>>2900766This.
Israel has always been afraid of getting embargoed. They were actually under a U.S. arms embargo during the '48 war, and then worked with France until '68 when France cut them off and then got back in with the U.S., but have since the beginning tried to do as much as they can themselves. For the military their strategy has been to produce at least one major weapon system in each category in Israel. The hardest thing was making airplanes which they never quite managed to do themselves. But in the 1970s they started making their own tank, for example. They'd make their own radio, and their own submachine gun, the Uzi. Then they'd sell radios and Uzis to all kinds of evil governments like South Africa during the Cold War at a lower price point than Western countries.
A lot of military hardware also isn't weapons but kind of niche stuff, like specific components. So Israel wouldn't make every component but they'd try to get good at specific things, so when Vietnam wants to upgrade their old Soviet armored vehicles with a new fire-control system, Israel will sell it to them and do the upgrades and they don't care about who they do business with. Or India, which has historically bought more Russian stuff than American stuff. (The U.S. has historically sold a lot more weapons to Pakistan than India.) Also the influx of Jewish engineers and scientists from the Soviet Union in the 1990s helped.
Also they've tried really hard to integrate with Western supply chains. Also a big thing now they do is medical technology. I think there's something about military hardware and medical tech that transfer easily because there's a lot of sensors involved. An engineer who can design a sensor for a helicopter can also make augmented goggles that a surgeon wears.
Also see Cuba pivoting into biotechnology in the 1980s (probably for similar reasons). You don't need a huge, continent-sized industrial base like the U.S., Russia or China to make pharmaceuticals. It's a good niche if you're a small country.