Israel's Economy - part 1/2

Israel's economy has done remarkably well for a country involved in a prolonged and violent political struggle over the Palestinian territories. The country's economy grew more than five percent last year -- faster than the U.S., Europe, UK and Japan.

While the Bank of Israel expects the country's fortunes to dip next year, along with the world economy, growth is still expected to exceed four percent. Not bad, given that the U.S., one of its biggest trading partners, is staring down the barrel of potential recession.

"The Israeli economy has managed to develop a kind of isolation from the political instability," says Yossi Mekelberg, Associate Fellow of the Middle East Program at Chatham House.

"It's almost isolated, mainly because it's based on hi-tech, pharmaceutical industries, and chemicals, and I think these are the things that are less conditioned by the political situation."

Israel says it spends a greater percentage of its GDP on hi-tech research and development than any other country.

According to the Israel Venture Capital Research Center, 3,361 hi-tech companies are operating in Israel. And they're attracting foreign interest and dollars. In the first three quarters of 2007, they raised more than $1.2 billion dollars in funding, 10 percent more than the same period the previous year.

Yossi Vardi is an industry veteran. He backed his first technology business almost forty years ago and has so far lent his expertise to 65 fledgling companies.

"Our strength on the food chain is usually in the very early stages where you have to come with ideas, innovation and take great risks," Yossi Vardi says.

"The hi-tech industry is not a monolithic thing. In China, they do manufacturing. In India, they do coding. We are very good in the early stages, like Silicon Valley. And this is what the world is looking for in Israel."

The country's fortunes contrast sharply with the economic turmoil engulfing the Palestinian territories.

According to the World Bank, the Israeli per capita GDP is more than 20 times that of the Palestinians.

Two-thirds of Palestinian people are thought to be living in poverty, although some say the figure could be even higher.

Since the election of Hamas in 2006, private investment in the region has all but dried up.
The government is relying on loans, remittances and donor aid, but it's not enough to cover expenditure. The World Bank estimated the Palestinian National Authority was running up a deficit of $100 million a month in the first half of 2007.

This week, after meeting with Israeli and Palestinian leaders, U.S. President George W. Bush called for them to make "painful concessions" to reach a peace deal.

Bush has predicted a peace treaty will be signed by the time he leaves office in 2009.

Yossi Mekelberg from the foreign policy think-tank Chatham House says a deal would create economic benefits for both sides of the divide.

"I think the direct benefits of a peace agreement would be immense, both for the Israelis and the Palestinians," he says.

"When there is a peace agreement there will be more investment. The European Union, the United States, and others will investors will pour more money, as happened post-1993. And also, let's bear in mind there will be an extra growing economy that has more than four million people, the Palestinian economy, so, a peace dividend can be only positive.

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[Yahoodi1]

the palestinans and egypt are fund by all the world, yet they do nothing with the money.

jealousy wil kill you wallah.

[Amanda75H]

I wish Israel's neighbors were inspired from her of how it is possible to establish a successful, western free society in that region instead of being captured in ignorance and radical aggressive Islam.

[chalitzah]

@chalitzah

Another factually incorrect statement you make is about American aid. American aid to Israel only begins during the 1970s, as we (Israel) essentially entered the Cold War, as the Arab Nationalist Movement became proxies for the Soviet Union during this period.

If the Muslim world had allowed us to be neighbours, the Israeli economy would be far better, and without any need for military assistance.

[chalitzah]

@TradingTutor

You have a one-sided and historically ignorant view. We accepted the 1947 partition. It was only the Arab leadership that rejected it. 7 Arab countries invaded us. Arabs only became refugees during a war, which was initiated by the Arab leadership.

Also my grandparents (we are Arab Jews) were expelled by Arab governments (Morocco and Syria). The number of Jews the Arab governments expelled is almost as many as the Arabs who left Israel. (continued)

[TradingTutor]

@chalitzah I'm portuguese, and until recently Portugal still had African colonies... Imagine what would it be, instead of letting the colonies be independent, Portugal said to Angola for example: "You now have to share this land with Jews, whether you want it or not". And then the Jews would declare it as an independent country. That's like stealing their land, and that's how Israel was made. Legal? Yes, but unethical and with a colonialism mindset behind it.

[TradingTutor]

@chalitzah Getting financial aid (it was only restricted to military aid until recently) since the 50s from US was what made Israel have the economy it has now.

And Israel existing implies that a war exists too... Just 1 day after your country's independence, you got attacked. Israel's foundation was legal, but certainly unethical... (continues)

[chalitzah]

@TradingTutor

No not until after '67, when we became part of the Cold War (the arabs were funded by the Soviety Union from circa 1965-89). The military aid from America is very helpful, but it is tiny compared to how much we have to spend on taxes to defend ourselves from the Arab countries and Iran. If we had peace, we would be far more rich now

[TradingTutor]

Israel's economy = USA funds since the 50s

[hima1911]

@Yahoodi1

hi

i'm egyptian pharaonin guy ,,, i love israel ,,i hope israel to fuck arab and islamists

please note that egypt now is occupied by islamists and dirty arab i hope to free egypt

to rebuild new pharaonic civilization ,, israel is our friend

GOD BLESS EGYPT AND ISRAEL

[nzobriens]

@Amanda75H They are captured by Israeli military walls, tanks and US funded aggression. Religion is a problem too, but this is also true of the USA where most highly educated people are non believers and the less educated are predominantly Christians. Try reading UN resolutions on Palestine, or Amnesty International on Palestine, or Jewish voice for peace, or What about Christians in Palestine. Educate yourself!

[zobielamouche1]

there are so many cashflows to "israel" (holocaust industry with germany, exploitation of goyim like diamond mine workers in africa, donations of evangelical christians in usa,..), so many "raw materials" they import without paying (like goy women from eastern europe who have to work as prostitutes then,human organs from haiti,...) and so many money they take with force from the palestinians (e.g. their taxes which they retain)

- i think we need not worry about the zionist economy

[CounterStrike211]

@trakkaton And yet Israel still remains the only non batshit crazy country in the region.