Defence Research and Development (R&D) in Israel: An Overview

ISSSP Reflections No. 48, July 27, 2016

Author: Vishakh K. Valiathan 


As history has shown us time and again, technological advances have had a huge impact on the conduct of warfare. This can be traced back from the adoption of saddle and stirrup for the cavalry, to the invention of gunpowder, to the present day automatic machine guns and development of nuclear weapons. Realpolitik demands that in order to survive in an anarchical world, a state needs to build up its military and economic power.

Technological prowess therefore is crucial in giving the country that slight edge over its adversaries. This has been the reason that countries and companies have relentlessly pursued development (R&D) of newer technology and invested time and money into research and development in the security sector. Innovation is important for sustainable development and it brings in new processes, services and systems that show the essential investment in any area. Israel’s investment into R&D has catalysed the growth of its civilian and defence industries which have in turn complemented its emergence as a technologically modern and prosperous nation. It can be noted that countries view spending on Defence Research and Development (R&D) as an investment for the future and a guarantor of their security.

Israeli Spending on Defence

From the time the state of Israel was created in 1948, it has experienced various security challenges. The geo-political situation in Israel’s neighbourhood has been hostile to say the least. The country from its experiences acknowledged that its continued existence could be secured only through a strong military, economy and pursuit of technological prowess. Israel’s small geographical and demographic footprint – as compared to other countries in the region – also resulted in Israeli political leadership giving importance to technical education and achieving technological superiority. Israel, in the present era, is known for its R&D in defence equipment and products. Some of the companies of Israel are the best in developing hi-tech innovative products for the defence sector complementing the civilian sector.

As Dov Dvir and Asher Tishler recount in their book The Changing Role of the Defense Industry in Israel’s Industrial and Technological Development, from the 1950s onwards (see Chapter 10), Israel has been playing a pivotal role in the innovation of defence products and equipment,  focus on aerospace, cyber and naval systems. These developments have benefited the Israeli Defence Forces (IDF), have created valuable friends and allies and earned much needed foreign exchange. Given the fact that Israel is not well endowed with natural resources, it chose to bank upon its highly educated population and steered its economy into a self-sufficient one, based on employment of high-end technologies. Innovation and creation of hi-tech industries accelerated the path for the Israeli defence sector to become global leaders in R&D beginning from the 1960s and 1970s. The 1970s witnessed an influx of high technology into the civilian industry and paved the way for defence R&D in the areas of sensors, electro-optics, information gathering systems etc. The flow chart in Figure 1 below shows the different phases of Israeli defence industry since the mid-1950s.

Figure 1: Phases of Israeli Defence Industry (1950-Current)

From Figure 2 below, it is clear that the Israeli government spends highly on military expenditure, which has been seen as a necessity given its multifarious security threats. Military expenditure accounted for 14.1% of total government expenditure in 2013, grew to 14.9% in 2014 and came down to 13.2% in 2015 which is similar to 2012 figures. Over the years, Israel has spent a fair share of its total government spending in beefing up its defence. This has resulted in the development of many innovative products, especially in the small arms industry, lasers, radars, drones, Unmanned Aerial Vehicles (UAV), Unmanned Surface Vehicles (USV) and personal equipment. Israel is also the world leader in surface bound equipment.

Source: SIPRI Military Expenditure Database
Source: SIPRI Military Expenditure Database

Israeli Investment into R&D

The Gross Domestic Product of Israel in 2015 was US$ 296.075 Billion. The economy is expected to grow at 3.4% in 2018 as compared to the present rate of 2.82% in 2016. Israel is among the world’s top ten countries partly also due to the quality in its R&D and innovation. The provision of basic R&D and venture capital is largely dispensed by the Academic and Research Institutes. Hi-tech industries and defence firms too have played their part in the development process. They accounted for 37% of the industrial product in 1965, which grew to 58% in 1985 and has currently reached close to 70%. In 2014, Israeli Gross Domestic Expenditure on R&D was US$ 10,358 Million.

Source: OECD
Source: OECD

Israel is amongst the top countries in the high income OECD list in terms of R&D investment with a 4.1% R&D share of GDP in 2014. From Figure 3 above, it can be seen that there is a high demand for research and technology in the nation.

Israeli Defence R&D: Focus Areas

Research & Development efforts carried out by Israeli defence firms result in development of products which are useful for both civilian and defence sectors. Using the SIBAT-International Defence Cooperation 2015-16 defence directory it is possible to glean the major products and areas of R&D in Israel’s defence industry. The major focus areas are:-

  • Aerospace: Aircraft manufacturing, maintenance, Upgrading and Retrofit, Avionics and Airborne Equipment, Simulation and pilot training solutions, helicopter upgrading, Electronic Warfare and countermeasures, Drones, Space Technology and Ballistic Missile Defence (BMD).
  • Naval Forces: Naval craft and shipborne equipment, Naval defence and attack systems, Sonar systems, Simulation and training.
  • Land Forces: Tanks and armored combat vehicles, force protection-active protection, personal protection gear, border protection, artillery, Electronic warfare and counter measures, infantry equipment, Dry storage, Military vehicles, Small arms, Demolition, Explosive Ordnance disposal and mine cleaning, Air Defence (AD) systems, aerostat systems.
  • Unmanned Systems & Robotics: Unmanned Aerial Vehicle, Unmanned Ground Vehicle, robots.
  • C4I (Command, Control, Communications, Computing& Intelligence): Military Communications-Systems and Equipment, C4I, Intelligence.
  • Optronics: Day/Night E.O. Systems and Lasers, Missile components, Airborne E.O. Pods, Thermal Imaging.
  • Electronic Components & Sub-Systems: Navigation.
  • Services: Defence Consultants &Training, Design, Engineering & planning.
Source: SIPRI Arms Transfer Database
Source: SIPRI Arms Transfer Database

It is very apparent from Figure 4 above, that the Israeli efforts in R&D have given the country and its firms a technological and competitive advantage. Majority of the military products and equipment that are exported, especially sensors, missiles and aircraft, have received sizeable inputs from R&D efforts. Israel is also a major exporter of defence services. Indo-Israeli defence cooperation has been growing in recent years, with India becoming one of the main importers of Israeli defence products in addition to setting up joint ventures with Israel.


Since its creation in 1948, Israel has been confronted with multiple security risks, which has resulted in the country’s leaders giving a lot of attention to R&D in the defence and hi-technology sectors. Statistics from the OECD and SIPRI illustrate the technological prowess that Israel has successfully achieved since the late 1970s. The investment into R&D has also contributed to the country’s economy by way of higher defence exports. This technological edge has offset Israel’s disadvantages emanating from its limited geographical landmass and population. The Israeli nation has invested a large amount of financial and human resources in building up military and technical competence to shield itself from the internal and external security threats.

 About the Author

Vishakh K. Valiathan is a Post-Graduate Student pursuing his Masters in International Relations from the School of Social Sciences and International Studies, Pondicherry University. He can be reached at <vishakh94[at]>

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