The Israeli Tiger that Needs Taming

Excerpt: Israel’s economy is enjoying rapid growth, but various thinkers say there’s a need for vision and planning to ensure it doesn’t rise and fall like Ireland did.

By ZIV HELLMAN
March 22, 2011 15:12
2 minute read.
Tiger

Tiger (do not publish again). (photo credit: Avi Katz)

GIVEN RECENT ECONOMIC growth numbers, Israelis might justifiably feel a need to pinch themselves, to be sure that the blazing fast growth rate is real.

While most advanced economies are still struggling to dig their way out of the mess left by the global recession of 2008 and 2009, Israel’s economy seems intent on racing ahead. Gross domestic product (GDP) expanded at an annualized rate of 5.2 percent in the second quarter of last year, 4.4 percent in the third quarter, and an astounding 7.8 percent in the fourth quarter, driven by strong private consumption and investments.

Compare that with an average GDP rise among OECD (the Organization for Economic Co-operation and Development, essentially the developed nations) members of only 2.8 percent last year. Israel’s growth rate outpaced that of Sweden, Japan, the US, Britain and Germany.

As cheering as the numbers are, in a dynamic global economy, resting on one’s laurels is not a good idea. In recent years, several initiatives have sprung up, urging the fashioning of coherent national policies with definite aims for where the country’s economy should be taken in the years ahead.

One idea, initiated by the Reut Institute, a non-partisan, non-profit policy team based in Tel Aviv, has been taken up by no less than Prime Minister Benjamin Netanyahu: to place Israel, within a few years, within the top 15 countries in the world, in terms of income and quality of life. This is an ambitious target – the International Monetary Fund currently lists Israel 28th in the world in per capita GDP – requiring strong and sustained growth over an extended period of time.

“One of the reasons that the Reut Institute was created,” says Gahl Rinat, Reut’s director of external relations, “is that its founder, Gidi Grinstein, noticed… that there is a built-in bias against long-term professional systemic thinking in the governmental system.” Grinstein came to this conclusion when he served as secretary of the Israeli negotiating team with Yasser Arafat and the Palestine Liberation Organization between 1999 and 2001.


“To make things happen, it is not enough just to react to developments, without careful planning,” Rinat explains. “[Grinstein] was determined to try to change that.”

As part of its efforts to stimulate longerterm thinking, Reut teamed with the business daily “The Marker” in January to conduct an international conference titled “Israel 2021,” attended by world experts in economic development, alongside local business figures. There they rubbed shoulders with top government officials, including Finance Minister Yuval Steinitz and Prime Minister Netanyahu. The conference included both lectures and “round-table” discussions intended to bring together individuals with varied expertise to discuss topics crucial to Israel’s economic future.


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