel portal
	Business and economics portal

• List of companies of Israel
• Ministry of Finance (Israel)
• Tel Aviv Stock Exchange
• Science and technology in Israel
• Silicon Wadi
• Start-up Nation
• Diamond industry in Israel
• Privatization in Israel
• Taxation in Israel
• Venture capital in Israel
• Economy of the Middle East
• Trajtenberg Committee

References[link]

Further reading[link]

External links[link]

Wikimedia Commons has media related to: Economy of Israel

General

• Official website of the Israel Ministry of Finance
• OECD's Israel country Web site and OECD Economic Survey of Israel
• CIA World Factbook – Israel
• International Monetary Fund Israel Page
• Israel economy overview at The Heritage Foundation
• Israel Economic Development at the Open Directory Project
• The Macro Center For Political Economics
• U.S.-Israel Free Trade Area Agreement
• The Israeli Economy: Fundamentals, Characteristics and Historic Overview
• Israel's Economic Highlights

Articles

• Trump upbeat on Israel's economy, Jerusalem Post
• MSCI upgraded Israel from an emerging market to a developed market
• Merrill Lynch: 7,200 millionaires living in Israel
• 'Israel could be one of world's most prosperous economies', Jerusalem Post

Coordinates: 31°N 35°E / 31°N 35°E / 31; 35

State of Israel מְדִינַת יִשְׂרָאֵל (Hebrew) دَوْلَة إِسْرَائِيل (Arabic) Medīnat Yisrā'el Dawlat Isrāʼīl
Flag Emblem
Anthem: Hatikvah (הַתִּקְוָה; The Hope)
Capital (and largest city)		Jerusalem[a] 31°47′N 35°13′E / 31.783°N 35.217°E / 31.783; 35.217
Official language(s)		Hebrew, Arabic[1]
Ethnic groups (2011)		75.3% Jewish 20.5% Arab 4.2% other[2]
Demonym		Israeli
Government		Parliamentary democracy[1]
-	President	Shimon Peres
-	Prime Minister	Benjamin Netanyahu
-	Knesset Speaker	Reuven Rivlin
-	Supreme Court President	Asher Grunis
Legislature		Knesset
Independence		from Mandatory Palestine
-	Declaration	14 May 1948
Area
-	Total	20,770/22,072 km2 [1](154th) 8,019/8,522 sq mi
-	Water (%)	2
Population
-	2012 estimate	7,869,900[2][3] (97th)
-	2008 census	7,412,200[2][4]
-	Density	371/km2 (32nd) 961/sq mi
GDP (PPP)		2011 estimate
-	Total	$235.222 billion[5] (50th)
-	Per capita	$30,975[5] (26th)
GDP (nominal)		2011 estimate
-	Total	$242.897 billion[5] (40th)
-	Per capita	$31,985[5] (27th)
Gini (2008)		39.2[1] (69th)
HDI (2011)		0.888 (very high) (17th)
Currency		Shekel (₪‎) (ILS)
Time zone		IST (UTC+2)
-	Summer (DST)	IDT (UTC+3)
Date formats		dd/mm/yyyy (AD)
Drives on the		right
ISO 3166 code		IL
Internet TLD		.il
Calling code		972
1	^ Excluding / Including the Golan Heights and East Jerusalem; see below.
2	^ Includes all permanent residents in Israel, the Golan Heights and East Jerusalem. Also includes Israeli citizens living in the West Bank. Excludes non-Israeli population in the West Bank and the Gaza Strip.

Israel, officially the State of Israel ( /ˈɪzriːəl/ or  /ˈɪzreɪəl/; Hebrew: מְדִינַת יִשְׂרָאֵל‎, Medīnat Yisrā'el, IPA: [me̞diˈnät jisʁäˈʔe̞l] ( listen); Arabic: دَوْلَة إِسْرَائِيل‎, Dawlat Isrāʼīl, IPA: [dawlat ʔisraːˈʔiːl]), is a parliamentary republic in the Middle East, along the eastern shore of the Mediterranean Sea. It borders Lebanon in the north, Syria in the northeast, Jordan and the West Bank in the east, Egypt and the Gaza Strip on the southwest, and the Gulf of Aqaba in the Red Sea to the south, and it contains geographically diverse features within its relatively small area.^[1][6] Israel is defined as a Jewish and Democratic State in its Basic Laws and is the world's only Jewish-majority state.^[7]

Following the adoption of a resolution by the General Assembly of the United Nations on 29 November 1947 recommending the adoption and implementation of the United Nations plan to partition Palestine, on 14 May 1948 David Ben-Gurion, the Executive Head of the World Zionist Organization^[8] and president of the Jewish Agency for Palestine, declared the establishment of a Jewish state in Eretz Israel, to be known as the State of Israel, a state independent from the British Mandate for Palestine.^[9][10][11] Neighboring Arab states invaded the next day in support of the Palestinian Arabs. Israel has since fought several wars with neighboring Arab states,^[12] in the course of which it has occupied the West Bank, Sinai Peninsula, Gaza Strip and the Golan Heights. Portions of these territories, including east Jerusalem, have been annexed by Israel, but the border with the neighboring West Bank has not yet been permanently defined.^{[neutrality is disputed][13][14][15][16][17]} Israel has signed peace treaties with Egypt and Jordan, but efforts to resolve the Israeli–Palestinian conflict have so far not resulted in peace.

Israel's financial centre is Tel Aviv,^[18] while Jerusalem is the country's most populous city, and its capital (although not recognized internationally as such). The population of Israel, as defined by the Israel Central Bureau of Statistics, was estimated in 2012 to be 7,869,900 people, of whom 5,923,500 are Jewish.^[3] Arabs form the country's second-largest ethnic group. The great majority of Israeli Arabs are settled-Muslims, with smaller but significant numbers of semi-settled Negev Bedouins and Arab Christians. Other minorities include various ethnic and ethno-religious denominations such as Druze, Circassians, Samaritans, Maronites and others.

Israel is a representative democracy with a parliamentary system, proportional representation and universal suffrage.^[19][20] The Prime Minister serves as head of government and the Knesset serves as Israel's unicameral legislative body. Israel has one of the highest life expectancies in the world.^[21] It is a developed country, an OECD member,^[22] and its economy, based on the nominal gross domestic product, was the 40th-largest in the world in 2011.^[23] Israel has the highest standard of living in the Middle East.^[24]

Etymology[link]

The Star of David, symbol of Judaism since the Middle Ages.

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Upon independence in 1948, the new Jewish state was formally named Medinat Yisrael, or the State of Israel, after other proposed historical and religious names including Eretz Israel ("the Land of Israel"), Zion, and Judea, were considered and rejected.^[25] In the early weeks of independence, the government chose the term "Israeli" to denote a citizen of Israel, with the formal announcement made by Minister of Foreign Affairs Moshe Sharett.^[26]

The name Israel has historically been used, in common and religious usage, to refer to the biblical Kingdom of Israel or the entire Jewish nation.^[27] According to the Hebrew Bible the name "Israel" was given to the patriarch Jacob (Standard Yisraʾel, Isrāʾīl; Septuagint Greek: Ἰσραήλ; "struggle with God"^[28]) after he successfully wrestled with the angel of the Lord.^[29] Jacob's twelve sons became the ancestors of the Israelites, also known as the Twelve Tribes of Israel or Children of Israel. Jacob and his sons had lived in Canaan but were forced by famine to go into Egypt for four generations until Moses, a great-great grandson of Jacob,^[30] led the Israelites back into Canaan in the "Exodus". The earliest archaeological artifact to mention the word "Israel" is the Merneptah Stele of ancient Egypt (dated to the late 13th century BCE).^[31]

The area is also known as the Holy Land, being holy for all Abrahamic religions including Judaism, Christianity, Islam and the Bahá'í Faith. Prior to the 1948 Israeli Declaration of Independence, the whole region was known by various other names including Southern Syria, Syria Palestina, Kingdom of Jerusalem, Iudaea Province, Coele-Syria, Retjenu, Canaan and, particularly, Palestine.

History[link]

Antiquity[link]

Masada, a national symbol

The notion of the "Land of Israel", known in Hebrew as Eretz Yisrael (or Eretz Yisroel), has been important and sacred to the Jewish people since Biblical times. According to the Torah, God promised the land to the three Patriarchs of the Jewish people.^[32][33] On the basis of scripture, the period of the three Patriarchs has been placed somewhere in the early 2nd millennium BCE,^[34] and the first Kingdom of Israel was established around the 11th century BCE. Subsequent Israelite kingdoms and states ruled intermittently over the next four hundred years, and are known from various extra-biblical sources.^{[35][36][37][38]}

The northern Kingdom of Israel, as well as Philistine city states fell in 722 BCE, though the southern Kingdom of Judah and several Phoenician city states continued their existance as the region came under Assyrian rule. With the emergence of Babylonians, Judah was eventually conquered as well, significantly shifting the demographics in the 6th century BCE.

Classical period[link]

With successive Persian rule, the region, divided between Syria-Coele province and later the autonomous Yehud Medinata, was gradually developing back into urban society, largely dominated by Judeans. The Greek conquests largely skipped the region without any resistance or interest. Incorporated into Ptolemaic and finally Seleucid Empires, southern Levant was heavily hellinized, building the tensions between Judeans and Greeks. The conflict erupted in 167 BCE, with the Maccabean Revolt, which succeeded to establish an independent Hasmonean Kingdom in Judah, which later expanded over much of modern Israel, as the Seleucids were gradually loosing their control of the region.

Roman Empire invaded the region in 63 BCE, first taking conrol of Syria, and then intervening in the Hasmonean civil war. The struggle between pro-Roman and pro-Parthian factions in Judea eventually led to the installation of Herod the Great and consolidation of the Herodian Kingdom as vassal Judean state of Rome. With the decline of Herodians, Judea transformed into Roman province into a violent struggle of Jews against Greco-Romans, culminating in the Jewish-Roman Wars, ending in wide-scale destruction and genocide. Jewish presence in the region significantly dwindled after the failure of the Bar Kokhba revolt against the Roman Empire in 132 CE.^[39] Nevertheless, there was a continuous small Jewish presence and Galilee became its religious center.^[40][41] The Mishnah and part of the Talmud, central Jewish texts, were composed during the 2nd to 4th centuries CE in Tiberias and Jerusalem.^[42] The region became to be majorly populated by Greco-Romans on the coast and Samaritans in the hill-country. Christianity was gradually evolving over Roman paganism, when the area under Byzantine rule was transformed into Deocese of the East, as Palaestina Prima and Palaestina Secunda provinces. Through the 5th and 6th centuries, dramatic events of Samaritan Revolts reshaped the land, with massive destruction to Byzantine Christian and Samaritan societies and a resulting decrease of the population. Persian conquest and installation of Juwish commonwealth in 614 CE, resulted in subsequent further decline and destruction when the Byzantine Empire shortly resinstalled its rule in 625 CE.

Middle Ages[link]

In 635 CE, the region, including Jerusalem, was conquered by the Arabs and was to remain under Muslim control for the next 1300 years.^[43] Control of the region transferred between the Umayyads,^[43] Abbasids,^[43] and Crusaders throughout the next six centuries,^[43] before being conquered by the Mamluk Sultanate, in 1260.^[44] In 1516, the region was conquered by the Ottoman Empire, and remained under Turkish rule until the 20th century.^[44]

Zionism and the British mandate[link]

Aliyah to Israel
Pre-Zionist Aliyah
The Return to Zion Old Yishuv
Before 14 May 1948
First Aliyah · Second Aliyah During World War I Third Aliyah · Fourth Aliyah Fifth Aliyah During and after World War II Bricha
After 14 May 1948
Operation Magic Carpet Operation Ezra and Nehemiah 1968 Polish aliyah 1970s Soviet Union aliyah Aliyah from Ethiopia 1990s CIS aliyah 2000s Latin America aliyah
Concepts
Judaism · Zionism Jewish homeland Jewish messianism Law of Return Galut · Yerida
Persons and organizations
Theodor Herzl · Knesset El Al · Nefesh B'Nefesh World Zionist Organization
Related topics
History of Israel History of Zionism Israeli Jews Jewish diaspora Jewish history Jews in the Land of Israel Religious Zionism Revival of the Hebrew language · Yishuv
v t e

Theodor Herzl, visionary of the Jewish State, in 1901

Since the Diaspora, some Jews have aspired to return to "Zion" and the "Land of Israel",^[45] though the amount of effort that should be spent towards such an aim was a matter of dispute.^[46][47] The hopes and yearnings of Jews living in exile were articulated in the Hebrew Bible,^[48] and is an important theme of the Jewish belief system.^[46] After the Jews were expelled from Spain in 1492, some communities settled in Palestine.^[49] During the 16th century, Jewish communities struck roots in the Four Holy Cities—Jerusalem, Tiberias, Hebron, and Safed—and in 1697, Rabbi Yehuda Hachasid led a group of 1,500 Jews to Jerusalem.^[50] In the second half of the 18th century, Eastern European opponents of Hasidism, known as the Perushim, settled in Palestine.^[51][52][53]