ECONOMY

Israel has a diversified economy with a strong high-technology sector. In the 1970s and ’80s, the economy was beset by very high inflation and a chronic foreign trade imbalance. An influx of immigrants and the opening of new markets that resulted from the end of the Cold War boosted the economy in the 1990s. The collapse of the peace process and a resurgence of violence between Israelis and Palestinians beginning in 2000 dealt a sharp blow to tourism and discouraged foreign investment. Because of the difficult security situation, a major share of national spending goes to the military. Living standards are generally high, with an annual gross national product estimated at $17,380 per capita in the early 2000s. At that time the annual national budget included revenue of about $44 billion and expenditure of about $58 billion.