Industry

   Industry became an important, diverse, and fast-growing sector of the Israeli economy that contributed about one third of the gross national product by the late 1970s and also became a major source of employment and of commodity exports. The manufacturing-sector output is similar in range, sophistication, and quality of products to that of smaller industrialized countries. Textile manufacturers produce a range of goods, including knitwear and high-fashion clothing, and there are also plastics, electronics, high-technology scientific and optical equipment, and food processing. The cutting and polishing of diamonds remains a major export industry. Israel's defense industries are dominated by government-owned plants, of which Israel Aircraft Industries is the largest. The mineral and chemical industry depends heavily on the Dead Sea, which is the country's leading mineral source and includes magnesium chloride, potassium chloride (potash), table salt, chlorine, and calcium and magnesium bromide. The Israel-Jordan Peace Treaty and interim agreements with the Palestine Liberation Organization both included provisions for the joint exploitation of minerals extracted from the Dead Sea region, as well as tourism and manufacturing in the region.

   Government policy supported industrial development with an export orientation to ease the country's chronic balance-of-payments problem. Emphasis was given to science-based industries, with a large value added by domestic manufacturing, particularly since the 1960s. This was the kind of export (e.g., chemicals, metal products, machinery, and electronic equipment) that, along with polished gem diamonds, grew most rapidly in the 1970s. Diamonds are the only product in which Israel has more than a peripheral share in any foreign market, although Israeli-manufactured arms and weapons systems have become very popular internationally and have become an important dimension of the country's export policy.

   See also Foreign Trade.