What type of economic system does Israel have? Israel's economic system is a mixed economy pairing a private sector with a state-run public sector. On the 2026 Index of Economic Freedom it scores about 69.9, ranking among the freest economies in the Middle East and North Africa and rated moderately free. It scores 73/100 on Freedom House, classed Free.
What is the economic system of Israel? The economy of Israel is based on a mixed economy. The country’s economic system combines elements of a market economy and a planned economy.
No country is purely capitalist or purely communist.
What do the freedom indexes tell about the economic system of Israel?
For instance, according to the 2026 Index of Economic Freedom, which measures the ability of every human to control his labor and property, Israel scores approximately 69.9 out of 100, ranking among the freest economies in the Middle East and North Africa region and indicating that the country has a moderately free economy.
Similarly, the 2026 Freedom House index evaluates the state of political rights and civil liberties globally. Israel gets a score of 73/100, which qualifies it as Free.
Israel is a country where the government does not control what people do for political reasons, and people have the freedom to choose (what, how much, and how to produce, whether to buy or not, selling price, etc.)
The Link Between Public Sector Employment and the Economic System of Israel
An indicator of the extent to which the State is involved in the economy is the number of public sector employees. In Israel, according to ILOSTAT, the number of public sector employees as a percentage of the total workforce is 31.4% (2021).
In the country’s mixed economy, the number of public sector employees as a percentage of the entire workforce varies based on the specific policies and practices adopted by the State. Some economic activities are left to the private sector while others are under government control. The bigger the public sector the closer the economy is to be a command economy.
What does the biggest company in Israel say about the country’s economic system
The biggest company in Israel should also be looked at, as well as whether it is a state-owned or private company. In this case, Teva Pharmaceutical Industries Ltd. is Israel’s largest company by revenue, headquartered in Tel Aviv. Teva is the world’s largest generic pharmaceutical manufacturer, reporting revenues of approximately $16.5 billion in fiscal year 2024. As a publicly traded company (NASDAQ: TEVA), its ownership is distributed among institutional and individual investors.
More: Top 10 Biggest companies by revenue in Israel
The historical factors that have influenced the economic system of Israel
The current mixed economy system of Israel in the last century is the result of a combination of factors, including the influx of immigrants, the development of a strong industrial sector, the growth of the service sector, and the liberalization of the economy. These factors have allowed Israel to become a major player in the global economy, with a strong focus on innovation and technology.
Sources
- List of countries by the public sector size
- ILOSTAT – Israel country profile
- 2026 Index of Economic Freedom – Israel
- Freedom in the World 2026 – Israel
- Teva Pharmaceutical Industries Ltd.
Last updated: June 20, 2026
Leave a Reply