page_title: Economy of Israel
section_title: High technology
hierarchical_section_title: Economy of Israel / Sectors / High technology
caption_attribution_description: The particle accelerator at the Weizmann Institute of Science
context_page_description: The economy of Israel is a highly advanced free-market, primarily knowledge-based economy. Israel ranks 22 on the latest report of the UN's Human Development Index, which places it in the category of "Very Highly Developed", allowing the country to enjoy a higher standard of living than many Western countries. The prosperity of Israel's advanced economy allows the country to have a sophisticated welfare state, a modern infrastructure, and a high-technology sector competitively on par with Silicon Valley. Israel has the second-largest number of startup companies in the world after the United States, and the third-largest number of NASDAQ-listed companies after the U.S. and China. Intel, Microsoft, and Apple built their first overseas research and development facilities in Israel, and other high-tech multi-national corporations, such as IBM, Google, HP, Cisco Systems, Facebook and Motorola have opened R&D centres in the country.
  The country's major economic sectors are high-technology and industrial manufacturing; the Israeli diamond industry is one of the world's centers for diamond cutting and polishing, amounting to 23.2% of all exports.
context_section_description: Science and technology in Israel is one of the country's most highly developed and industrialized sectors. The modern Israeli ecosystem of high technology is highly optimized making up a significant bulk of Israeli economy. 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 among the highest in the world. 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. Despite its small population relative to other industrialized nations around the world, Israel has the highest number of scientists and technicians per capita in the world with 140 scientists and technicians per 10,000 employees. In comparison, the same is 85 per 10,000 in the United States and 83 per 10,000 in Japan.
  Israeli scientists, engineers, and technicians have contributed to the modern advancement of the natural sciences, agricultural sciences, computer sciences, electronics, genetics, medicine, optics, solar energy and various fields of engineering. Israel is home to major corporate players in the high-tech industry and has one of the world's technologically most literate populations. In 1998, Tel Aviv was named by Newsweek as one of the ten technologically most influential cities in the world. In 2012, the city was also named one of the best places for high-tech startup companies, placed second behind its California counterpart.
  In 2013, Tel Aviv repeated the feat where the American newspaper, Boston Globe ranked Tel Aviv as the second best city for business start-ups, after Silicon Valley Israel has the largest number of startup companies globally, second only to the United States and remains one of the largest centers in the world for technology start-up enterprises.  200 start-ups are created annually and more than 2500 start-up companies are operating throughout the country.
  As a result of the country's highly renowned and creative start-up culture, Israel is often referred to as the Start-up Nation (adapted from the book Start-Up Nation, by Dan Senor and Saul Singer) and the "Silicon Valley of the Middle East". There are even numerous programs that send people to Israel to explore the "Start-Up Nation" economy (such as TAVtech Ventures and TAMID Group). This success has been attributed by some to the IDF and its development of talent which then fuels the high-tech industry upon discharge, but entrepreneur Inbal Arieli suggests in her work that characteristics inherent to Israeli culture and the way Israeli children are raised also plays a significant role.
  In recent years, the industry has faced some challenges, and the further growth of the industry depends on overcoming them. Now high technology sector is rapidly growing and demand for tech talent increasing as well. There are not enough specialists in the market and in particular, 15% of positions in the high technology sector of Israel remain unfilled. However, the largest number of unfilled positions (31%) are in software engineering specialties: DevOps, back-end, data science, machine learning and artificial intelligence. Therefore, salaries of specialists in the Israeli market also increased significantly. To solve this problem, IT companies look for filling the gaps abroad. Consequently, they employ about 25% of their entire workforce overseas. Most companies choose to hire employees from Ukraine (45%) and USA (with 16%) are the second most popular offshoring destination country. Thus, to keep the industry growing, Israel should overcome this force labour shortage. Actually, Israel's Council for Higher Education has already launched a five-years program to increase the number of graduates from computer science and engineering programs by 40%.
caption: Weizmann Institute of Science, Rehovot
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