Israel\u2019s high-tech sector has become the backbone of its economy, transforming wartime setbacks into an economic lifeline, according to a new report released Wednesday by Startup Nation Central and the Aaron Institute for Economic Policy at Reichman University.<\/p>\n
The study, Startup Nation Economic Insights: Israeli High-Tech Resilience and Growth, shows that technology now contributes 19% of Israel\u2019s GDP, generates 56% of exports, and accounts for more than 25% of tax revenue, despite employing just 10% of the workforce. In 2024, the sector helped swing the economy from a projected 10% GDP deficit to a 3% surplus.<\/p>\n
Professor Zvi Eckstein, head of the Aaron Institute, described high tech as \u201cthe battleship of Israel\u2019s economy,\u201d crediting it with offsetting wartime slowdowns. He said that with the right policies\u2014focusing on artificial intelligence, education, and collaboration with universities\u2014Israel could sustain annual growth of 3.5%.<\/p>\n
The report highlights record global deals, including Google\u2019s $32 billion purchase of cybersecurity firm Wiz and Palo Alto Networks\u2019 $25 billion acquisition of CyberArk, part of $63.9 billion in mergers and acquisitions recorded in 2025. Defense exports also set a record, reaching $14.8 billion.<\/p>\n
Yet the analysis warns of challenges, including the first net decline in startups in more than a decade, manpower shortages caused by army reserve duty, and gaps in scaling nontechnical talent.<\/p>\n
\u201cIsrael\u2019s edge lies in its unique ability to translate bold ideas into global solutions,\u201d said Yariv Lotan, vice president at Startup Nation Central. \u201cEven through unprecedented challenges, the sector continues to attract capital, grow talent, and scale innovation worldwide.\u201d<\/p>\n