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Defense industry of Israel
The defense industry of Israel is a strategically important sector and a large employer, as well as a major supplier of the Israel Defense Forces. The country is a large importer of military equipment, accounting for 2.1% of the world total in 2024. Three Israeli companies were listed on the 2022 Stockholm International Peace Research Institute index of the world's top 100 arms-producing and military service companies: Elbit Systems, Israel Aerospace Industries (including ELTA Systems), and RAFAEL.
Israel is also a major player in the global arms market with a 2.3% share of the global exports of major arms as of 2023. Total arms transfer agreements topped $12.9 billion between 2004 and 2011. There are over 150 active defense companies based in the country with combined revenues of more than $3.5 billion annually. Israeli defense equipment exports reached $7 billion in 2012, making it a 20 percent increase from the amount of defense-related exports in 2011.
With the Russian invasion of Ukraine, arms exports reached $12.5 billion in 2022. Much of the exports are sold to the United States and Europe. Other major regions that purchase Israeli defense equipment include Southeast Asia and Latin America. India is also major country for Israeli arms exports and has remained Israel's largest arms market in the world.
The manufacture of small weapons and explosives for the forerunners of the IDF had begun in secret arms factories during the 1930s. Jewish units fought the 1948 Arab–Israeli War of 1947-1949 with Sten guns, grenades, light mortars, antitank guns, flamethrowers, and light ammunition, much of it produced in Israel with surplus United States machinery acquired as scrap after World War II. After Israel's independence in 1948 and the departure of the British, the new state could import substantial wartime surplus aircraft, tanks, and artillery. The Israeli arms industry made a specialty of upgrading and overhauling such equipment. The Israeli-designed Uzi submachine gun, in service from 1954 and adopted by the security forces and the military of many nations, became a major export success, providing needed revenue for the Israeli arms industry. The Egyptian–Czechoslovak arms deal of 1955 and the 1956 Sinai War gave further impetus to domestic weapons production. Israel's decision to become a major producer of armaments came about after the arms embargo imposed by France, then Israel's main supplier of arms, just before the outbreak of the Six-Day War of June 1967.
By the mid- to late 1970s, Israeli suppliers were delivering an increasing share of the IDF's major weapons systems. These systems included the Reshef missile boat, the Kfir fighter plane, the Gabriel missile, and the Merkava tank. The Kfir, based on plans of the French Mirage 5 acquired clandestinely through a Swiss source, was powered with a United States General Electric J79 engine, but embodied Israeli-designed and Israeli-produced components for the flight control and weapons delivery systems.
Domestic production reduced foreign exchange costs for imports, provided a degree of self-sufficiency against the risk of arms embargoes, and facilitated the adaptation of foreign equipment designs to meet Israeli requirements. A high concentration of well-qualified scientists, engineers, and technicians, a growing industrial base, and a flow of government resources toward military research and development facilitated the rapid expansion of locally produced military equipment. Officials asserted that spinoffs from the arms industry, especially in electronics, had stimulated the civilian high technology sector, thus contributing indirectly to export earnings. This claim has been disputed by Israeli economists who concluded that the US$700 million spent annually on military research and development would have produced five times the value in export earnings had it been spent directly on civilian research and development. Even among government leaders, there was growing realization that the defense industry had become too large and that the government should not be obliged to come to the rescue of large defense firms in financial difficulty.
In 1988, Israel's more than 150 defense and defense-related firms (thousands of other firms were engaged in subcontracting) fell into one of three ownership categories: state-owned enterprises, privately owned firms, and firms with mixed state and private ownership. One firm, Armament Development Authority, commonly known as Rafael, was the main military research and development agency responsible for translating the ordnance requirements of IDF field units into development projects. Rafael had a unique status under the direct supervision of the Ministry of Defense.
Total employment in the defense sector reached a peak of 65,000 persons in the mid-1980s, more than 20 percent of the industrial work force. By 1988, however, retrenchment of the defense budget and shrinkage of the world arms market had exposed the defense industry to severe financial losses and layoffs that reduced the work force to about 50,000 employees.
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Defense industry of Israel
The defense industry of Israel is a strategically important sector and a large employer, as well as a major supplier of the Israel Defense Forces. The country is a large importer of military equipment, accounting for 2.1% of the world total in 2024. Three Israeli companies were listed on the 2022 Stockholm International Peace Research Institute index of the world's top 100 arms-producing and military service companies: Elbit Systems, Israel Aerospace Industries (including ELTA Systems), and RAFAEL.
Israel is also a major player in the global arms market with a 2.3% share of the global exports of major arms as of 2023. Total arms transfer agreements topped $12.9 billion between 2004 and 2011. There are over 150 active defense companies based in the country with combined revenues of more than $3.5 billion annually. Israeli defense equipment exports reached $7 billion in 2012, making it a 20 percent increase from the amount of defense-related exports in 2011.
With the Russian invasion of Ukraine, arms exports reached $12.5 billion in 2022. Much of the exports are sold to the United States and Europe. Other major regions that purchase Israeli defense equipment include Southeast Asia and Latin America. India is also major country for Israeli arms exports and has remained Israel's largest arms market in the world.
The manufacture of small weapons and explosives for the forerunners of the IDF had begun in secret arms factories during the 1930s. Jewish units fought the 1948 Arab–Israeli War of 1947-1949 with Sten guns, grenades, light mortars, antitank guns, flamethrowers, and light ammunition, much of it produced in Israel with surplus United States machinery acquired as scrap after World War II. After Israel's independence in 1948 and the departure of the British, the new state could import substantial wartime surplus aircraft, tanks, and artillery. The Israeli arms industry made a specialty of upgrading and overhauling such equipment. The Israeli-designed Uzi submachine gun, in service from 1954 and adopted by the security forces and the military of many nations, became a major export success, providing needed revenue for the Israeli arms industry. The Egyptian–Czechoslovak arms deal of 1955 and the 1956 Sinai War gave further impetus to domestic weapons production. Israel's decision to become a major producer of armaments came about after the arms embargo imposed by France, then Israel's main supplier of arms, just before the outbreak of the Six-Day War of June 1967.
By the mid- to late 1970s, Israeli suppliers were delivering an increasing share of the IDF's major weapons systems. These systems included the Reshef missile boat, the Kfir fighter plane, the Gabriel missile, and the Merkava tank. The Kfir, based on plans of the French Mirage 5 acquired clandestinely through a Swiss source, was powered with a United States General Electric J79 engine, but embodied Israeli-designed and Israeli-produced components for the flight control and weapons delivery systems.
Domestic production reduced foreign exchange costs for imports, provided a degree of self-sufficiency against the risk of arms embargoes, and facilitated the adaptation of foreign equipment designs to meet Israeli requirements. A high concentration of well-qualified scientists, engineers, and technicians, a growing industrial base, and a flow of government resources toward military research and development facilitated the rapid expansion of locally produced military equipment. Officials asserted that spinoffs from the arms industry, especially in electronics, had stimulated the civilian high technology sector, thus contributing indirectly to export earnings. This claim has been disputed by Israeli economists who concluded that the US$700 million spent annually on military research and development would have produced five times the value in export earnings had it been spent directly on civilian research and development. Even among government leaders, there was growing realization that the defense industry had become too large and that the government should not be obliged to come to the rescue of large defense firms in financial difficulty.
In 1988, Israel's more than 150 defense and defense-related firms (thousands of other firms were engaged in subcontracting) fell into one of three ownership categories: state-owned enterprises, privately owned firms, and firms with mixed state and private ownership. One firm, Armament Development Authority, commonly known as Rafael, was the main military research and development agency responsible for translating the ordnance requirements of IDF field units into development projects. Rafael had a unique status under the direct supervision of the Ministry of Defense.
Total employment in the defense sector reached a peak of 65,000 persons in the mid-1980s, more than 20 percent of the industrial work force. By 1988, however, retrenchment of the defense budget and shrinkage of the world arms market had exposed the defense industry to severe financial losses and layoffs that reduced the work force to about 50,000 employees.