Israel has a dynamic, technologically advanced market economy, with a GDP of approximately US$200 billion. Over the past five years, GDP has grown by an average of five percent annually, while inflation has been near zero and the Israeli Shekel has remained stable versus the US Dollar. The Bank of Israel's interest rate is at a record low, at 0.5 percent, and is among the lowest in the world. Raw materials (excluding diamonds and fuels), constitute 40 percent of total imports, while manufacturing (low-to-high technology products and services), constitutes 87 percent of total exports. In addition, there are more Israeli-domiciled companies traded on NASDAQ (currently 63) than in any country outside the US.
The country's entrepreneurial and competitive environment is underpinned by a number of cultural and social factors. Education is one of the key drivers with high numbers of science and engineering students graduating each year - Israel boasts a ratio of 135 scientists per 100,000 workers, the highest in the world
In the 1990s, following the successful establishment of Yozma, one of Israel's first venture capital (VC) programs, nearly 100 VC firms have been established, using foreign and local investment capital, to help catapult the creation and expansion of a large number of high technology companies. Approximately US$9.4 billion of capital was invested from these sources between 1993 and 2000, however it then began to decline by approximately 22 percent annually. In 2003 there were virtually no investments due to the collapse of high-tech stock markets world-wide and heightening tensions in the region.
In all, approximately US$4.2 billion of capital has been invested in Israeli private equity firms
KPMG - April 2011 - frontiers in finance: Spreading its wings