The US-Israel Economic Relationship Factsheet

The depth and durability of the US-Israel alliance is often attributed shared democratic, liberal values and common security threats. However, an equally important pillar to the alliance is the economic relationship between the two allies. These economic ties not only bring money and jobs to America, but have demonstrability contributed positively to the quality of life in America, and in many cases directly to the health of the American people.

This fact sheet covers the macroeconomic benefits of America’s economic relationship with Israel as well as the quality of life benefits from over 40 years of federally funded scientific, technological, healthcare, agricultural and environmental research and development conducted jointly by Americans and Israelis.

  • The US-Israel Free Trade Agreement (FTA) was America’s first FTA when it was signed on April 22, 1985. Since then, trade with Israel has multiplied ten-fold to over $40 billion annually. These numbers have made Israel America’s 23rd largest trade partner.
  • Israel’s private direct investment in America represents 45% of foreign investment in the U.S. from the Middle East despite representing only 2% of the region’s population.   Israel’s cumulative foreign direct investment in America through 2013 was greater than investment from China, India and Russia to name just a few.

• Trade with Israel supported 254,563 American jobs between 2009 and 2014.  These jobs represent the highest value per job of any of the 20 free trade partner countries in 2014. This number is found by taking the dollar amount of trade between the U.S. and a given country, then dividing it by the number of jobs supported by that country.

Every US state does business with Israel, from Alaska (over $287,000 in exports to Israel in 2014) to New York (over $6.3 billion in exports in 2014).  This map shows exports to Israel from each state:

Another element of the U.S.-Israel economic alliance is the three U.S.-Israel binational programs: the Binational Science Foundation (BSF), the Binational Industrial Research and Development Foundation (BIRD), and the Binational Agricultural Research and Development Foundation (BARD). These programs receive equal funding from both countries and then distribute those funds through competitive processes into joint American and Israeli research and development efforts. According to a 2011 study by the Economic Strategy Institute:

“a very conservative estimate of the historic number of jobs created in the United States by the investments of the [three] binational foundations is 18,000-50,000. But it could well be in the 200,000 or more range.” The study found that total economic benefits to the United States from BSF, BIRD and BARD totaled $7.7 billion, and $700 million in tax revenue for the U.S. government.

The BSF funds nonprofit collaborative research by U.S. and Israeli scientists that can become the basis for commercially viable technological developments. Grants are made through a peer-reviewed process juried by leading scientists from around the world.
    o Thirty-eight Nobel laureates have received BSF funding.
    o In 2004 alone, six of eight Nobel Prize winners were BSF grantees. That year, the Nobel Prize for Chemistry was awarded to Avram Hershko and Aaron Ciechanover of the Technion—Israel Institute of Technology and Irwin Rose of University of California, Irvine for their BSF-funded discovery of the ubiquitin system for protein degradation, which opened up new research opportunities on cancer treatments, neurodegenerative disorders, and more.
    o Two of BSF’s projects, an algorithm that has revolutionized online auctions and advertising and the Positron Emitting Tomography, a diagnostic tool that identifies cancer, have had such commercial success that they’ve paid for the entire BSF program several times over.

The BIRD Foundation promotes non-defense industrial research and development jointly conducted by Israeli and American companies with an eye toward commercialization.
    o One BIRD-funded project contributed to the creation of the digital signal processing chips that have become essential to a wide variety of electronic products, including the multibillion-dollar digital camera industry.
    o Another American corporation turned a $675,000 grant in 1992 into annual sales of $100 million, profits of $20 million, and over 500 jobs.
    o A BIRD-funded project led to the development of Krystexxa, a drug that treats chronic gout in adult patients.
    o A  joint project between the pharmaceutical company Kamada and the American Red Crossthat produced a breakthrough on treatment of Alpha1 Antitrypsin Deficiency, a genetic disorder that causes lung and liver disease.
    o All told, BIRD-sponsored projects have produced over $5 billion in global sales and $100 million in tax payments to the US government. BIRD has had several medical successes as well.

The BARD program competitively funds and promotes collaboration by U.S. and Israeli scientists on agricultural research and development projects that aim to increase agricultural productivity and emphasize plant and animal health, food quality and safety, and environmental issues. Although commercialization is not a factor in BARD grant-making, ten BARD projects, with a total BARD investment of $2 million, have resulted in $1.7 billion in economic benefits to the U.S., according to the ESI study. Successful BARD projects include:
    o The development of a machine that screens for a wider variety of pesticides and chemicals in food, which allows government agencies to maintain security of the food supply.
    o A zero-discharge intensive aquaculture system for fresh and sea water fish that prevents environmental pollution (two have already been built in New York and Washington state).
    o A preservation method for the transport of cut flowers that reduces costs and environmental impact.
    o The creation of a database for cows that allows farmers to optimize breeding.
    o Genetic mapping of fruit so scientists worldwide can study aroma, taste, and quality.
    o Research on selective breeding in tilapia that helped launch an industry in America that put tilapia on the menu of seemingly every American restaurant in the seafood section of seemingly every American grocery store.

All things considered, one would be hard-pressed to find an alliance more effective than the one between the United States and Israel. The Jewish state is a small country in population and size, but the benefits America realizes from its trade and collaboration with Israel are often comparable to much larger and wealthier nations, and in some cases may even exceed them. From individual states to the national economy, Israel’s impact is outsized: Hundreds of thousands of jobs, technological improvements, and science and healthcare advances that boost our material and physical quality of life.


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