Travel Reference
In-Depth Information
Chapter Six
Israel's economy ranks high among the world's wealthiest and most technologically ad-
vanced. Its industry specializes in cutting-edge communications, electronics, and medi-
cal technology and shows an increasing capacity for developing consumer products and
services. Its business sector is entrepreneurial and dynamic.
A full-fl edged participant in the global economy, Israel exports about one-third of its gross
domestic product (GDP) and attracts billions of dollars in foreign investment every year. Its
fi nancial markets are sophisticated. Business and fi nancial regulations are effi cient if heavy-
handed by the standards of the United States and much of Europe. Its GDP per capita, a mea-
sure of a country's relative wealth, was about $28,500 in 2009, about the same as the GDP of
Italy, Spain, Greece, and South Korea.
In the World Economic Forum's annual survey of national competitiveness, Israel placed
27th among 134 countries in 2009 and rose to 24th in 2010. Measured against social indicators
such as access to health care and life expectancy — to which economists are giving increasing
weight —Israel also stands among the world's most developed economies. The United Nations
Human Development Index —which gauges health, knowledge, and standard of living —
ranked Israel at 15th out of 169 surveyed countries in 2010.
None of these achievements was inevitable. When the fi rst Jewish immigrants motivated by
Zionism arrived in the last quarter of the nineteenth century, the economy was poor by the
standards of the time. The land had few of the natural resources that traditionally underpin
modern agriculture and industry. In the years that followed, the confl ict with the Arabs ham-
pered economic development and forced the young State of Israel to devote disproportionate
fi nancial and human resources to security.
Growth was repeatedly interrupted by wars and the struggle to cope with successive waves
of immigration. The ideological imperatives of creating a new society and state often came
into confl ict with economic effi ciency. Indeed, Israel went through more than a decade of eco-
nomic stagnation in the 1970s and 1980s before it made the transition to a full-fl edged market
economy.
That Israel fi nally overcame these obstacles is a testament to its people's dynamism, en-
trepreneurial drive, and intellectual resources. Yet the economy continues to face critical
challenges. The country remains isolated from its immediate neighbors in the Middle East,
