Prosperity without Peace; A current update
Posted on January 2, 2008
Filed Under Oren Golasa |
Since Israel was founded in 1948, the State of Israel has never enjoyed full peace and normalization with all of its neighboring countries. Nor was it recognized by surrounding Arab countries as an independent nation. In fact, life in Israel has always been consumed with constant violence from the Arab world outside and inside of Israel. As violence fluctuates in this region, going up then down, so does the performance of Israel’s economy. In recent years, the ageless conflict with the Palestinians over land territories received a lot of publicity worldwide, which inherently overshadowed Israel’s great economic achievements.
However, I would like to present a different view of the current situation. While violence is down and terror organizations can’t launch attacks within Israeli territory, the local economy is performing well. High-tech industry exports, the country’s second largest industry, are at an all time high (Schwartz, 2006). The reasons for this great economic turnaround are:
- The security wall surrounding the Arab-Palestinian authorities, along the “Green Line”, is blocking terrorists from entering Israel.
- A new economic policy that includes privatization of government assets, tax adjustments, and welfare reduction.
- Israel implemented a free market strategy, which was an act of the current economic minister.
- A current cease-fire and negotiation with the new Palestinian leader.
During the last 3 years, the security situation within Israel has greatly improved. In 2005, there were 11 suicide bombings, compared with 54 bombings the year before. In 2005, Israel exports were a total of $23.6 billion, representing a 16% increase from the previous year. Major contributors to this economic boost are small high-tech companies that gained exposure at the international market. These companies develop advanced technologies in areas such as Wi-Fi, WiMax, and VOIP.
Success has sure followed and Israeli companies have gained a solid market share abroad, especially among security firms, police departments, and government agencies. Traded daily on Nasdaq, Alvarion and AudioCodes are examples of successful high-tech companies, which develop advanced technologies originally intended for the Israeli military. What makes these companies unique is the mix of the human resource and the environment in which they operate. Personnel in market leading companies include veterans from the IDF and secret service agencies.
As a result of the unfortunate day-to-day situations, Israeli companies have also become the best source for terror prevention counseling. “Israeli companies sell the know-how they’ve acquired the hard way” said Schwartz. Founders of many start-ups in Israel often have a common military background and capitalize upon their experience in the military to develop new technologies. In addition, many of the worlds’ leading companies, such as Intel, Microsoft, and HP have established R&D in Israel to attract young “brains”- who finished their army service and bachelor or master degree.
Due to the continuous conflict in Israel, governments change rapidly and ministers don’t stay in office long enough to implement policies. At this time of peace, when goals are achieved, the economic growth that Israel is experiencing should be credited to the current government’s open economic policy. A major contributor to their economic success was the reducing of the government interest in two bit companies, such as Bezeq (telephone company) and El-Al (the national airline). The reduction of government interest in these companies was a very controversial act, however it aided Israel in taking a step towards a free market agenda.
While the security situation has improved, many Israelis are traveling domestically with no fear. Looking into the future, Israelis are careful to not be too optimistic. Some young professional are thinking about leaving the country in case the situation could worsen again. Others prefer to think about the economic boost and future development in case the peace process would move ahead. Clearly, on this piece of land, all are exhausted from the violence and try to dream of a better future.
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4 Responses to “Prosperity without Peace; A current update”
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Great post! Lets just hope that peace can continue in Israel so that their economy continues to thrive. I remember when I visited Israel last year, I saw Technion on my tour and the guide said that it’s like the MIT of the Eastern Hemisphere. Impressive.
I’m still not convinced that following in the footsteps of the U.S. is the smartest things Israel can do…
A free market system works - the cold war is proof. Israel is right to keep security high and allow it’s economy to grow. It would appear that at least the Fatah side of the Palestinian people are attempting to follow suit while Hamas chokes on it’s own filth as penalty for their radical ideology.
The rift between Hamas and Fatah will only grow as the more reasonable Palstinians begin to share the success with the Iraelis. Sooner or later, as more Palestinians chose life over death, those Iranian puppets will find themselves short on canon fodder in the form of young martyrs.
Very interesting article about Israel.
Many thanks for this info.
I visited to Jerusalem in November, two month ago.It was pleasant journey! It’s a beautiful country with developed and diversified economy… and rich culture…!
Once more thank You very much.