Israel’s Economic Impact On T he U.S.

Earlier this week I attended the annual Israel-America Chamber of Commerce (AMCHAM) dinner in Tel Aviv.

The honorary chairman of the AMCHAM is U.S. ambassador to Israel Daniel Shapiro.  In his remarks, he mentioned that the very first free-trade agreement that the U.S. signed with any country was the United States-Israel Free Trade Agreement in 1985. He indicated that bilateral trade between the two countries is now at $40 billion annually and will probably top $45 billion for 2014.

That is an amazing statistic for a country with just eight million people, yet it does not tell the whole story.  To complete the story, one must understand the additional economic impact of Israeli company operations in the U.S., both in benefits to the local economies and the number of jobs supported.

A case in point is Massachusetts.  An independent study by Stax Inc., a global strategic consulting and research firm, revealed that Israeli founded businesses generate enormous revenue, jobs and capital activity in that state.

The more than 200 Israeli-founded businesses located in Massachusetts booked over $6 billion of revenue there and generated nearly $12 billion in economic benefit to the state, inclusive of their own revenue, plus the multiplier effect of their spending in the local economy, for example, on office space and accounting, legal, marketing, health care and other services.  This represented 2.9 percent of Massachusetts’ GDP in 2012.  These companies directly employed more than 6,600 people and supported more than 23,000 jobs based on the multiplier effect of their demand for goods and services.

In Pennsylvania, just one Israeli company, TEVA, the world’s largest producer of generic pharmaceuticals, employs almost 2,400 people in the state in eight locations. The most recent figures available (from 2011) indicate that this one Israeli company generated 15,800 direct and indirect jobs, $1.2 billion in local income, $4.4 billion in economic output and $115 million in state and local taxes.

But that’s not all: Through TEVA’s corporate charitable donations program and its advocacy and medical education programs, the company made $2.9 million in contributions in Pennsylvania alone in 2013.

Thus far, no one has commissioned a study of the  impact of Israeli business on the entire U.S. economy. Should a study be commissioned,  the numbers would surely be staggering.

No doubt even more can be done to enhance and expand the economic gains and collaborations on both sides, as the foundation is strong enough to support additional activity.

Finally, this goes a long way in neutralizing the anti-Israel voices in the U.S. who complain about our getting $3 billion in foreign aid annually (even though most of it has to be spent in the U.S.).

Sherwin Pomerantz is president of Atid EDI Ltd., a Jerusalem-based economic development consulting firm involved in promoting regional trade and investment. He is a member of the Israel-America Chamber of Commerce’s Regional Cooperation Committee.

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