Travel Reference
In-Depth Information
While Israel ranks among the world's wealthiest economies as measured in per capita GDP, it remains poor
relative to Western Europe and North America. (Data: OECD; Chart: David Rosenberg. Drawing: Bill Nelson.)
which prevents the free fl ow of trade, labor, and capital. Although defense costs are smaller as
a percentage of GDP than in the past, they continue to be heavy. In addition, Israel has higher
rates of poverty and income inequality than its peers in the developed world.
The primary and secondary educational system — a critical foundation for the technol-
ogy industry — performs poorly by international standards. Universities are underfunded
even though more Israelis than ever are getting a higher education. Compared to the world's
wealthiest economies, Israel still has catching up to do. Its GDP per capita is equal to about
60 percent of the U.S. GDP and 81 percent of the average for countries belonging to the Or-
ganization for Economic Cooperation and Development (OECD), which assesses the world's
industrialized economies and to which Israel was admitted as a member in 2010.
The Israeli economy and the ideological assumptions behind it evolved over the past cen-
tury in parallel with the global debate over the relative merits of the socialist and capitalist
models of economic development. In the Yishuv, socialism emerged early on as the prevalent
ideology and held sway in Israel for the fi rst three decades of the country's history. The global
tide turned in the face of economic malaise in the United States and Western Europe dur-
ing the 1970s, which pointed up the ineffi ciencies of state intervention, and fi nally with the
collapse of Communism in 1989. Israeli policymakers, starting with the 1985 Economic Stabi-
lization Plan, took their cue not only from local conditions but from events around the world
and began to implement policies that rolled back the state's role in economic life, a process still
going on today.
