Israel’s 67 year old economy is a case study for its neighbours

The Palestinians cannot blame their economic woes on Israel, which thrives despite facing tough challenges
Tel Aviv skyline (photo credit: Abir Sultan/Flash 90)
Tel Aviv skyline (photo credit: Abir Sultan/Flash 90)

As Israel celebrates 67 years of independence, this is an opportunity to see just what its economic success can teach others in the region.

Remember: From 1948 until the mid 1980s, Israel’s leaders deemed it best to govern a closed economy, protected by high tariffs and government regulations. Since then, the country has witnessed spectacular growth, often characterised by the term ‘start-up nation’. According to the Ministry of Economics, “since the establishment of the state, the number of employees in Israeli industry has grown from 65,000 to 400,000. Israeli exports have soared from $5 million to $47 billion.” Phenomenal!

And that growth shows no sign off stopping. For example: –

  • The Israeli economy grew 7 percent in the last quarter of 2014, its highest rate of growth in recent years.
  • Even Jerusalem is no longer seen as just a tourist attraction for the religious, but a thriving port of call for high-tech and biotech investment opportunities.
  • In the past month alone, multinationals like Apple or Dentsu from Japan have upped their involvement in the economy of the Holy Land.
  • It is estimated for 2014 that 300 Israeli start-ups raised approximately US$3.4 billion in capital. A further 100 companies sold out for US$7 billion. 2015 is showing a similar pattern after just four months of activity.

The list of positives is very long. Although there is still much to improve, one commentator declared: “Israel boasts one of the world’s most innovative economies with the highest ratio of startups per capita, the second-largest venture-capital industry and more than half of our exports deriving from the high-tech sector.” Unfortunately, despite the boom, ‘there is chaos all around’.

Let us compare this success story to the Palestinian economy of today. Residents of Ramallah and Gaza argue ad nauseam that there will be no riches for its people until Israel takes down the military road blocks in the West Bank and rescinds the blockade of Gaza. Yet, there are now very few such army positions. And it is Egypt that has shut down its border with Gaza, while Israel encourages daily lorry loads of humanitarian supplies.

Inevitably, there are many reasons why the Palestinian economy is thread bare; minimal efforts to collect taxes, corruption, a poor historical base, to name but a few. And yes, Israel can take some of the blame. However, there is something more fundamental, something that Israel began to appreciate back in the 1980s, which has led to a positive difference for millions.

A strong country cannot just rely on a strong military. The economy needs to thrive as well. That requires diverting resources into domestic infrastructure. In contrast, Hamas appears content to ignore the housing problem in Gaza, concentrating on building more tunnels to attack Israel’s towns. Fatah makes little attempt to install basic social principles of government. Where are practical schemes to encourage small businesses? What investment incentives are there for there private sector?

As I wrote over a year ago, the Palestinian economy remains a story of “what if?”.

And if you are sincerely looking for the answer as to what could have been achieved, consider that success is not just measured in statistics. The beauty of Israel has been summarized in an amazing and stunning collage of 67 photos. They reveal just what a fantastic place Israel has grown to be and how it has come to prosper, for peoples of all faiths and political persuasions. That is a cause for celebration in Israel, while neighbours deny themselves.

About the Author
Michael Horesh is a recognised business coach and mentor, and has helped clients collectively to create millions in added value over the past decade. He has substantial understanding of the workings of the Israeli economy and the financial situation of the Palestinians, as well as an incisive way of looking at Middle East issues.
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