Israel: The Dark Horse

Oct 25, 2013 No Comments by

Israel, predominantly Jewish country, is one of the most powerful countries of Middle East Asia. It shares its border with other Middle Eastern countries like Gaza, Lebanon, Syria, Jordan, Egypt and it has access to 4 seas: Mediterranean Sea, Dead Sea, Gulf of Aqaba (Red Sea) and Sea of Galilee. Israel is considered a holy place for Jews, Christians and Muslims. Israel though having small area, small population, limited resources, constant clashes within the country and its neighboring countries, has fared better than most of the countries in Middle East. This makes Israel a resilient country (withstands and recovers quickly from difficult conditions).

Israel is the only country in the Middle East to follow parliamentary democracy. It is one of the three democracies in the world without a codified constitution (others are Britain and New Zealand).

Israel is technologically very advanced which makes it a major player in world science and technologies. Israel has more high-tech start-ups and a larger venture capital industry per capita than any other country in the world. According to the Forbes Tel Aviv, Israel ranks 3rd in top 4 Tech Capitals To Watch (after Silicon Valley and New York) and is nicknamed as “Silicon Wadi”.

Israel’s economic growth seems like a miracle and many researches have been conducted and Start-up Nation is one such book on economy of Israel by Dan Senor and Saul Singer which was on wall street journal bestseller list. According to them major cause for Israel’s economic growth were :

  • Israel defense force- National military service is compulsory for all Israel citizens over the age of 18, both male (3 yrs) and female (2 yrs). It provides experience exerting responsibility in a relatively non hierarchical environment where creativity and intelligence are highly valued.
  • Immigrants and descendants of immigrants- 9 out of 10 Israelis are immigrants. Most of the immigrants were educated and skilled. Limited resources made them to innovative and become creative.
  • Israel’s culture- Culture of Challenging norms and ‘out of the box’ way of thinking, Creativity at working under limited resources, Direct, informal and task oriented approach is helping its economy to achieve greater heights.

Other factors for growth may be grants from US (Us grants $3 billion every year to Israel and majority of it should be used to buy US products or services)

Other main industries contributing to the economy are Tourism (it is one of Israel’s major sources of income), polished diamonds (Israel is one of the world’s three major centers for polished diamonds, alongside Belgium and India), oil and natural gas (The Leviathan field was one of the world’s largest offshore natural gas finds).

 

Israel’s main imports are: oil and other mineral fuels (19 % of total imports); uncut diamonds and other precious metals and stones (15 %); mechanical machinery and appliances (11 %); electrical machinery and electronics (10 %) and vehicles and their parts (7 %). Main import partners are: United States (12 % of total imports), China (7 %), Germany (6.2 %) and Belgium (6 %). Others include: Switzerland, Italy, United Kingdom and Netherlands

Israel’s main exports are: cut diamonds, pearls and other precious metals and stones (31 % of total exports); electrical machinery and equipment, mechanical machinery and appliances, sound and TV recorders and reproducers and computer equipment (18 %) and pharmaceutical products and fertilizers (13 %). Main export partners are: United States (28 % of total exports) and Hong Kong (8 %). Others include: Belgium, United Kingdom, India and China.

The Israel Defense Forces consist of Israeli Army, Israeli Air Force and Israeli Navy, employing over 176500 personnel and is ranked 34th. It is also a major player in the global arms market and is the 11th largest arms exporter in the world as of 2012 (behind the US, Russia, France, the UK, Germany, China, and Italy). In 2012 it was the 7th largest spender on defense purpose (7.6 % of Gdp). Over the past decade Israel has defended itself from its neighbors in every dimension of warfare. Its major suppliers are United States, Germany etc. Israel is the only country in Middle East speculated to have nuclear weapon.

The Bank of Israel is the central bank of Israel. In 2010, the Bank of Israel was ranked first among central banks for its efficient functioning, according to IMD’s World Competitiveness Yearbook. Israeli new shekel is official currency of Israel, it consist 100 agorot/ agora. One Israeli new shekel is equal to 0.28 US$ (i.e., 3.53 Israeli new shekel = 1 US $).

Israel has from long time involved in war and conflicts with its neighboring Middle Eastern countries because of several factors like area, water, religion etc. Foundation for conflicts within nation and with neighboring nations was huge number of Jewish people migrating to Palestine. This led to civil war between Arab and Jewish (after withdrawal of mandatory Palestine), 1948 Arab–Israeli War, frequent attack by Palestine fedayeen, 1950 Egypt closed the Suez Canal to Israeli. 1960’s tensions with respect to water between Israel on the one hand, and Syria and Lebanon on the other, 1967 disputes over Palestinian water rights, 1967 Six-Day War against Egypt, Jordan, Syria and Iraq, 1973 Yom Kippur war Egyptian and Syrian armies launched a surprise attack against Israeli forces, 1987 First Intifada, a Palestinian uprising, Persian Gulf war of 1991 and many more minor tensions. In most of the conflicts Israel had upper hand and has been able to defend itself

It also has very good relationships with top nations of the world like United States, China and India. Israel is one of the United States’ major non-NATO allies in the Middle East. It is dependent on the United States for its economic and military strength.US provides almost $3 billion in grants annually to Israel(74 % of these funds must be spent purchasing US goods and services) and  is the largest cumulative recipient of military assistance from the United States since World War II, followed by Afghanistan, Iraq, Egypt, and Pakistan. It is involved in the joint development of military technology and regularly engages in joint military exercises involving United States and other forces.

Israel is a member of many agencies like UN, UNESCO, IAEA, WHO, WTO, NATO, OECD etc. It has diplomatic, commercial and cultural ties between neighboring countries and other countries around the world to avoid conflicts and have friendly relationships.

Country’s highly developed human resource, largest natural gas field and culture adds to its advantage. GDP of Israel is $274 billion but its per capita income is about $34,000 with a GDP growth of 5%.  India’s per capita income is just about $3600. If Israel’s conflict element is taken apart, it could be one of the top economies in the world. So, it is definitely a DARK HORSE.

 

 

 

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Economy

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