Research and development spending in Israel’s Business Sector Hits $36 Billion

Jerusalem, 24 August, 2025 (TPS-IL) — In 2023, total spending by Israeli businesses on internal R&D was 121.8 billion Shekels ($36 billion), and spending on external R&D (purchased by external parties) was 13.3 billion Shekels ($3.9 billion). This according to the data provided by Israel’s Central Bureau of Statistics.

Also, Israel ranks first among OECD countries in terms of total internal R&D spending in the business sector as a percentage of GDP (6.5%).

In 2023, there was an 11.4% increase in total internal R&D spending at current prices in the business sector.

At constant prices, there was a decrease of approximately 3% in internal R&D spending in 2023 compared to 2022.

Approximately 5,500 companies engaged in R&D in the business sector in 2023, of which 53.1% belonged to a group of companies and they carried out 82.6% of R&D spending.

Internal R&D spending in companies belonging to a foreign group was approximately 49.3% of total internal R&D spending.

High-tech industries are the main contributors to internal R&D activity – approximately 94% of total business R&D spending.

The driving force of R&D activity is human resources, and this is reflected in a high labor cost component of total internal R&D spending (74.2%).

In 2023, there was no change in the total number of employees in companies engaged in R&D, and especially in the number of R&D employees. In startup companies, there was a sharp decrease in the total number of employees, and the number of R&D employees decreased by about 20% compared to 2022.

The main source of growth in R&D spending in Israel in 2023 was in the computer programming and consulting industry, other services, and information services.