Economy

The economy of Israel is based on both state and private ownership and operation. Despite adverse conditions, agriculture in Israel has been developed successfully, largely by extensive irrigation to compensate for the shortage of rainfall. Agricultural exports include citrus fruits, cut flowers, non-citrus fruits, and vegetables. Other sizable crops are cotton, wheat, barley, peanuts, sunflowers, grapes, and olives. Poultry and livestock are raised. Agricultural production adds up to roughly 5% of Israel's gross national product and of its exports.

Most of the land (apart from the land belonging to non-Jews) is held in trust for the people of Israel by the state and the Jewish National Fund. The latter was set up in 1901 to buy land in Palestine for Jews to cultivate, and now implements a wide range of forest and land development activities. The Israel Land Authority leases the land to kibbutzim, which are communal agricultural settlements; to moshavim, which are cooperative agricultural communities; and to other agricultural or rural villages.

The major industries include the cutting and polishing of diamonds and the manufacture of chemical fertilizers, apparel, and military and electronic equipment. High-technology industries are Israel's fastest-growing businesses, with emphasis on computers, software, telecommunications, biotechnology, and medical electronics. A number of light industries produce processed foods, precision instruments, and plastic goods. The Dead Sea has minerals of commercial value, such as potash, magnesium, bromine, and salt.

Another major industry is tourism, which is one of Israel's largest sources of revenue. The government decided to privatize El Al, Israel's international airline, in 1998. Two nuclear reactors exist: one near Tel Aviv, and another near Dimona in the Negev, the site of research on using atomic energy for the production of electricity and the desalination of seawater. Dimona has also been credited with nuclear weapons capacities.

Processed diamonds, high-technology and military products, and agricultural products are the major exports, followed by chemicals, pharmaceuticals, textiles, and apparel. The leading imports are military equipment, machinery, rough diamonds, crude oil, chemicals, transport equipment, iron and steel, and cereals. Although Israel imports more than it exports, the balance of trade is far more favorable now than it was in the early years of the state. Israel's chief trading partners are the United States and nations in the European Union, especially Britain and Germany.

The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2007, Columbia University Press. All rights reserved.

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