‘When Israel was a child, then I loved him,
And called my son out of Egypt.'
With these beautiful words God describes His relationship with His chosen people as one of sovereign love. Out of His love for them He had called Israel as His son out of Egypt where they were in slavery. Compare Exodus 4:22-23 where He described Israel as ‘His firstborn' and demanded that they be freed on that basis, and Deuteronomy 14:1, where He declares them to be His children. His redemption of Israel from bondage in Egypt (Exodus 20:2) is being portrayed as the act of a loving Father delivering by the payment of a ransom His child who had been enslaved. He had paid a ransom in order that Israel might be set free.
And we do well to note at this stage who ‘Israel' were. They were not all direct descendants of Abraham. They included descendants of Abraham's 318 fighting men and their families (Genesis 14:14), and a ‘mixed multitude' of peoples from many nations who, having taken part in the Exodus (Exodus 12:38), were received into the covenant at Sinai, and were circumcised at Gilgal (Joshua 5:2-9). They also included any who had later chosen to throw in their lot with Israel and enter by circumcision into the covenant (Exodus 12:48). Thus they were already a multinational people. For ‘Israel' was never made up simply of people descended from Abraham himself (that was a legal fiction). They rather saw themselves as adopted by Him, on the basis that ‘those who are of faith, those are the children of Abraham' (Galatians 3:7). But all of them were loved equally by God and were seen as His children, having been accepted into the covenant as ‘Israel'.