This document provides an analysis of Israel's economy. It includes background information on Israel such as its capital, population, independence date. It then analyzes Israel's economic indicators including GDP, GDP growth, exports, imports, inflation rates, and labor force statistics. The document also examines Israel's economic growth over time from 1948-1967, 1967-1983, and from the 1980s crisis to reforms. It discusses how factors like migration, foreign aid, and a strong military-industrial complex have contributed to Israel's economic success despite security challenges. Tables and graphs analyze GDP and export growth, national income per capita, labor productivity, and research and development spending.

1. FARUK DOKUMACIFARUK DOKUMACI
A COUNTRY ANALYSEA COUNTRY ANALYSE
ISRAELISRAEL

2. The Elements in The StudyThe Elements in The Study
 MAIN INTRODUCTION ANDMAIN INTRODUCTION AND
INFORMATION ABOUT ISRAELINFORMATION ABOUT ISRAEL
 ECONOMIC INDICATORS OF ISRAELECONOMIC INDICATORS OF ISRAEL
 PERIODICAL ANALYSE OF ISRAELPERIODICAL ANALYSE OF ISRAEL
ECONOMYECONOMY
 ISRAEL’S ECONOMIC GROWTH:ISRAEL’S ECONOMIC GROWTH:
SUCCESS WITHOUT SECURITYSUCCESS WITHOUT SECURITY

3. LOCATION OF ISRAEL IN THE WORLDLOCATION OF ISRAEL IN THE WORLD

6. INFORMATION ABOUT ISRAELINFORMATION ABOUT ISRAEL
 Capital CityCapital City: Jerusalem: Jerusalem
 Population:Population: 7.148.0007.148.000
 Land:Land: 20.770 km220.770 km2
 Language:Language: HebrewHebrew

7. INFORMATION ABOUT ISRAELINFORMATION ABOUT ISRAEL
 Independence Day:Independence Day: 14 May 194814 May 1948
 President:President: Shimon PeresShimon Peres
 Prime Minister:Prime Minister: Ehud OlmertEhud Olmert
 Currency:Currency: New Israel ShekelNew Israel Shekel

8. POPULATION ANALYSE INPOPULATION ANALYSE IN
ISRAELISRAEL
 Population Growth Rate:Population Growth Rate:
1.154%1.154%
 Life Expectancy:Life Expectancy:
79.6 years79.6 years
 Literacy Level (Literacy Level ( reading and writingreading and writing):):
97.1%97.1%
 Ethnicity:Ethnicity:
76.4% Jewish, 23.6%76.4% Jewish, 23.6% MostlyArabicMostlyArabic
MuslimMuslim

9. MAIN ECONOMIC INDICATORSMAIN ECONOMIC INDICATORS
 GDP :GDP : 170.3 Billion Dollars170.3 Billion Dollars
 Growth (GDP):Growth (GDP): 5.1% (2006 est5.1% (2006 est))
 GDP per capitaGDP per capita: 26.800 Dollars: 26.800 Dollars
 ( The highest income leveled 10% of total( The highest income leveled 10% of total
population is getting 28.3% of all the income inpopulation is getting 28.3% of all the income in
the country )the country )
 ( The lowest income leveled 10% of total( The lowest income leveled 10% of total
population is getting 2.4% of all the income inpopulation is getting 2.4% of all the income in
the country )the country )

10. MAIN ECONOMIC INDICATORSMAIN ECONOMIC INDICATORS
GDPGDP
 2.5% Agriculture2.5% Agriculture
 30.3% Industry30.3% Industry
 67.2% Service67.2% Service

11. MAIN ECONOMIC INDICATORSMAIN ECONOMIC INDICATORS
 Inflation:Inflation: -0.1%-0.1%
 Unemployment:Unemployment: 8.3%8.3%
 Defence Expenditures:Defence Expenditures: 7.3% of7.3% of
GDPGDP

12. MAIN ECONOMIC INDICATORSMAIN ECONOMIC INDICATORS
 Foreign Direct Investments:Foreign Direct Investments:
12.1billion dollars12.1billion dollars
 Foreign Debt:Foreign Debt:
81.98 billion dollars81.98 billion dollars

13. MAIN ECONOMIC INDICATORSMAIN ECONOMIC INDICATORS
 Imports:Imports:
46.96 billion dollars46.96 billion dollars
 Main Import Partners:Main Import Partners:
USA(12.4%)USA(12.4%)
Belgium(8.2%)Belgium(8.2%)
Germany( 6.7%)Germany( 6.7%)
 Exports:Exports:
43.73 billion dollars43.73 billion dollars
 Main Export Partners:Main Export Partners:
USA(38.4%)USA(38.4%)
Belgium(6.5%)Belgium(6.5%)
Hong Kong(5.9%)Hong Kong(5.9%)

14. MAIN ECONOMIC INDICATORSMAIN ECONOMIC INDICATORS
 Main Export Products:Main Export Products:
machinerymachinery
hardwarehardware
softwaresoftware
diamonddiamond
agricultural productsagricultural products
chemical productschemical products
textiletextile
 Main Import Products:Main Import Products:
raw materialsraw materials
military defence sectormilitary defence sector
raw diamondraw diamond
grain(food)grain(food)
common goodscommon goods

15. MAIN ECONOMIC INDICATORSMAIN ECONOMIC INDICATORS
 The Elements Determine Today’s StructureThe Elements Determine Today’s Structure
1.Small national market forces economy to be1.Small national market forces economy to be
export orientedexport oriented
2.Since there is not much water source, it was a2.Since there is not much water source, it was a
neccessary to improve agricultural technologyneccessary to improve agricultural technology
3.Qualified Jewish labor force migrated to the3.Qualified Jewish labor force migrated to the
countrycountry

16. MAIN ECONOMIC INDICATORSMAIN ECONOMIC INDICATORS
In Israel, altough there are manyIn Israel, altough there are many
private entrepreneurs, stateprivate entrepreneurs, state
has a ciritical for employment andhas a ciritical for employment and
production. However, state’s roleproduction. However, state’s role
has declined with the privatizationhas declined with the privatization
of some state organizations,of some state organizations,
banks and with the openedbanks and with the opened
energy sector to the globalenergy sector to the global
competitioncompetition

17. PERIODICAL ANALYSE OFPERIODICAL ANALYSE OF
ISRAEL ECONOMYISRAEL ECONOMY
 1948-19671948-1967
In this foundation years Israel gaveIn this foundation years Israel gave
great importance to Jewish migrationgreat importance to Jewish migration
Untill 1951 ,totally 687000 JewishUntill 1951 ,totally 687000 Jewish
migrated to the country by doublingmigrated to the country by doubling
Jewish population to 1.4 millionJewish population to 1.4 million and tilland till
60’s it is redoubled again60’s it is redoubled again

18. PERIODICAL ANALYSE OFPERIODICAL ANALYSE OF
ISRAEL ECONOMYISRAEL ECONOMY
Although consumed a hugeAlthough consumed a huge
amount of national sources, thisamount of national sources, this
migration had a boom affect in themigration had a boom affect in the
growth of construction and durablegrowth of construction and durable
goods production industrygoods production industry

19. PERIODICAL ANALYSE OFPERIODICAL ANALYSE OF
ISRAEL ECONOMYISRAEL ECONOMY
The main objectives were only aThe main objectives were only a
rapid growth, employment andrapid growth, employment and
increasing the populationincreasing the population
Early years, Israel had deficits.Early years, Israel had deficits.
However, the money coming fromHowever, the money coming from
Jewishs abroad, from USA aid andJewishs abroad, from USA aid and
from Germany as compensation helpedfrom Germany as compensation helped
these deficits to be financed.these deficits to be financed.
( totally: 1/6 of GDP )( totally: 1/6 of GDP )

20. PERIODICAL ANALYSE OFPERIODICAL ANALYSE OF
ISRAEL ECONOMYISRAEL ECONOMY
 1967-19831967-1983
After the war against Arabs, West BankAfter the war against Arabs, West Bank
and Gaza Strip was captured by Israel andand Gaza Strip was captured by Israel and
became a market also became anbecame a market also became an
unskilled labor force source for Israel.unskilled labor force source for Israel.
The war has created a huge demandThe war has created a huge demand
and this demand helped Israel’s economyand this demand helped Israel’s economy
to be activated with more efficiencyto be activated with more efficiency

21. PERIODICAL ANALYSE OFPERIODICAL ANALYSE OF
ISRAEL ECONOMYISRAEL ECONOMY
InIn 70’s migration came to a70’s migration came to a
point to stop, also overall worldpoint to stop, also overall world
economy’s recession mainlyeconomy’s recession mainly
resulting from high petroliumresulting from high petrolium
prices in 70’s limited the ability toprices in 70’s limited the ability to
cope with the shocks and changescope with the shocks and changes
While the inflation was 34%While the inflation was 34%
in 1977 , it became 54% in 1978 andin 1977 , it became 54% in 1978 and
it boomed till 140% between 1979it boomed till 140% between 1979
and 1983and 1983

22. PERIODICAL ANALYSE OFPERIODICAL ANALYSE OF
ISRAEL ECONOMYISRAEL ECONOMY
 From Crisis to ReformFrom Crisis to Reform
Price level was freezed for 3 monthsPrice level was freezed for 3 months
Wages were freezed for 8 monthsWages were freezed for 8 months
Inflation decreased till 20% levelsInflation decreased till 20% levels
Subsidies and government expendituresSubsidies and government expenditures
were limitedwere limited
Deficit reduced from 13.2% of GDP to 2.8% ofDeficit reduced from 13.2% of GDP to 2.8% of
GDP.GDP.

23. PERIODICAL ANALYSE OFPERIODICAL ANALYSE OF
ISRAEL ECONOMYISRAEL ECONOMY
After 1990-1991 peace andAfter 1990-1991 peace and
seperation of Russia, cretaed newseperation of Russia, cretaed new
Jewish migrations especially fromJewish migrations especially from
Russia.Russia.
After 90’s it was observed that GDPAfter 90’s it was observed that GDP
per capita and expected life time wasper capita and expected life time was
very high.very high.

24. ISRAEL’S ECONOMIC GROWTH:ISRAEL’S ECONOMIC GROWTH:
SUCCESS WITHOUT SECURITYSUCCESS WITHOUT SECURITY
 About the ViolanceAbout the Violance
Israel territory have not beenIsrael territory have not been
captured by its enemiescaptured by its enemies .. Harbours,Harbours,
factories, univerisities did not stopfactories, univerisities did not stop
activities, Transportation andactivities, Transportation and
communication was not hurt. Alsocommunication was not hurt. Also
terrorism did not stop industry.terrorism did not stop industry.

25. ISRAEL’S ECONOMIC GROWTH:ISRAEL’S ECONOMIC GROWTH:
SUCCESS WITHOUT SECURITYSUCCESS WITHOUT SECURITY
 MigrationMigration
In the foundation time of Israel and afterIn the foundation time of Israel and after
the seperetion of Russia, there was a peak inthe seperetion of Russia, there was a peak in
migrationmigration
This high migration level has increasedThis high migration level has increased
the overall demand level, and growth, alsothe overall demand level, and growth, also
efficiency in labor force by migratingefficiency in labor force by migrating
qualified labors.The war has not effected thequalified labors.The war has not effected the
migration level because it s not resultedmigration level because it s not resulted
from only economic reasons, it s resultedfrom only economic reasons, it s resulted
from mainly Jewish ideology and identity.from mainly Jewish ideology and identity.

26. ISRAEL’S ECONOMIC GROWTH:ISRAEL’S ECONOMIC GROWTH:
SUCCESS WITHOUT SECURITYSUCCESS WITHOUT SECURITY
 Tranfers from AbroadTranfers from Abroad
Donations from Jewishs livingDonations from Jewishs living
abroad, and wealth transfers withabroad, and wealth transfers with
migration, Germany compensations,migration, Germany compensations,
and USA aid has made Israel theand USA aid has made Israel the
numberone country in foreign aid pernumberone country in foreign aid per
capita. In the war time aids from Jewishcapita. In the war time aids from Jewish
people abroad has increasedpeople abroad has increased

27. ISRAEL’S ECONOMIC GROWTH:ISRAEL’S ECONOMIC GROWTH:
SUCCESS WITHOUT SECURITYSUCCESS WITHOUT SECURITY
 Industry and Military ComplexIndustry and Military Complex
Defence industry in Israel have a vitalDefence industry in Israel have a vital
share in export related growth. By force ofshare in export related growth. By force of
enemies around the country the defenceenemies around the country the defence
sector is very large. Israel is the fifth biggestsector is very large. Israel is the fifth biggest
defence sector exporter in the world . It s thedefence sector exporter in the world . It s the
most modernized sector in the country. Inmost modernized sector in the country. In
80’s 65% of governmental research and80’s 65% of governmental research and
development expenditures was aboutdevelopment expenditures was about
defence industry.defence industry.
High technology used in defence sectorHigh technology used in defence sector
has also effected the other sectors tohas also effected the other sectors to
developdevelop

28. TABLES
 GDP and Export Growth
Israel had economic growth when its
exports are increasing, as exports are
declined growth has also decrased.
These informations can let us to say,
the growth is export oriented

29. 0
50
100
150
200
1960-1969 1970-1979 1980-1989 1990-1999 1994-2003
Export Growth
GDP Growth
GDP and Export Growth

30. According to Purchaising
Power Parity, National
Income per Person
 In the next graph, sixteeen countries
are a sample of devoloped and
developing countries.Israel with 23.415
dollar level is just between the
developed and developing countries.

31. According to Purchaising
Power Parity, National Income
per Person
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
egypt czech r. ISRAEL uk usa
Export Growth
3-B Sütun 2
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
egypt
4317
turkey czech
rp.
ISRAEL
23415
spain japan usa
41319

32. Labor Force Efficiency
 As we will see in the graph, after the
cirisis in 2001, the level in 2000 could
not be catched up.. However, the
growth in labor force efficiency has
been increasing year by year

33. Labor Force Efficiency
0
1
2
3
4
5
6
7
8
9
10
2000 2001 2002 2003 2004
labor productivity,
annual percentage
change

34. Inflation
 Israel suffered from high inflation level
especially in 80’s. Although the
governments have tried to decrase it
did not work efficiently.However ,
nowadays Israel has minus inflation
which is very hard to find it around the
world.

35. Inflation
19,7
16,1 16,4
20,7
17,6 18
9,4
11,2
14,5
8,1
10,6
7
8,6
1,3
0
1,4
6,5
1,2
2,4
-1,9
-5
0
5
10
15
20
25
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006

36. Research and Development
Percentage in National Income
 Israel is the number one country with
research and development share
according to the national income.
Coordination between the defence
sector and civilian technology has a
very important role on this event.

37. Research and Development
Percentage in National Income
 Annul inflation,1986-2006
 (end-of period) Annul
inflation,1986-2006
 (end-of period) Annul
inflation,1986-2006
 (end-of period)1,1
1,3
1,9
2,1
2,2 2,2
2,5 2,6 2,6 2,6
3,2
3,5
4
4,9
0
1
2
3
4
5
6
irela
nd
c.re
p
u
b
lic
u
k
sin
g
ap
o
refran
ce
tota
l
O
E
C
D
d
en
m
a
rk
g
e
rm
a
n
y
u
sa
ko
re
a
jap
a
nfin
landsw
e
d
en
isra
e
l

38. Global Competition
 Technological readiness , scientific
research institutions’ quality and
availability of scientists in Israel is very
high degrees in the world.

39. Global Competition
Israel is the 1 st by availabiity of
sicentists and engineers
 1. Israel
 2. Japan
 3. Finland
 4. India
 5. France

40. Global Competition
Israel is 4th by quality of scientific institutions
 1. Switzerland
 2. USA
 3. UK
 4. Israel
 5. Japan

41. Global Competition
Israel is the 3th by technological readiness
 1. Finland
 2. Japan
 3. Israel
 4. Germany
 5. USA

42. Sectorial Export
 48% of exports are high technology
industry products. However, low
technology products are only 7% of
aggregate exports. This simply tells that
Israel is an important high technology
product exporter.

43. Sectorial Export
0
5
10
15
20
25
30
35
40
45
50
48% 27% 18% 7%
high tech
industries
medium high
tech industries
medium low
tech industries
low
technologhy
industries

44. SOURCES USED
DURING THE STUDY
 www.wikipedia.org
 Dış Ekonomik İlişkiler Kurulu (www.deik.org.tr)
 DTM Ihracatı Geliştirme Etüd Merkezi (www.dtm.gov.tr)
 İzmir Ticaret Odası (www.izto.org.tr)
 Roger Owen, Şevket Pamuk 20. Yuzyılda Ortadogu Ekonomileri
Tarihi
 Linda Sharaby, Israel’s Economic Growth: Success Without
Security
 Central Bureau of Statistics ( www.cbs.il)
 www.imf.org
 www.gov.il
 www.oecd.org