I shall start with stats. Of course, I am able to copy and paste, but it is better if I give a link:
Israel In The World Factbook 2002
Israel is a modern industrial country. The most developed branches of Israeli economy are telecommunications equipment and software industries (Comverse Technologies Inc., Amdox, ECI ?- part of these companies are registered in the USA for avoiding the Arab embargos, but majority of their R&D and manufacturing divisions are located in Israel, and Israelis are in key positions in these companies), miscellaneous soiftware manufacturing (Check Point Corp., Alladdin Systems, Orek Software), pharmaceutical industries (Teva Ltd.). Part of the export revenues is derived from trading processed diamonds, the raw materials being purchased in Africa and Russia.
Currently Israeli business life is suffering from serious hardships for two reasons: general stagnation in the hi-tech industries that started in 2001 and security problems that repel foreign investors. Current unemployment level exceeds 10.5 percent of labor force, and it continues to grow.
There are seven universities and technological institutes in Israel: Tel Aviv University, Hebrew University in Jerusalem, Haifa University, Technologic Institute "The Technion" in Haifa, Bar Ilan University in Ramat Gan, Ben Gurion University in Beer Sheba and Chaim Weizmann Institute in Rechovot (the latter deals mainly with post-graduate, doctorate and post-doctorate students). Economic faculty of the TA University was considered being the best in Europe in 2002. One of its graduates won in 2002 the Nobel Prize in economy.
In spite of general prejudice of Israel being an unsafe place, there are many places where terror attacks have never happened. For example, these never took place in the toiwn I live in ?- in Lod. I have never heard of any terror attack happening in the Red Sea tourist city of Elat. Towns and villages in Galilee and on the Golan Heights, all the population centers in the Negev area (Beer Sheba, Arad, Dimona) are absolutely safe as well. On the contrary, the central area of the country attracts homicide bombers; the last major dual terror attack happened in January in Tel Aviv, 23 people killed (part of them being illegal foreign workers from China, Africa and Romania), tens injured. By all means, most of the terror attack attempts takes place on the West Bank and in Gaza. Active operations of the IDF do not permit the terrorists to prepare well, and majority of such attacks are inefficient; they are not even being announced in the foreign media.
Majority of the Israeli population (>80 percent) are Jews. There are 18 percent of Muslims (ethnic Arabs) and 2 percent of Christians (mainly of Arab ethnic origin). They have equal rights with their Jewish compatriots, and there are 11 Arab representatives in the Israeli parliament, 8 of them being members of the specific Arab nationalist parties, and 3 belong to the major Israeli parties (Labor, Likud, Meretz, etc.). Since 1990 about 1 million Jews and non-Arab Gentiles (family members of the Jews and people having Jewish grandparent(s); majority of these people are ethnic Russians and Ukrainians). arrived in Israel from the former USSR, seriously improving the demographic balance of the country.
Immigrants, regardless of their ethnic origin are loyal citizens of the country: they work, pay taxes and serve in the IDF. Arab population is exempted from compulsory military service, but part of them volunteer in the IDF: Druzes (an esoteric para-Muslim denomination; they do not define themselves as Muslims), some of the Muslim Bedouin tribes' members (unlike Palestinians, Bedouins do not consider Israeli existence illegal) and part of Christian Arabs.
IDF is a draft army. Arabs and the ultra-Orthodox Jews have exemption of draft. The Ultra-Orthodox Jews do not recognise legitimacy of the secular State of Israel, they believe that the Jewish State must be founded by Messiah, and not by the secular Zionist David ben Gurion. This does not prevent them from efficiently milking the state budget. They abuse the fact that none of the major political parties gets absolute majority in the parliament, and they need partners for the coalition. Ultra-Orthodox parties join any governmental coalition, regardless of its being right- or left-wing, and extort financing of their yeshivahs. The yeshivah students (some of them being 40-50 y.o.) do not work, do not pay taxes and impose all their expenses on the budget of the national insurance. In economic terms they are more detrimental than Arafat and Hamas taken together.
Majority of the enterprises in Israel belong to private capital, domestic and foreign (mainly, American). But there are several state-owned monopolies, like the Electric Company. They are extremely inefficient, and they cover their expenses on the clients' expense. Every time the Electric Company decides to increase salaries of its employees, it pressurizes the government to increase prices of electricity. And nothing can be done: all the attempts to make this company and the similar ones (e.g., the Water Supply Co.) were prevented by threat of strike that might paralyze life in the whole country.