Free Press Journal

The economics of Israel in a nutshell


Israel, it has not done badly at all…

Formed out of strife in 1948, it is a young nation. Still, starting from scratch, it has clocked a GDP of USD 360 billion which puts it close to the top 50 nations in an overall count of 195 for the planet.

On the count of per capita income, it is actually ranked around 35, with an estimated figure of USD 40,000.

Located in inhospitable climes with water shortages, it has created survival-level technologies for water procurement (out of sea water), drip irrigation and optimisation of cultivation out of arable land.

With the same mentality, it has managed a high level of technology innovations, serving fields ranging from cyber-security to defence to healthcare and a multitude of manufacturing industries. It is an avowed leader in many of the areas where it has chosen to create a footprint.

Given its limited history, the fact that Israel was chosen to join the OECD in 2010 speaks volumes for its achievements. The OECD comprises of around 35 leading economic countries.

Israel has a population of around 8.8 million and it has managed all these innovations. In its brief history, Israel has managed twelve Nobel laureates. Clearly, work ethic is a way of life. Military service is compulsory (two years for women and an extra eight months for men).

From the OECD benchmark, Israel has done excellently, as the charts indicate.

The 2008 global economic crisis has seen the OECD manage through free-money policy (and related debt increases). Israel, on the other hand, has been among the few countries which had austerity and self-dependence. The results are evident— the debt to GDP ratio for Israel has consistently gone lower, which is a healthy sign, whereas for overall OECD nations it has kept climbing. Likewise, the inherent technological base which Israel has developed has helped it in two areas— curbing of unemployment and getting foreign capital investment interest.

Today, Israel is in a decent position wherein it does not need to invest just for collaborative arrangements at the national level. Indeed, the chart on the economy shows increasing foreign asset acquisition by the Israeli economy. Combined with rising per capita incomes and falling debt percentages, it indicates that whatever economic activity Israel is following, it is able to generate economic returns, recognition and long-term benefits.

In other areas, the OECD has also acknowledged that Israel has built a robust healthcare system with the three key elements – widespread coverage, competitive pricing and good level of choice for the consumer fraternity. In forward-looking areas of technology innovation, Israel is acknowledged as a front-runner, with the resolution mentality needed.