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Israel as a Market

Over the years, the Israeli economy has developed from a small, closed economy to a relatively large, developed economy that uses modern methods and advanced technologies for manufacturing. Manufacturing in Israel has evolved from small establishments that engaged primarily in processing of agricultural products and clothing, to high technology production.The ongoing favourable economic growth makes the Israeli market an attractive target for Danish companies.
From means of survival to a generator of success

Israel is a young country, who has faced a number of challenges from its inception, but with sense of/flair for innovation, Israel had turned disadvantages into advantages and it is today among the most innovative countries in the world. According to the “Intellectual Capital” report, published this year by the Ministry of Industry, Trade and Labour, investment in research and development has led to a 30% increase in the GDP in the last three decades.

Israel’s innovativeness is a product of :

  • Its highly educated workforce – partly due to the country’s high expenditure on education
  • The close cooperation between the academia and the private business 
  • The highest availability of Engineers and Scientists worldwide according to IMD 2007. 
  • Smooth access to venture capital 
  • Ranking as the top country for scientific publications per capita — almost 60% in biology and related medical or agricultural fields. 
  • Position as number one in the OECD in expenditure on R&D.

According to a survey conducted by Global Competitive Report, Israel is among the top 10, in terms of its companies’ capacity for innovation, and Israel is among the countries, with the highest number of patents registered per capita – especially within ICT and biotech.

An important component of Israel’s innovative“infrastructure” is the incubator program, launched in 1991. Through this program, early entrepreneurs or scientist and engineers with business aspirations, are being nurtured at the earliest stage of technological innovation, and supports them in the process of turning a good idea into exportable commercial products. The fields covered by these programs, ranges from environment, life sciences, software, medical devices, to water and ICT.

During the last 15 years, Israel has taken the lead on the high tech. world market. ICT, bio-tech. and IT development, telecommunication equipment and solutions are but a few of the areas in which Israel is at its pinnacle.

Along with the fact that there are more than 100 high tech. companies registered on the New York stock exchanges and that Israel has very competitive R&D capabilities, the country is certainly an attractive market for Danish high tech. companies for testing new products and cooperative measures with leading global players.

Especially the Israeli bio-tech industry has been progressing with great success in the last ten years - also on a global scale. Hence, taking into consideration Israel's solidly established academic society with seven Universities, five technical colleges specializing in life sciences, and ten research centres, the prosperous bio-tech tendency is highly likely to continue in the future.

In the past years, Israel has also made substantial progress on a wide range of environmental issues. Due to a recent immigration wave, the number of inhabitants in the country is growing rapidly. Thus, for the last six years, the government has had much focus on the environment in many different respects. In order to reach the goals set by the government, Israel needs foreign business partners who have the required know-how, products and capabilities to efficiently design, produce and implement sustainable environmental solutions. Danish consulting engineering firms as well as companies specializing in waste management and other environmental technologies are good candidates to benefit from this new trend.

In 1989, Israel and the European Union signed a free trade agreement resulting in the removal or reduction of tariffs and trade barriers. In 2000, this agreement was replaced by the Association Agreement that was further elaborated and expanded in 2003, increasing the quota and lowering the tariffs on agricultural goods.

The Association Agreement between EU and Israel states that products made in Israel can be imported to Denmark with preferential duty. Danish industrial goods are exported to Israel without full tariff. Naturally, this agreement has contributed to the expansion in trade activities between Denmark and Israel, making the export from Danish companies to Israel easier and more profitable as there are no or very low entry barriers.

The European Union and its Member States consider that Israeli settlements are illegal under international  law, constitute an obstacle to peace and threaten to make a two-state solution to the Israeli-Palestinian conflict impossible. As a result, the European Union and its Member States are raising European citizens' and businesses' awareness on the risks related to economic and financial activities in the settlements. Financial transactions, investments, purchases, procurements as well as other economic activities (including in services like tourism) in Israeli settlements or benefiting Israeli settlements, entail legal and economic risks stemming from the fact that the Israeli settlements, according to international law, are built on occupied land and are not recognised as a legitimate part of Israel's territory.