The Israeli economy is relatively wealthy and large in regional terms, as well as being a highly export oriented economy. The main vehicle that the government uses to encourage investment is through the Law for the Encouragement of Capital Investment. The two types of benefits are government grants and tax exemptions . The extent and scope of the incentives on offer are determined by the geographic location of the investment. Priority Area B - which is made up of the north east of Haifa.
Projects located there receive the next highest level of inducements.
The greater the level of foreign ownership in the project the greater the size of the tax benefits available with this option. Besides the Law for the Encouragement of Capital Investment, in 1990 the Israeli Parliament , passed the Law for the Encouragement of Investments. These grants are repayable through royalties on sales only if the project is successful. In addition grants are also available for feasibility studies. The purpose of these funds are to bring together companies from different countries to cooperate and complement each other in a specific project.