Israel's diamond industry in the 1980s differed considerably from its 1950s version. Until the early 1980s, a handful of large firms dominated the Israeli diamond industry. The nucleus consisted of European Jewish cutters who had immigrated during the Yishuv. In the 1970s, Israel surpassed Antwerp as the largest wholesale diamond center, accounting for more than 50 percent of all cut and polished gem diamonds. Diamonds were the only export in which Israel was more than a marginal supplier.

Unlike other industries, the diamond industry was affected entirely by external factors not under Israeli control. The diamond industry imported rough diamonds, cut and polished them, and then exported them. The slump in the industry from 1980 through 1982 surprised many Israeli firms that had speculative stockpiles. The result was a complete restructuring of the industry in FY 1984, and the creation of approximately 800 new and smaller manufacturing units. These small entities in mid-1986 concentrated exclusively on cutting, leaving the marketing to larger export firms. This latter task was supported by the 2,000-member Israel Diamond Exchange and the 300-member Israel Precious Stones and Diamonds Exchange, together with the quasi-governmental Israel Diamond Institute.

The success of this revitalization can be seen in the trade figures for the industry. In 1982 net diamond exports were US$905 million, equal to 18 percent of total exports in 1986, however, diamond exports had grown to nearly US$1.7 billion, or approximately 24 percent of total exports.

Data as of December 1988