Israel Gains $6 Billion Annually Through Foreign Industrial Cooperation

Israel's economy is reaping significant rewards from an expanding network of industrial cooperation agreements with global partners, generating approximately $6 billion annually in actual procurement and supporting more than 1,100 local businesses many of them small and medium-sized enterprises (SMEs).

This data comes from the 2023–2024 summary report by the Industrial Cooperation Authority (ICA), which oversees reciprocal procurement policies requiring foreign firms engaged in Israeli government tenders to reinvest in the local economy. Submitted to Minister of Economy and Industry Nir Barkat, the report highlights Israel’s growing influence in international defense, infrastructure, and energy markets.

In just the past two years, foreign companies committed to $1.7 billion in direct cross-purchase agreements with Israeli businesses. These deals are designed to connect Israeli companies—especially those in peripheral regions and SMEs with global giants and open doors to new international markets.

“Reciprocation is an important tool that strengthens Israeli industry,” said Minister Barkat. “It helps connect our companies to major global players and ensures local suppliers have a role in major projects.”

In 2023, the ICA recorded 186 new commitments totaling $628 million from 49 foreign companies, with civilian and defense procurement almost evenly split. By 2024, that number grew to 259 commitments worth $1.14 billion from 75 firms an impressive 81% increase in commitments, largely driven by defense projects, which accounted for 85% of the total.

Israel’s Ministry of Defense played a central role, securing $887 million in commitments many linked to large-scale projects with U.S. defense contractor Boeing. Other government bodies like Israel Railways and the Israel Electric Corporation also contributed. Notable deals included $161 million from Alstom and Siemens for railway purchases and $8 million from Thales for signaling infrastructure.

Even in the civilian sector, foreign suppliers like China’s BYD and Greece’s Hellenic have made multi-million-dollar commitments after being awarded major contracts.

These partnerships not only inject capital into Israeli industry but also facilitate knowledge transfer and technological cooperation. Moti Hagay, Director General of the Ministry of Economy and Industry, called the policy a strategic lever: “This is not just regulation it’s a mechanism for growth and a win for both Israel and our international partners.”

One first-of-its-kind development this year was the imposition of a sanction on a foreign company that failed to meet its cooperation obligations. The firm, unnamed in the report, has been banned from bidding on Israeli tenders for two years signaling that Israel is serious about enforcement.

Nurit Tzur-Rabino, head of the ICA’s industrial strategy division, emphasized the program’s long-term vision. “These are WIN-WIN transactions,” she said. “We are vigilant in enforcing agreements and remain committed to guiding Israeli firms into global partnerships.”

As Israel continues to punch above its weight in innovation and industrial capability, the success of these cooperation agreements reflects the country’s growing economic clout and strategic value in the global marketplace.

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