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Despite current events, Israeli industry continues to succeed
Ministry of Industry and Trade
Investment Promotion Center
Foreign Trade Administration
Jerusalem, 30 October 2000
"I see no loss of interest on the part of US venture capital
investors in Israeli start-ups" - Harvey Krueger, Chairman,
Lehman Brothers, at a speech in New York, October 24, 2000 (as
quoted in Globes, 24.10.00)
Despite serious political events in the region and unrest in the
Palestinian areas, the Israeli economy remains strong whilst
industry continues to produce formidable results.
Business in Israel Today
Israeli businesses, factories and companies are operating at
full capacity, with 100% manpower, across the country.
Ports, communications, transport, power, water and all other
forms of infrastructure are operating as normal and are not
affected by the disturbances in the Palestinian areas.
Industries that rely on Palestinian employment have
experienced a slow down. However, this problem is restricted to
the areas of agriculture and construction. Plans are currently
underway to ensure that unemployed Israelis fill these positions.
Overall, Palestinians comprise only 1% of the Israeli
industrial workforce and are not found in the hi-tech sector at
all.
The Hi-tech Sector
The hi-tech sector remains unaffected by the current
disturbances. This sector is strong and thriving.
There are around 4,000 high tech companies in Israel. The
largest concentration in the world, outside of California.
Approximately 2-3 new hi-tech start-ups are established in
Israel every day, (including since the current disturbances
began).
The first 6 months of 2000 saw $3.2 billion invested in
Israeli VCs, more than double the amount for all of 1999 (which
was itself a record year).
The vast majority of marketing and sales activities of
Israeli hi-tech companies take place outside of Israel.
According to a Goldman Sachs report (15.10.00) "As far as
Israeli technology is concerned, the security situation has had
no special impact... R&D activity, which is mostly based in
Israel, is not affected by events, because R&D centers are
located far from the flashpoints."
Growth Will Continue
History has shown that the path to peace has many upswings
and downswings. Despite this, the Israeli economy has continued
to grow and expand even during times of conflict. There is no
reason to believe that the current problems will affect Israeli
industry.
Rating agency Fitch, who reaffirmed Israel's credit rating,
in a report entitled "Sovereign ratings implications of the
Middle East Crisis" concluded "under a reasonable worse case
scenario, the crisis is not likely to fundamentally derail the
performance of the Israeli economy." (as reported in Globes,
24.10.00).
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