|
|
The Economy of Israel
Is it sound? Should you invest in it?
If you follow economic news, you may have concluded
that Israel's economy is in dire straits. And you may have heard of rampant
inflation and other disquieting information. But when you visit Israel,
and feel the vigor and "vibes" of the economy, you get a different
impression.
What are the facts?
Israel is still paying for all the wars forced upon it since
its birth. Out of an annual budget of about $20 billion, more than one-third,
about $7 billion, is for repaying and servicing of that debt and $5 billion
goes for defense. That leaves just $8 billion to run all other services
of the country. In making peace with Egypt and returning the Sinai, Israel
gave up the oil fields it had developed, which yielded an annual income
of over $2 billion and which made Israel independent of oil imports. Israel
also gave up the enormous investment in some of the world's most advanced
and sophisticated military bases, and the cities of Yamit and Ofira.
All of these sacrifices did indeed create a major economic
crisis, which resulted in inflation, unemployment and stagnation. But
for the last three years, Israel has put into effect wide-ranging recovery
plans, leading to economic stability and renewed growth. The results of
these plans have exceeded expectations: Inflation was beaten without causing
recession, unemployment declined, the budget deficit was reduced to 4%
of GNP, and the Bank of Israel's foreign reserves almost doubled.
The energy and resourcefulness that has enabled Israel to
absorb over 2 million immigrants and to convert a desolate land into one
of green fields and modern cities are also reflected in Israel's economic
development. Israel is a modern industrial state, whose output encompasses
some of the most advanced technology and sophisticated production in the
world. Industry is concentrated in high-technology and high-added-value
products. It is based primarily on domestic scientific and technological
creativity and innovation.
Israel is a leader in the fields of medical electronics,
military electronics, civilian and military aviation, agri-technology,
telecommunications, computerized graphics, fine chemicals, solar energy,
water desalinization, and computer hardware and software. Traditional
industries include food processing, textiles and fabrics, furniture, fertilizers,
rubber, plastic, and metal products. The highest growth rates are in those
branches that require heavy R&D investment and sophisticated production
techniques.
Israel is the acknowledged world leader in the diamond industry.
It produces over 80% of the world's output of small polished stones. Israel
is also the developer and the world leader in the drip irrigation technology
of agriculture. Israeli equipment and this technology are now being used
with great success in many developing countries (some of which don't acknowledge
the "existence" of Israeli).
Domestic tranquility, a western legal system, the superb
university network (centered on Hebrew University in Jerusalem and the
Technion in Haifa), the full infrastructure in transport, communications,,
and utilities, but primarily its educated and motivated population make
Israel attractive to foreign investment. They are also aware that the
highest level of R&D work is performed in Israel and that it costs
around 40% less than in the U.S. Such companies as IBM, Digital Equipment,
Intel, National Semiconductor, Motorola and many others have established
plants and design centers in the new industrial parks mushrooming around
the country's academic institutions. Israel has a Free Trade Area agreement
with both the E.E.C. and with and with the United States, the only country
in the world whose goods have preferential tariff reductions and duty-free
access to the two most important markets in the world.
Israel's economy is healthy, is vibrant and growing, and
offers countless investment opportunities in industry, agriculture, real
estate, tourism, commerce, mineral exploration and much more. This is
a country that started essentially from scratch, less than 40 years ago.
It is almost totally devoid of raw materials, has poor soil, and scant
water resources. Yet is has fought five major wars, has absorbed and settled
over 2 million immigrants, and has created a formidable industrial/agricultural
economy. The emerging nations and "third world" countries should
take the economy of Israel as their example.
This ad has been published and paid for by
Facts and Logic About the Middle East
P.O. Box 590359
San Francisco, CA 94159
Gerardo Joffe, President
Return to top of page>>
|