Israel’s economy dodged a fiscal crisis last year thanks to its high-tech sector, which has become the country’s economic lifeline and a magnet for global investment, according to a report released on Wednesday.
The study, conducted by Startup Nation Central and the Aaron Institute for Economic Policy at Reichman University, argues that Israel’s innovation economy is no longer just a “startup nation” but a “scale-up powerhouse” with disproportionate weight in both national stability and international competitiveness.
High-tech now generates 19% of Israel’s GDP, makes up 56% of exports, and contributes more than a quarter of tax revenues, despite employing only about 10% of the workforce. In 2024, the sector helped turn what was projected to be a 10% GDP deficit into a 3% surplus, underscoring its role as the bedrock of the Israeli economy.
“The high-tech sector is the battleship of Israel’s economy,” said Professor Zvi Eckstein, head of the Aaron Institute, in the report’s foreword. “Since the October 7 war, it has proven its resilience, offsetting sharp national slowdowns. With the right policies—focused on human capital, AI readiness, and industry-academia collaboration—Israel can maintain growth of 3.5% and sustain its global leadership.”