Travel Reference
In-Depth Information
People watch a board showing stock fl uctuations at the Tel Aviv Stock Exchange, November 22, 2007.
(Moshe Shai / Flash90.)
start-ups. The industry plays a critical role in providing not only fi nance but the management
skills that young companies need to evolve from pure research and development to manufac-
turing and marketing. The venture industry has about eighty funds, including about thirty-
fi ve foreign funds, with total capital of about $10.6 billion at the end of 2008. Israeli venture
funds invested just over $2 billion in approximately 480 technology companies in 2008, mak-
ing it the largest venture industry in the world after that of the United States.
Regulation of Israel's markets and fi nancial services industry is divided among three prin-
cipal authorities. The Bank of Israel supervises banks. The Finance Ministry's capital markets
division supervises foreign insurance companies and pension and provident funds. The Israel
Securities Authority, an independent agency, regulates the stock market and securities indus-
try. With the deregulation of fi nancial markets and the blurring of distinctions among the
players, there have been calls to merge most or all of these bodies into a single unit.
THE PUBLIC SECTOR
Israel's government has traditionally played a large role in the economy — at times an exceed-
ingly large role — in terms of taxes and spending, regulation, fi nance, and outright ownership
of businesses. In part, this has been because of the country's heavy defense burden; both the
cost of maintaining a large army and national security considerations require the state to in-
tervene in areas normally left to the private sector. Until the 1980s, ideology was also a factor.
Policymakers believed that the state was the best mechanism for managing the economy. Even
if it was not the most effi cient mechanism, it was still the one best suited to ensure the needs
of national development.
 
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