Investment in Israel Up 16%
Investment in Israel Up 16%

Foreign direct investment rose from $4.44 billion in 2009 to $5.15 billion in 2010, says UN.

Gil Ronen, | updated: 23:43

Teva plant in Jerusalem
Teva plant in Jerusalem
Arutz Sheva photo

In Israel, the inflow of Foreign Direct Investment (FDI) rose by 16% from $4.44 billion in 2009 to $5.15 billion in 2010, higher than 5% the increase in global FDI, according to the UN Conference on Trade and Development’s Annual World Investment Report (WIR 2011). 

FDI outflows from Israel saw an impressive increase of 370%, from $1.7 billion in 2009 to some $8 billion in 2010. This significant growth was influenced amongst other factors by one giant $4.9 billion deal in the field of pharmaceutics by Teva.

FDI flows in 2010 to and particularly from Israel "reflect cautious optimism," according to the WRI. However, the FDI flows into and out of Israel in 2010 were still lower than the comparable average figures achieved in the period 2005-2007, prior to the global financial crisis. 

Nevertheless, the data clearly shows an improvement in 2010 after the steepest drop in Israel FDI inflows and outflows in 2009. This low was explained as a direct result of the global financial crisis, which increased the risks for investors, magnified the uncertainty over yields on investments, minimized the credit supply and led to a drastic drop in investors’ appetite for risk taking. Many investors both in Israel and around the world preferred investment alternatives that provide minimal but low-risk yields, such as corporate bonds in stable countries, and banking deposits in stable and reliable financial institutes.

Generally speaking, the WRI noted, the annual fluctuation in FDI in Israel in the past few years is similar to the annual fluctuation in the FDI around the world or in developed countries. The similarity between FDI trends in Israel and around the world point to Israel’s quick integration in the globalization process and in the global economy.

Dr. Tal Shavit, head of Faculty of Finance at the School of Business Administration, College of Management Academic Studies, said following the report that Israel’s obvious advantage in FDI is in the fields of technology, research and knowledge. However, he cautioned, if Israel becomes a center of research and knowledge while manufacturing is relocated to places like China and India, this could further widen the social gaps in Israel.