The working environment has changed from most people working for large government-owned organizations to a situation where most workers are now employed by smaller privately held firms. The entrepreneurial spirit in Israel is still active and is even growing. Israel is at the forefront of technology. Israel is known as “Silicon Valley II.” There are over 100 Israeli businesses that trade on the NYSE, NASDAQ, and AMEX equity markets. Outside of Canada, there is no other country that has more companies represented. The government of Israel believes that the country’s economic future depends on the technological industry in Israel. They have begun a program to help entrepreneurs who have bright technological ideas. The program enables the entrepreneur to turn the idea into a product.

Israel has many advantages as a business partner and one major disadvantage. The major shortcoming that gives pause to use of Israel as the site of an offshore manufacturing or assembly center for partially finished goods is the continuing political situation involving the aspirations of the Palestinians for a homeland. This Palestinian quest includes, for a significant faction of Palestinians, the elimination of Israel as a political entity. The situation has been stalemated over the last four years with the resumption of the intafada during 1990. The death of Arafat in late 1994, together with Israeli Prime Minister Sharon’s policy of withdrawal from Gaza and building of a wall separating Palestinian occupied regions, offers some possibilities for movement towards a permanent resolution of differences and a lasting peace. The continuing prospect of violence in Israel creates an additional level of risk that, currently, is not present in many other parts of the world.

As the site of business partners providing exports to the U.S., Israel offers many advantages. These include: (1) an entrepreneurial population; (2) governmental policies that encourage entrepreneurship and small businesses; (3) a high level of education; (4) a tax structure that encourages entrepreneurship.

When and if the Palestinians and Israel reach a peace agreement, Israel would be an ideal place to locate an assembly site for U.S. goods that eventually would be exported to the EU. This is the case because both the U.S. and the EU have tariff treaties with Israel that could potentially eliminate all tariffs between U.S. goods assembled in Israel for ultimate export to the EU.

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