According to the UN World Investment Report, foreign investment in Israel was cut in half in 2014. The fighting in Gaza was cited as the major cause of the drop.
According to the report, the inward flow of dollars to Israel resulting from foreign direct investment (FDI) going from $11.804 billion in 2013 down to $6.432 billion in 2014. The outward flow of dollars also fell from $301 million in 2013 to $253 million in 2014. As a percentage of gross fixed capital formation in Israel FDI dropped from 20.9% in 2013 to 11.4% in 2014.
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It should be noted, however, the report also shows a drop in foreign investment in the US and Europe in 2014. So why assume the drop in investment was due to the Gaza conflict?
“We believe that what led to the drop in investment in Israel are Operation Protective Edge and the boycotts Israel is facing, ” Dr. Roni Manos of the College of Management and one of the authors of the report’s summary told Ynet News. But she also cites “In the past there were large transactions such as Waze and ISCAR Metalworking which boosted investment, but over the past year there were not enough such deals.”
Israel certainly lost considerable income from a drop in tourism at the height of its summer season due to the conflict, and local businesses, including factories and agriculture, were forced to shut down during the fighting.
The drop in foreign investment last year could also be attributed to foreign business people canceling trips to Israel because of the Gaza conflict.