The Israel Innovation Authority has released its annual report assessing the state of high technology, revealing both resilience and uncertainty. The study shows that despite numerous challenges over the past year, the sector has demonstrated growth, with several macroeconomic indicators trending upward. However, the report also highlights a decline in some indices linked to key business activities, reflecting underlying concerns for the sector.
Despite this year's challenges, including political unrest and the aftermath of the ongoing war, several indicators show continued growth in the high-tech sector. Employment increased by 2.6% in 2023, reaching 396,000 employees, with ten thousand additional people joining the sector during the year. Furthermore, the contribution of the high-tech sector to Israeli GDP reached almost a fifth (19.7%) in 2023, or around 340 billion shekels, while its share in Israeli exports stood at 53%. last year, for a total of $73.5 billion.
However, at the same time, high-tech job growth has slowed significantly, barely outpacing population growth rates, and various business activity indices have returned to 2018 or 2018 levels. Before. For example, investments in Israeli startups saw a sharp decline of around 55% in 2023, with later funding rounds suffering the greatest impact. This slowdown raises concerns about the future sustainability and growth potential of the sector, highlighting the need for strategic initiatives to drive investment and innovation in the years to come.
“Innovation is our most important resource, and the high-tech industry is the main growth engine of the Israeli economy. To ensure that high-tech continues to grow and prosper, we must, in "As a government, continue to support businesses and develop necessary infrastructure," said Gila Gamliel, Israel's Minister of Innovation, Science and Technology.
Alon Stopel, president of the Israel Innovation Authority, believes that "unlike the world's major technology centers, the Israeli government's budget for R&D is relatively small."
“Most high-tech investments come from non-governmental sources, with a significant share of foreign investors. Therefore, the resilience of the high-tech sector needs to be strengthened through various budgetary additions, including government, to address the shortcomings "Advancing Israeli high technology, as a beacon of success, is essential to maintaining economic leadership and strengthening Israel's global impact," concluded Alon Stopel.
Caroline Haïat
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