Feb 15, 2017 - 2:30pm

How the U.S. Can Strengthen Economic Ties with the 'Startup Nation'


Senior Editor, Digital Content

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President Donald Trump meets with Israel Prime Minister Benjamin Netanyahu.
President Donald Trump meets with Israel Prime Minister Benjamin Netanyahu.

Israel has been dubbed, the “Startup Nation.” In 2014 Israel was the fourth-ranked country for venture capital invested, trailing India, China, and the United States.

Israel’s Prime Minister Benjamin Netanyahu is in Washington, D.C., meeting with President Donald Trump. Security concerns are top of mind, but developing closer economic ties between our two countries also warrants discussion.

Israeli venture capitalist Jon Medved told Bloomberg, "There’s an untold story peeping above the radar, and it’s how Israeli technology is driving U.S. economic growth. There’s a virtuous circle: investment coming in to Israeli companies, who then go out and create jobs in the U.S. This story isn’t out there, and in today’s context it’s important."

Joshua Kram, senior director for Middle East Affairs at the U.S. Chamber of Commerce, notes in a New York Observer op-ed that commercial ties have benefited both countries for decades:

The U.S. and Israel are global pacesetters in high-impact commerce and innovation because—decades ago—our leaders pursued groundbreaking public policies, like America’s first free trade agreement in 1985.

As a result, America now exports more to Israel—a nation of just eight million people—than it does to Russia or Indonesia, even though Russia’s economy is seven times larger and Indonesia has 31 times more people. Israel is also an outsized investor in the American economy, investing more than Brazil, China, Hong Kong, India, Russia, or all of Africa. Israel’s investment in America helps create good jobs across the country, such as the nearly 9,000 employed by Israel’s leading drug company, Teva Pharmaceuticals.

These economic connections have generated trade and investment growth, finds a new report from the U.S. Chamber’s U.S.-Israel Business Initiative:

Between 1985 and 2014, two-way trade in goods expanded more than eight-fold – from $4.7B to $38.1B. The U.S. and Israel also make significant investment in each other’s economies. In 2013, cumulative U.S. investment in Israel was $9.5B – the same value as Israel’s cumulative investment in the United States.

“Yet, we have only scratched the surface of the potential of what our economies can accomplish together,” Kram writes. Closer economic ties that improve trade, investment, innovation, and job creation can be developed when the U.S. and Israel “direct their governments to establish a new mechanism to address a range of bilateral economic, trade and competitive issues.”

Here are some recommendations from the U.S.-Israel Business Initiative to do just that:

  • Organize joint meetings between President Trump, Prime Minister Netanyahu, and U.S. business leaders.
  • Create new institutional arrangements between the two governments on economic issues.
  • Launch working groups to advance collaboration in key sectors like energy, cybersecurity, and water.
  • Advance U.S.-Israel trade relations.
  • Intensify collaboration on innovation.
  • Enhance regulatory cooperation.

“With the start of a new administration, we have a unique opportunity to reconsider our strategy towards Israel in a way that strengthens our bilateral partnership,” said Myron Brilliant, executive vice president and head of International Affairs for the U.S. Chamber of Commerce in a statement. “Our recommendations would advance the U.S.-Israel economic relationship and our overall strategic alliance by establishing consistent engagement at the highest levels of the administration.”

About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean has written for various Chamber properties since 2012. In 1999, Sean launched a “weblog” and never looked back, becoming a self-proclaimed pioneer of the medium.