No one need reminding that Israel’s external image is dominated by pictures of conflict and perceptions of injustice. Lost in this portrayal, however, is how smart and successful Israel has been in developing its economy. This Paper surveys Israel’s impressive economic growth story.
There is no single explanation for Israel’s success, although high on the list is surely its commitment to research and development. Also vital has been the mind-set that living in a rough regional neighbourhood has engendered amongst the population – of robust accountability across society, long-term thinking and a problem-solving ethos.
Today Israel is not only a world leader in diamond polishing and cutting, but more recently in software, semi-conductors and telecommunications, where the concentration of hightech start-up industries has given it the monikers ‘Silicon Wadi’ and ‘Start-up Nation’. In addition, its rapid agro-development in a dry Mediterranean climate has meant that since independence in 1948, Israel’s agricultural output has increased 16-fold, whilst simultaneously decreasing water usage in the industry by 40 per cent in 60 years. Assessing why Israel has done so well in economic terms – and certainly by comparison to its neighbours – is typically shaped by one’s view of the region’s politics, ancient and contemporary. Nevertheless, developing countries would do well not to ignore the many lessons that can be drawn from Israel’s impressive economic progress in the face of stark challenges of security, geography and resources.