Afternoon Tea in Jerusalem Blog

In addition to my work as a business coach, one of my interests is blogging about life in Israel. This is a country full of contrasts – over eight million citizens living in an area the size of Wales. You can see snow and the lowest place on the globe in the same day. Although surrounded by geopolitical extremes, Israel has achieved a decade of high economic growth. My work brings me in contact with an array of new companies, exciting technologies and dynamic characters. Sitting back with a relaxing cup of strong tea (with milk), you realise just how much there is to appreciate in the Holyland. Large or small operations, private sector or non profit, my clients provide experiences from which others can learn and benefit.

Israel is known as a ‘start up nation’, the high-tech powerhouse of the Middle East. It has 20 unicorns, only beaten by China, USA and the UK.

A new research report detailed just how far Israel has come in three decades in encouraging overseas investors to trust what was once a bankrupt and insular economy – whose best export was the Jaffa orange.

The key number is 362 – 362 multinationals are active in the Holy Land. “Intel is the most active corporation in Israel (2014–2019): Intel Capital has participated in 52 investment deals; Intel corp. acquired 5 companies totaling $17.5B.” Google and Microsoft have purchased ten and eight businesses respectively.

And the growth rate continues. “51 Multinational Corporations opened new R&D activity in Israel between 2017 and 2019.” The three top technology clusters in MNCs in Israel are: Machine Vision, IoT and Cyber Security.

What is this worth to the Israeli economy?

  • Hightech employs about 15% of the workforce. The largest number of employees is in a manufacturing facility (Intel Fab in Kiryat-Gat) and not an R&D center. Interestingly, no other High-Tech facility in Israel comes close to this scale, other than the Intel R&D center.
  • Israeli based MNCs are about to pay nearly $8.85 billion in 2019.
  • This amount is equivalent to approximately 2.6% of Israel’s estimated GDP for 2019 (in fixed prices, assuming 3.1% GDP growth this year), and 18% of the total income from direct tax, which is expected to be $48 billion this year.
  • The median tax payment per MNC is expected to be $7.125m in 2019.

The report from the IVC et al makes for fascinating reading. You can see what your country can learn from this innovative approach to building an economy from scratch.

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