Israel
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Guys, a presentation on Israel with an MNE (Multi national Enterprise) point of view
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Israel
- 1. Israel Presentation by: Abhishek Das (02) Khitish Kakar (28) Ruchir Shukla (42)
- 2. Israel: Evolution as a Nation
- 3. Israel: Evolution as a Nation
- 4. Israel: Culture • Heterogeneous • Low – Context (Straight talk) • Monochronic Time • Low Power distance • Individualism • High uncertainty avoidance • Gender Equality
- 5. Implications for MNE in Israel Pride in culture and history Do not openly criticize Show interest in their culture & history Relationship oriented Build relationships in business Business commitment Business deals tend be detailed and contracts are strictly adhered to. Less scope of later change Gifts & Bribes Advisable to not offer gifts in initial business meets
- 6. Implications for MNE in Israel Pace of Negotiation Expect deals to be slow Decision Making: Individualistic Individual decision makers are appreciated Personal feeling and opinion are considered rather than set rules only Group membership : Acquired Appreciate education and achievement of people Gender equality Not much problem for visiting businesswoman
- 7. Demographics Population 74,73,052 Jerusalem 7,47600 Urban population 92% Age Distribution Pop. growth rate 1.58% Birth rate 19.24 births/1000 population Death rate 5.47 deaths/1000 population
- 8. Demographics Religions Total pop. 7.5 million Jewish 5.7 million Languages Hebrew (official), Arabic, English
- 9. Demographics Sex ratio 1.05 male/female Infant mortality rate 4.12 deaths/1000 live births Life expectancy at birth 80.96 yrs Literacy Rate 97.1%
- 10. Israeli system of government • Parliamentary Democracy • 11 Basic Laws • Israel does not have a written constitution. • The Legislative Branch: Knesset is Israel's unicameral legislature and is seated in Jerusalem. -It has 12 standing committees. -Knesset elects the prime minister and also holds power to remove the president.
- 11. Political Risks • Since its establishment in 1948, Israel has been in almost constant conflict with its Arab neighbors. • These conflicts, particularly the conflict over the Gaza Strip and the West Bank, have had a negative impact on the country’s stability and its international relations. • This social unrest has brought about a decline in investor confidence in much of the region.
- 12. Legal System Israel's legal system combines • English common law • Civil law • Jewish law Marriage & divorce are under the jurisdiction of the religious courts: Jewish, Muslim, Druze, and Christian
- 13. Jewish/Israeli Influence on US • Jews & the Jewish religion has a great influence on US • It’s often said that the fundamentals of US are Jewish and not Christian • American Israel Public Affairs Committee (AIPAC) is an important influence • A large number of Jews hold important offices in the US
- 15. World Vs Israel GDP (Growth %)
- 16. GCI Rankings
- 17. Economic Sectors • Hi–Tech Industries: Highly qualified labor force, scientific institutes, and R&D centers. • Diamond Industry: Multi-faceted, world leader in both cutting-edge technologies and craftsmanship. • Agriculture: Intensive system of production, close cooperation between researchers, farmers, and agriculture-related industries.
- 18. Economic Sectors • Construction: Residential building accounts for 84 percent of total construction output, necessary to meet the demands of renewed immigration. • Transport & Communications: Contributes 7 percent to GDP and employs 5 percent of the country's labor force. • Tourism: Tourists attracted by Israel's geographical diversity, its archeological and religious sites. Foreign currency added value of 85 percent export and employs some 80,000 persons.
- 19. ISRAEL: Exports Export of Commodities: Exports to Regions:
- 20. ISRAEL: Imports
- 21. Major Highlights • Market Economy: Technologically advanced Market Economy • Silicon Wadi: High concentration of High-Tech industries & strong venture capitalist industry • Berkshire Hathaway, Intel & Microsoft
- 22. ISRAEL’S FREE TRADE AGREEMENT
- 24. Some MNE’S in Israel
- 25. ISRAEL: High IPR Compliance
- 27. Israel : Relative Advantage Hi Tech Industries • Relative advantage : No. 2 after Ireland. • Grew by 100 % between 1995-2000 • Skilled workforce Highest % of population as researchers and scientists in the world • Capital Large VC and government investments in Hi Tech industry since late 80’s • Investment as % of GDP in R&D 4.7 %, highest in the world • 50 % Israeli exports are Hi Tech Products • Microsoft & Intel opened their first outside R&D centres in Israel
- 28. Israel : Relative Advantage Chemical Industry • Chiefly due to pharmaceutical companies • Teva, world’s leading pharma company, $16 bn annual sales Reason • Favorable government policies for Pharma companies • Relative abundance in minerals • High capital availability • Skilled workforce: researchers, scientists
- 29. Recent Achievements • Year 2000 – Zero inflation rate. • Year 2009 – Balance of Trade deficit less than 1% of total trade • Industrial exports grew almost six-fold in the past two decades, from $6 billion in 1985 to $34.6 billion in 2009. • Foreign debt was eliminated, from being 1.6 times the GDP in 1985 down to zero by 2003 with Israel since then becoming a creditor .
- 30. Recent Achievements • With a GDP per capita of $29,500 (PPP) in 2009, it ranked 24 out of 34 OECD members • Ranked higher - 15 out of 169 countries (in 2010) - on the United Nations Human Development Index • Growth of exports from $175 million in 1987 and $16.9 billion in 2009 • Achieved positive growth (0.7 percent) in 2009(Recession) • Country's civilian labor force, from 1.65 million in 1990 to 3 million in 2010
- 31. Challenges for Israel • Maintaining national security • Absorbing large numbers of immigrants • Establishing a modern economic infrastructure • Providing a high level of public services (health, education, welfare, etc.)
- 32. Country’s Future Transformations • First is a political settlement of the Israeli- Palestinian conflict • The second transformation needed is in the field of education • The third transformation needed: a long-term investment policy that centers not only on high-tech and finance, and not only in the Tel Aviv area • Israel’s most significant failure is the poor public image which she portrays in the international community
- 33. ATTRACTIVENESS OF ISRAEL GE Country Attractiveness Matrix Maximize Collaborations HIGH Commitment Country Attractiveness Individualized MEDIUM Strategies Individualized Minimize LOW Strategies Commitment HIGH MEDIUM LOW Competitive Strength
Notes de l'éditeur
- In it’s 63 year history, Israel has grown at a phenomenal pace, and this has provided a world of opportunities to the MNEsFollowing implications can be observed for MNEs in view of Israel’s unique culture2. Israel holds more patents relative to the population than the G7 countries combined (Six: France, Germany, Italy, Japan, United Kingdom, and United States. The following year, Canada was invited to join.[1 )3. 200 bn $ economy, larger than all neighboutrs put together1Largest no of start – up companies per capita in thw worldIn last decade, Israel won 5 nobel prizesSo, Israel is a country with a very challenging political environmentMost Israelis are very proud of their country and expect others to show some appreciation for itschallenging political environment. It can be disastrous for your business if you openly critique thecountry’s current policies. Unlike in a country like India.Israel’s culture expects its members to have a sense of belonging to and conforming with their group.At the same time, it leaves a lot of room for individual preferences. Building lasting and trustingpersonal relationships is important to most people in this country
- Decision Making – Hierarchies do not play a very strong role in Israeli companies. Decision makersare usually individuals who consider the best interest of the group or organization. Their authorityis oen delegated to lower management levels. Independent decision making is encouraged, sincepersonal initiative and achievement are strong values. Nevertheless, many Israelis will consult with
- Demographics: In it’s 63 year history…Israel has grown to a population ofPopulation is a modest 75 lakhs. Talk of jerusalem, tha national , historic , religious and cultural capital. The population of Jerusalem is 7.5 lakh approx. That’s the population of Ghatkopar as well.Urban population, a staggering 92 %. The remaining 8 percent is largely involved in community farming Age distribution. As shown in the figure.Plus other figures….we move aheadBirth rate 19.24 births/1,000 population (2011 est.) Death rate 5.47 deaths/1,000 population (2011 est.)
- The population is primarily Jewish, 76% approx, followed by Arab MuslimsAmong the Jews, the primary groups are American born jewsMiddle east born jewsIsrael born jewsGiven the diverse nature of the population, business practices reflect a diverse mix of North American, European,Russian, or other cultural influences. Ashkenazim (Europe- or American-born), Sephardim (mostly born in the Arabic Middle East or around theMediterranean), and Sabras (Hebrew: Tzabars , indicating those born in Israel)Ethnic groupsJewish 76.4% (of which Israel-born 67.1%, Europe/America-born 22.6%, Africa-born 5.9%, Asia-born 4.2%), non-Jewish 23.6% (mostly Arab) (2004)ReligionsJewish 75.6%, Muslim 16.9%, Christian 2%, Druze 1.7%, other 3.8% (2008 census)LanguagesHebrew (official), Arabic (used officially for Arab minority), English (most commonly used foreign language)Literacydefinition: age 15 and over can read and write total population: 97.1% male: 98.5% female: 95.9% (2004 est.)
- More demographics…Israel has a technologically advanced market economy with substantial, though diminishing, government participation. It depends on imports of crude oil, grains, raw materials, and military equipment. Despite limited natural resources, Israel has intensively developed its agricultural and industrial sectors over the past 20 years.Birth rate 19.24 births/1,000 population (2011 est.) Death rate 5.47 deaths/1,000 population (2011 est.)Urbanizationurban population: 92% of total population (2010) rate of urbanization: 1.5% annual rate of change (2010-15 est.)Sex ratioat birth: 1.05 male(s)/female under 15 years: 1.05 male(s)/female 15-64 years: 1.03 male(s)/female 65 years and over: 0.78 male(s)/female total population: 1 male(s)/female (2011 est.)Infant mortality ratetotal: 4.12 deaths/1,000 live births male: 4.3 deaths/1,000 live births female: 3.94 deaths/1,000 live births (2011 est.)Life expectancy at birthtotal population: 80.96 years male: 78.79 years female: 83.24 years (2011 est.)
- Defn: Parliamentary systemA parliamentary system is a system of government in which the ministers of the executive branch get their democratic legitimacy from the legislature and are accountable to that body, such that the executive and legislative branches are intertwined.AdvOne of the commonly attributed advantages to parliamentary systems is that it's faster and easier to pass legislation. This is because the executive branch is dependent upon the direct or indirect support of the legislative branch and often includes members of the legislature.Parliamentarianism has attractive features for nations that are ethnically, racially, or ideologically divided. In a unipersonal presidential system, all executive power is concentrated in the president. In a parliamentary system, with a collegial executive, power is more divided.Criticism:One of the main criticisms of many parliamentary systems is that the head of government is in almost all cases not directly elected. In a presidential system, the president is usually chosen directly by the electorate, or by a set of electors directly chosen by the people, separate from the legislature (see Electoral college). However, in a parliamentary system the prime minister is elected by the legislature, often under the strong influence of the party leadership. Thus, a party's candidate for the head of government is usually known before the election, possibly making the election as much about the person as the party behind him or her.The Knesset has 12 standing committees:·The House Committee·The Foreign Affairs Committee·The Economics Committee·The Interior and Environment Committee· The Education and Culture Committee· The Labor and Welfare Committee· The State Control Committee· The Constitution, Law and Justice Committee· The Immigration and Absorption Committee· The State Control Committee· The Committee on the War against Drug Affliction· The Committee for Advancing the Status of Women
- Since its establishment in 1948, Israel has been in almost constant conflict with its Arab neighbors.• These conflicts, particularly the conflict over the Gaza Strip and the West Bank, have had a negative impact on the country’s stability and its international relations.The Middle East & North Africa region includes several wealthy oil producing nations and is characterized by regional instability and periods of regional violence.Political uncertainty has increased significantly throughout the MENA region since the beginning of 2011, starting with the revolution in Tunisia.This social unrest has brought about a decline in investor confidence in much of the region.
- This is a country that is at war on two borders, but can devote time and energy to ensure that a tourist who lost his wallet in the holy city of Jerusalem has it returned to him without too much ado. This is the same country that prefers not to destroy a location being used to store ammunition or launch rockets if there is any risk of civilian casualties
- This is a country that is at war on two borders, but can devote time and energy to ensure that a tourist who lost his wallet in the holy city of Jerusalem has it returned to him without too much ado. This is the same country that prefers not to destroy a location being used to store ammunition or launch rockets if there is any risk of civilian casualties
- Global Competitiveness Index Rankings GCI
- . Two incentives brought about the initial transformation of these workshops into more modern factories - the immigration of entrepreneurs and experienced engineers from Germany in the 1930s and the increasing demand for industrial products during World War II (1939-45) as the Allied forces in the region required various commodities, especially clothing and canned foods, and the region needed products that could not be imported from Europe because of the war. Due to its lack of natural resources and raw materials, Israel's one advantage is its highly qualified labor force, scientific institutes, and R&D centers. Today Israeli industry concentrates mostly on manufacturing products with high added value, by developing products based on Israel's own scientific creativity and technological innovation.
- Construction In the early years of statehood, residential building accounted for 84 percent of total construction output. Subsequently, allowing for more infrastructure construction, it fluctuated between 70-75 percent until 1991, when it leaped back to 86 percent in order to meet the demands of renewed immigration. As a result, the construction sector output also rose sharply in 1991, a year when the number of apartment-unit-starts reached an all time peak of 83,500. Since then that annual figure has dropped steadily to 29,000 in 2004.Transport and Communications The importance of the transport and communications sector largely exceeds its small share in the economy's statistics, as it is an infrastructure industry serving all other branches of the economy as well as households. It is a service rather than a production sector, and is growing - as is the case in all modern economies - faster than the production industries. A remarkable growth in the aviation part of this sector took place in recent years (thanks to a parallel in tourism increase), but the growth of the communications sector has been even faster.Transport and communications contributed 7 percent to the GDP in 2006, constituted some 8 percent of exports of goods and services, and employed 5 percent of the country's labor force.Tourism Tourists are attracted by Israel's geographical diversity, its archeological and religious sites, the almost unlimited sunshine and modern resort facilities on the Mediterranean, Lake Kinneret (Sea of Galilee), the Red Sea, and the Dead Sea.In the year 2000, the largest number of tourists ever - 2.41 million - visited the country (compared to 33,000 in 1950, 118,000 in 1960, 441,000 in 1970, 1.18 million in 1980, and 1.34 million in 1990). This figure was topped in 2008 as Israel opened its doors to more than 3 million tourists.Although this industry contributes less than 3% to the GNP, it has a foreign currency added value of 85 percent (making it the added-value leader among the country's export industries) and employs some 80,000 persons. This industry's large potential is yet to be exploited, as it is a major factor in Israel's economic growth plan.
- Construction In the early years of statehood, residential building accounted for 84 percent of total construction output. Subsequently, allowing for more infrastructure construction, it fluctuated between 70-75 percent until 1991, when it leaped back to 86 percent in order to meet the demands of renewed immigration. As a result, the construction sector output also rose sharply in 1991, a year when the number of apartment-unit-starts reached an all time peak of 83,500. Since then that annual figure has dropped steadily to 29,000 in 2004.Transport and Communications The importance of the transport and communications sector largely exceeds its small share in the economy's statistics, as it is an infrastructure industry serving all other branches of the economy as well as households. It is a service rather than a production sector, and is growing - as is the case in all modern economies - faster than the production industries. A remarkable growth in the aviation part of this sector took place in recent years (thanks to a parallel in tourism increase), but the growth of the communications sector has been even faster.Transport and communications contributed 7 percent to the GDP in 2006, constituted some 8 percent of exports of goods and services, and employed 5 percent of the country's labor force.Tourism Tourists are attracted by Israel's geographical diversity, its archeological and religious sites, the almost unlimited sunshine and modern resort facilities on the Mediterranean, Lake Kinneret (Sea of Galilee), the Red Sea, and the Dead Sea.In the year 2000, the largest number of tourists ever - 2.41 million - visited the country (compared to 33,000 in 1950, 118,000 in 1960, 441,000 in 1970, 1.18 million in 1980, and 1.34 million in 1990). This figure was topped in 2008 as Israel opened its doors to more than 3 million tourists.Although this industry contributes less than 3% to the GNP, it has a foreign currency added value of 85 percent (making it the added-value leader among the country's export industries) and employs some 80,000 persons. This industry's large potential is yet to be exploited, as it is a major factor in Israel's economic growth plan.
- Construction In the early years of statehood, residential building accounted for 84 percent of total construction output. Subsequently, allowing for more infrastructure construction, it fluctuated between 70-75 percent until 1991, when it leaped back to 86 percent in order to meet the demands of renewed immigration. As a result, the construction sector output also rose sharply in 1991, a year when the number of apartment-unit-starts reached an all time peak of 83,500. Since then that annual figure has dropped steadily to 29,000 in 2004.Transport and Communications The importance of the transport and communications sector largely exceeds its small share in the economy's statistics, as it is an infrastructure industry serving all other branches of the economy as well as households. It is a service rather than a production sector, and is growing - as is the case in all modern economies - faster than the production industries. A remarkable growth in the aviation part of this sector took place in recent years (thanks to a parallel in tourism increase), but the growth of the communications sector has been even faster.Transport and communications contributed 7 percent to the GDP in 2006, constituted some 8 percent of exports of goods and services, and employed 5 percent of the country's labor force.Tourism Tourists are attracted by Israel's geographical diversity, its archeological and religious sites, the almost unlimited sunshine and modern resort facilities on the Mediterranean, Lake Kinneret (Sea of Galilee), the Red Sea, and the Dead Sea.In the year 2000, the largest number of tourists ever - 2.41 million - visited the country (compared to 33,000 in 1950, 118,000 in 1960, 441,000 in 1970, 1.18 million in 1980, and 1.34 million in 1990). This figure was topped in 2008 as Israel opened its doors to more than 3 million tourists.Although this industry contributes less than 3% to the GNP, it has a foreign currency added value of 85 percent (making it the added-value leader among the country's export industries) and employs some 80,000 persons. This industry's large potential is yet to be exploited, as it is a major factor in Israel's economic growth plan.
- Construction In the early years of statehood, residential building accounted for 84 percent of total construction output. Subsequently, allowing for more infrastructure construction, it fluctuated between 70-75 percent until 1991, when it leaped back to 86 percent in order to meet the demands of renewed immigration. As a result, the construction sector output also rose sharply in 1991, a year when the number of apartment-unit-starts reached an all time peak of 83,500. Since then that annual figure has dropped steadily to 29,000 in 2004.Transport and Communications The importance of the transport and communications sector largely exceeds its small share in the economy's statistics, as it is an infrastructure industry serving all other branches of the economy as well as households. It is a service rather than a production sector, and is growing - as is the case in all modern economies - faster than the production industries. A remarkable growth in the aviation part of this sector took place in recent years (thanks to a parallel in tourism increase), but the growth of the communications sector has been even faster.Transport and communications contributed 7 percent to the GDP in 2006, constituted some 8 percent of exports of goods and services, and employed 5 percent of the country's labor force.Tourism Tourists are attracted by Israel's geographical diversity, its archeological and religious sites, the almost unlimited sunshine and modern resort facilities on the Mediterranean, Lake Kinneret (Sea of Galilee), the Red Sea, and the Dead Sea.In the year 2000, the largest number of tourists ever - 2.41 million - visited the country (compared to 33,000 in 1950, 118,000 in 1960, 441,000 in 1970, 1.18 million in 1980, and 1.34 million in 1990). This figure was topped in 2008 as Israel opened its doors to more than 3 million tourists.Although this industry contributes less than 3% to the GNP, it has a foreign currency added value of 85 percent (making it the added-value leader among the country's export industries) and employs some 80,000 persons. This industry's large potential is yet to be exploited, as it is a major factor in Israel's economic growth plan.
- Today's EFTA members are Liechtenstein, Iceland, Norway, and Switzerland
- Construction In the early years of statehood, residential building accounted for 84 percent of total construction output. Subsequently, allowing for more infrastructure construction, it fluctuated between 70-75 percent until 1991, when it leaped back to 86 percent in order to meet the demands of renewed immigration. As a result, the construction sector output also rose sharply in 1991, a year when the number of apartment-unit-starts reached an all time peak of 83,500. Since then that annual figure has dropped steadily to 29,000 in 2004.Transport and Communications The importance of the transport and communications sector largely exceeds its small share in the economy's statistics, as it is an infrastructure industry serving all other branches of the economy as well as households. It is a service rather than a production sector, and is growing - as is the case in all modern economies - faster than the production industries. A remarkable growth in the aviation part of this sector took place in recent years (thanks to a parallel in tourism increase), but the growth of the communications sector has been even faster.Transport and communications contributed 7 percent to the GDP in 2006, constituted some 8 percent of exports of goods and services, and employed 5 percent of the country's labor force.Tourism Tourists are attracted by Israel's geographical diversity, its archeological and religious sites, the almost unlimited sunshine and modern resort facilities on the Mediterranean, Lake Kinneret (Sea of Galilee), the Red Sea, and the Dead Sea.In the year 2000, the largest number of tourists ever - 2.41 million - visited the country (compared to 33,000 in 1950, 118,000 in 1960, 441,000 in 1970, 1.18 million in 1980, and 1.34 million in 1990). This figure was topped in 2008 as Israel opened its doors to more than 3 million tourists.Although this industry contributes less than 3% to the GNP, it has a foreign currency added value of 85 percent (making it the added-value leader among the country's export industries) and employs some 80,000 persons. This industry's large potential is yet to be exploited, as it is a major factor in Israel's economic growth plan.
- The year 2000 was the first ever in the country's economic history with both a zero inflation rate and a significant decrease of the balance of trade deficit, the latter declining further to less than $1 billion in 2009, representing less than 1 percent of total trade.• In May 2010 Israel was accepted into the Organization for Economic Cooperation and Development (OECD), a tribute to its emergence as a developed economy of the first class.• Israel absorbed almost 1.2 million immigrants in a decade, augmenting the country's civilian labor force, from 1.65 million in 1990 to 3 million in 2010.• Inflation was defeated, from an annual rate of 445% in 1984 to 21% in 1989, 0% in 2000 - rising only to 2.4% in 2005 and to less than zero - 0.1% in 2006. This achievement allowed the central bank to lower interest rates to near zero during the financial crisis of 2007-2010 - while still keeping inflation within the target 3-5% range.• Foreign debt was eliminated, from being 1.6 times the GDP in 1985, still 25% of the GDP in 1995, declining to less than 3% in 2001, and down to zero by 2003 - with Israel since then becoming a creditor (i.e., the world economy owes it much more than Israel owes the world). By 2010 the world owed Israel a net total of $50 billion.• Foreign investments rose steadily, encouraging the GDP and accelerating growth of exports from $175 million in 1987 to $5.8 billion in 1997, to $10.7 billion in 2005, and $16.9 billion in 2009.• Industrial exports grew almost six-fold in the past two decades, from $6 billion in 1985 to $39.8 billion in 2008 and $34.6 billion in 2009.• In 2010 Israel announced the discovery of a huge natural gas field in its coastal waters, raising the prospect that the country may be able to reduce its dependence on energy imports and even become a gas exporter.
- Israel has been thriving as a market economy in last few decades.Followinfg factors have been the major contributorsExpenditure in R &D is highVC funding highQualified scientists engineers are abundantIT skills are high
- Israel is called as the high-tech powerhouse.Because of the mentioned Competitive edge, Israel has relative advantage in this industryThe reasons for this advantage areSkilled workforce. Apparently Israel has the highest % of researchers and scientists as a percentage of populationHigh capital availability. Govt funding and VC investement in the sector has made Israel the only country with 4.7 % investment in R&D as a % of GDPThe high-tech industry forms a large part of the Israeli economy.The country is a global leader in many hi-tech sectors such as electronics, generic pharmaceuticals, biotechnology and aeronautics. Exports of products by the hi-tech industry has been grown at an annual rate of 8.5% in the last five years. In March this year, the sector brought in $2.1B in export revenue
- Israel has relative advantage in some industries: Hi Tech and Chemical are the prominent onesThe reasons for this advantage areSkilled workforce. Apparently Israel has the highest % of researchers and scientists as a percentage of populationHigh capital availability. Govt funding and VC investement in the sector has made Israel the only country with 4.7 % investment in R&D as a % of GDPThe high-tech industry forms a large part of the Israeli economy.While Germany is known for engineering, Israel can be called as a high-tech powerhouse.The country is a global leader in many hi-tech sectors such as electronics, generic pharmaceuticals, biotechnology and aeronautics. Exports of products by the hi-tech industry has been grown at an annual rate of 8.5% in the last five years. In March this year, the sector brought in $2.1B in export revenue
- The year 2000 was the first ever in the country's economic history with both a zero inflation rate and a significant decrease of the balance of trade deficit, the latter declining further to less than $1 billion in 2009, representing less than 1 percent of total trade.• In May 2010 Israel was accepted into the Organization for Economic Cooperation and Development (OECD), a tribute to its emergence as a developed economy of the first class.• Israel absorbed almost 1.2 million immigrants in a decade, augmenting the country's civilian labor force, from 1.65 million in 1990 to 3 million in 2010.• Inflation was defeated, from an annual rate of 445% in 1984 to 21% in 1989, 0% in 2000 - rising only to 2.4% in 2005 and to less than zero - 0.1% in 2006. This achievement allowed the central bank to lower interest rates to near zero during the financial crisis of 2007-2010 - while still keeping inflation within the target 3-5% range.• Foreign debt was eliminated, from being 1.6 times the GDP in 1985, still 25% of the GDP in 1995, declining to less than 3% in 2001, and down to zero by 2003 - with Israel since then becoming a creditor (i.e., the world economy owes it much more than Israel owes the world). By 2010 the world owed Israel a net total of $50 billion.• Foreign investments rose steadily, encouraging the GDP and accelerating growth of exports from $175 million in 1987 to $5.8 billion in 1997, to $10.7 billion in 2005, and $16.9 billion in 2009.• Industrial exports grew almost six-fold in the past two decades, from $6 billion in 1985 to $39.8 billion in 2008 and $34.6 billion in 2009.• In 2010 Israel announced the discovery of a huge natural gas field in its coastal waters, raising the prospect that the country may be able to reduce its dependence on energy imports and even become a gas exporter.
- Ranked higher - 15 out of 169 countries (in 2010) - on the United Nations Human Development Index.which takes into account not only economic performance but also performance in the fields of health, education and gender equalityThe year 2000 was the first ever in the country's economic history with both a zero inflation rate and a significant decrease of the balance of trade deficit, the latter declining further to less than $1 billion in 2009, representing less than 1 percent of total trade.• In May 2010 Israel was accepted into the Organization for Economic Cooperation and Development (OECD), a tribute to its emergence as a developed economy of the first class.• Israel absorbed almost 1.2 million immigrants in a decade, augmenting the country's civilian labor force, from 1.65 million in 1990 to 3 million in 2010.• Inflation was defeated, from an annual rate of 445% in 1984 to 21% in 1989, 0% in 2000 - rising only to 2.4% in 2005 and to less than zero - 0.1% in 2006. This achievement allowed the central bank to lower interest rates to near zero during the financial crisis of 2007-2010 - while still keeping inflation within the target 3-5% range.• Foreign debt was eliminated, from being 1.6 times the GDP in 1985, still 25% of the GDP in 1995, declining to less than 3% in 2001, and down to zero by 2003 - with Israel since then becoming a creditor (i.e., the world economy owes it much more than Israel owes the world). By 2010 the world owed Israel a net total of $50 billion.• Foreign investments rose steadily, encouraging the GDP and accelerating growth of exports from $175 million in 1987 to $5.8 billion in 1997, to $10.7 billion in 2005, and $16.9 billion in 2009.• Industrial exports grew almost six-fold in the past two decades, from $6 billion in 1985 to $39.8 billion in 2008 and $34.6 billion in 2009.• In 2010 Israel announced the discovery of a huge natural gas field in its coastal waters, raising the prospect that the country may be able to reduce its dependence on energy imports and even become a gas exporter.
- Israel's most striking economic achievement is the rate at which it has developed while simultaneously dealing with the following enormously expensive challenges:• Maintaining national security: Israel now spends around 8 percent (as against over 25% in the 1970s and 23% in 1980) of its GDP on defense. Even in eras of relative calm, Israel must retain a strong deterrent capability.• Absorbing large numbers of immigrants: The "ingathering of the exiles" is practically the raison d'etre of the Jewish state. Since its inception, Israel has absorbed more than 3 million immigrants, more than five times the number of Jews living in the country when it attained independence in 1948. In its first four years alone, Israel's population more than doubled as 700,000 immigrants, mostly refugees from postwar Europe and Arab states, poured into the country.Since 1990 another wave of 1.2 million immigrants (940,000 from the former Soviet Union alone), required enormous outlays for their physical and social absorption. However, much faster than the previous waves of immigration, these newcomers soon contributed to accelerating the GDP growth - though also temporarily increasing unemployment to an 11.2 percent high in 1992. This was gradually reduced to below 6 percent before the financial crisis struck.• Establishing a modern economic infrastructure: Although basic networks of roads, transportation, port facilities, water, electricity, and communications existed in 1948, they were far from adequate, requiring enormous outlays for their development and expansion. Without this huge investment in communications and transportation, much of the expedited growth of the economy could have never occurred.• Providing a high level of public services (health, education, welfare, etc.): As Israel is committed to ensuring the well-being of its population (with special concern for the weaker elements in the society) a continuously growing proportion of its resources had been devoted to meet these obligations. Recent budgets have placed a special emphasis on education and other programs aimed at investing in the country’s future workforce while helping to close the income gap.
- For Israeli society and economy to move up a grade, three major transformations need to take place. The first is a political settlement of the Israeli-Palestinian conflict. This may not allow for an immediate reduction in defense expenditures, but it may at least prevent routine additional expenditures tagged for "hostilities" in the occupied territories. Over the last two decades, these expenditures have amounted to more than the combined annual budgets for Education and Health. A political settlement would also raise Israel's credit rating and open up new markets in the region. Most importantly, it would facilitate a major change in the national agenda, from guns to butter and from the prioritization of military affairs to the prioritization of civilian and social ones. The second transformation needed is in the field of education. At the present time, less than 50% of Israeli 17 year olds receive a high school matriculation diploma, and only about 30% of the age group enrolls in college or university within eight years of high school graduation. Down-sizing of the state, which began in 1985, has hit the budgets of most schools, especially in the social and geographic periphery of the country. Parents who can afford it, most of them in the big cities in the center of the country, improve their children's chances by making out-of-pocket payments for additional teaching hours inside the schools and private lessons outside of them. And this, in turn, works to make high scholastic achievements the privilege of a shrinking sector of the population.In contemporary Israel, income and wealth are becoming more and more concentrated - which brings us to the third transformation needed: a long-term investment policy that centers not only on high-tech and finance, and not only in the Tel Aviv area. Such a policy change, combined with a long-term educational transformation, would provide a much larger pool of highly educated persons capable of functioning in a global environment. This needs to be accompanied by a labor policy based on workers' rights and strict, universal implementation of labor laws.