[35] As the country is relatively poor in natural resources, it consequently depends on imports of petroleum, raw materials, wheat, motor vehicles, uncut diamonds and production inputs.

[38] The country has developed a strong educational infrastructure and a high-quality business startup incubation system for promoting cutting edge new ideas to create value-driven goods and services.

[46] Israel is the most developed and advanced country in West Asia,[47][48] possessing the 17th largest foreign-exchange reserves in the world and the highest average wealth per adult in the Middle East (10th worldwide by financial assets per capita).

[64] The textile underwent rapid development during World War II, when supplies from Europe were cut off while local manufacturers were commissioned for army needs.

As these closed down, Israeli firms, among them Delta, Polgat, Argeman and Kitan, began doing their sewing work in Jordan and Egypt, usually under the QIZ arrangement.

Israeli exports reached $370 million a year, supplying such retailers and designers as Marks & Spencer, The Gap, Victoria's Secret, Walmart, Sears, Ralph Lauren, Calvin Klein, and Donna Karan.

[74] The years after the 1973 Yom Kippur War were a lost decade economically, as growth stalled, inflation soared and government expenditures rose significantly.

Afterward, Israel managed to create a remarkable recovery by opening up new markets to Israeli exporters farther afield, such as in the rapidly growing countries of East Asia.

This was possible thanks to a rebound in the Israeli tech sector, spurred on by the gradual bottoming out of the dotcom crash and a growing increase in demand for computer software, which in turn was due to burgeoning rates of global internet usage at this time.

[84] The Israeli economy weathered and withstood the late-2000s recession, registering positive GDP growth in 2009 and ending the decade with an unemployment rate lower than that of many of its Western counterparts.

[85] There are several reasons behind this economic resilience, for example, the fact that the country is a net lender rather than a borrower nation and the government and the Bank of Israel's generally conservative macro-economic policies.

Two policies, in particular, can be cited, one is the refusal of the government to succumb to pressure by the banks to appropriate large sums of public money to aid them early in the crisis, thus limiting their risky behavior.

[91] On the long term, Israel is facing challenges of high dependency on the growing number of Ultra-Orthodox Jews, who have a low level of official labor force participation among men.

Israel's thriving venture capital and business-incubator industry played an important role in financing the country's flourishing high-tech sector.

These institutional investors include Goldman Sachs, Bear Stearns, Deutsche Bank, JP Morgan, Credit Suisse First Boston, Merrill Lynch, CalPERS, Ontario Teachers Pension Plan, and AIG.

[129] In 2023, despite the occurrence of war and significant events like a legal reform and interest rate rise that shook the capital market and created uncertainty, about 40% of the companies traded on the Tel Aviv Stock Exchange continued to distribute dividends to their shareholders.

The percentage of Israelis engaged in scientific and technological inquiry, and the amount spent on research and development (R&D) concerning gross domestic product (GDP), is among the highest in the world,[131] with 140 scientists and technicians per 10,000 employees.

[141] Israel is also home to nearly 400 research and development centers owned by various multinational companies, including prominent high-technology giants such as Google, Microsoft, and Intel.

[121] Programs that send people to Israel to explore the "Start-Up Nation" economy include TAVtech Ventures and TAMID Group.

[156][157][158] This success has been attributed by some to widespread service in the Israel Defense Forces and its development of talent which then fuels the high-tech industry upon discharge.

[159][160] However, the largest number of unfilled job positions (31%) are in software engineering specialities: DevOps, back-end, data science, machine learning and artificial intelligence.

[165] The country possesses negligible reserves of crude oil but does have domestic natural gas resources which were discovered in more significant quantities starting in 2009, after many decades of previously unsuccessful exploration.

Plans were made for the Israel Electric Corporation to construct several natural gas-driven power plants, for erecting a national gas distribution grid, and for an LNG import terminal.

As of 2014[update] however, this field is nearly depleted—earlier than expected due to increased pumping to partially compensate for the loss of imported Egyptian gas in the wake of unrest associated with the fall of the Mubarak regime in 2011.

[179][180] As a result, Israel, as well as its other neighbor Jordan, which also suffered from disruption of gas deliveries from Egypt, had to resort to importing significantly more expensive and polluting liquid heavy fuels as substitute sources of energy.

[182] In 2018, the owners of the Tamar and Leviathan fields announced that they are negotiating an agreement with a consortium of Egyptian firms for the supply of up to 64 BCM of gas over 10 years valued at up to US$15 billion.

[184] Since the founding of the state through the mid-2010s decade, the state-owned utility, Israel Electric Corporation (IEC) had an effective monopoly on power generation in the country.

[191] Industrial production of metals, machinery and electrical equipment, construction materials, consumer goods, and textiles, as well as food processing also form a significant part of the manufacturing sector.

Most of its exports are high-value-added items such as electronic components and other high-technology equipment, tools, and machinery, cut diamonds, refined petrochemicals, and pharmaceuticals.

Israel's economic competitiveness is helped by strong protection of property rights, relatively low corruption levels, and high openness to global trade and investment.