Foreign Direct Investment in Israel

Overview by

FDI in Figures

The investment system in Israel is liberal and most of the activities are open to private national and foreign investors.  According to a report of the Bank of Israel, the flow of foreign direct investment (FDI) into Israel totaled USD 3.7 billion in 2009, which means a decrease of more than 50%  compared to 2007, and they have remained weak in 2010. This strong decline can be explained by the context of the global economy and most of all, the American economy because Israeli start-ups depend very much on the situation of the other side of the Atlantic.  Nevertheless, Israel benefits from these assets: a strong R&D activity and a high-skilled and multilingual workforce. However,  the country suffers from a particularly unstable geopolitical environment.


Country Comparison For the Protection of Investors

  Israel Middle East & North Africa United States Germany
Index of Transaction Transparency* 7.0 6.3 7.0 5.0
Index of Manager’s Responsibility** 9.0 4.6 9.0 5.0
Index of Shareholders’ Power*** 9.0 3.4 9.0 5.0
Index of Investor Protection**** 8.3 4.8 8.3 5.0

Source: Doing Business

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Foreign Direct Investment 2007 2008 2009
FDI Inward Flow (million USD) 8,798 10,877 3,892
FDI Stock (million USD) 62,223 64,005 71,258
Performance Index*, Ranking on 141 Economies 63 54 80
Potential Index**, Ranking on 141 Economies 25 27 -
Number of Greenfield Investments*** 21 41 20
FDI Inwards (in % of GFCF****) 28.1 30.0 28.5
FDI Stock (in % of GDP) 37.3 31.7 36.6

Source: UNCTAD

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

Return to top

Why You Should Choose to Invest in Israel

Strong Points
Israel is the country which invests the most  in research and development (4.8% of the GDP) in the world. The country has a highly qualified manpower, particularly in engineering. The country is ranked 2 nd place in world, with regard to availability of venture capital. The government provides the necessary support to entrepreneurs.
Weak Points
Corporate tax is relatively high. The State of Israel has a significant public debt. Manpower costs are higher than Asian or East European countries. Lastly, Israel suffers from great geopolitical instability due to the political environment of the region.
Government Measures to Motivate or Restrict FDI
Foreign investment incentives, to encourage investment in Israel, are given through the recently revised law. The new law differs from the first one by the addition of a financial incentives plan.
For further information consult Invest in Israel.
Bilateral Investment Conventions Signed By Israel
Israel has signed bilateral agreements with 37 countries.
To see the list of the countries click here.
To view the agreements, click here.

Return to top

Procedures Relative to Foreign Investment

Freedom of Establishment
There are no restrictions on foreign investments except in the industry sectors of defence and telecommunications.
Acquisition of Holdings
Any settlement concerning mergers and acquisitions or takeovers which differ from these that Israelis should follow .
Obligation to Declare
Investment in Israel in neither subjected to authorisation nor registration except if the company wants to gain from certain advantages.
Find Investment Service Providers in Israel on

Return to top

Investment Opportunities

Investment Aid Agency
Ministry of Industry and Trade
Israel's Investment Promotion Center
Tenders, Projects and Public Procurement
Israeli Government, Tenders
Tenders Info, Tenders in Israel
DgMarket, Tenders Worldwide
Other Useful Resources
Business Opportunities of the Ministry of Foreign Affairs

Return to top

Any Comments About This Content? Report It to Us.

Find more on about Investing in Israel.
Read more See less
Experts Views (2)
Hot Tips (1) Go Top
Post your content


Post content about Foreign Direct Investment in Israel and you will be listed here to receive requests for offers.

Contact our expert contributors
  • How2Go Consultoría de...

    Internationalization Consulting, Brazil

  • U.S. Commercial Service Israel

    U.S. Department Of Commerce, Israel