Israel’s economic growth and global economic integration
Straight from the Jerusalem Boardroom #214, August 26, 2016
1. China’s telecommunications conglomerate, Xinwei, is acquiring Israel’s satellite operator, SpaceCom, for $285MN. In 2015, Chinese companies invested about $500MN in Israeli companies. Israel’s trade balance with China is $11BN (10% of Israel’s overall trade balance), doubling the trade balance in 2010, far from the $50MN in 1990. Chinese companies are pushing deeper and further into Israel than ever before, and Israeli companies and government officials are returning the embrace. China is increasingly targeting Israeli general technology, agro-technology and irrigation with private and government money. In 2015, China’s Bright Food bought control of Israel’s Tnuva for $2BN, and in 2011 China’s National Chemical Corp. acquired Israel’s Adama, a pesticides and crop protection company, for $2.4BN. Taiwan’s General Mobile Corporation acquired MassiveImpact, an Israeli Ad Technology company, for tens of millions of dollars.
2. Car manufacturing giant, Ford, which is determined to develop a driverless car by 2021, just made its first acquisition of an Israeli company, SAIPS, a computer vision and machine learning company. Israel’s NLT was acquired by the San Diego-based SeaSpine for $54MN in milestone payments.
3. The Minnesota and Ireland-based Medtronic, the world-largest standalone medical technology company, acquired an additional 3.4% of Israel’s Mazor Robotics for $20MN, expanding its ownership to 7.27% of Mazor. Israel’s Insightec concluded a joint venture agreement with Germany’s Siemens, following a similar agreement with GE.
4. The $3.3BN raised by Israeli startups, since January, 2016 may break the $4.4BN annual record set during 2015. Intel invested in three Israeli startups, expanding its Israeli investment portfolio to 80 startups with $345MN invested since 1997.
5. In 2016, the three leading global credit rating companies reaffirmed their confidence in the long-term viability of Israel’s economy. Standard & Poor sustained an A+ rating with stable outlook, Fitch upgraded Israel’s credit rating outlook to “positive,” while retaining its A rating, and Moody’s sustained an A1 rating with stable outlook.
6. Israel’s government debt/GDP ratio - the Achilles’ heel of most countries – has been reduced from 100% in 2002 to 63.9% in 2016, compared with the Euro Bloc’s 90.7% and the OECD’s 94%.
7. Israel’s unemployment rate has declined to 4.8%, compared to the OECD average of 6.3% and the Euro Bloc’s 10.1%.
8. Israel’s IDE is second on Fortune Magazine’s Change the World List of companies, which have had a positive social/business/innovation impact. IDE builds and operates major desalination plants in Israel and 40 additional countries, such as the USA, China, Mexico, etc. In Carlsbad, Southern California, IDE operates the largest desalination plant ($1BN) in the Western hemisphere, transforming seawater into potable water, providing 8% of San Diego county’s water, at a cost of less than half-a-cent per gallon of drinking water, which amounts to an additional monthly cost of only $5 per homeowner.
9. According to the Huffington Post: “The emergence of Israel as a small, but significant, player on the world stage is one of the remarkable developments at the end of the post-Cold War era… with a flourishing economy of $300BN and nearly $40,000 GDP per capita…. Its military was rated by the Institute for the Study of War as ‘pilot to pilot and airframe to airframe, the best air force in the world….’ Israel’s extensive work on air defense with the USA, makes it a serious military power…. Its intelligence capabilities are formidable…. With over 250 foreign companies creating research facilities in Israel, its strong high-tech capability has been rated by the University of Lausanne as one of the top five world powers in this key area…. Apple has invested over a billion dollars in creating a hardware development center with 800 employees…. Three of the world’s most powerful countries have invited Israeli companies to work with them in high tech [the USA, Russia and China]…. Israel is also developing a strong relationship with India: $5BN in trade, which could multiply to $15BN if the two sides decide to create a free trade zone. Israel is the second largest exporter of arms to India, preceded only by Russia….”