The document summarizes the economic history of Israel from 1948 to the present. It describes how Israel transformed from a new state with few resources after its founding in 1948 to a modern, innovative economy today. Key events included an initial period of socialist policies and government involvement in the economy from 1948-1973, followed by a stabilization plan in 1985 that reduced government spending and debt and led to strong economic growth through privatization and development of high-tech industries. Israel now has a GDP of $281 billion and is known as a global leader in areas like research and development, entrepreneurship, and high-tech industries like cybersecurity.

1. Economic History of Israel 1948 - Present
An advanced, resilient, innovation-driven and knowledge-based
economy

2. $281B
$33,656
Economic History of Israel
1948 - Present

3. Economic History of Israel
1948 - Present
US$64.1B US$62.1B

4. Economic History of Israel
1948 - Present
US$64.1B

5. Economic History of Israel
1948 - Present
US$64.1B

6. Economic History of Israel
1948 - Present
US$62.1B

7. Economic History of Israel
1948 - Present
US$62.1B

8. Economic History of Israel
1948 - Present

9. Economic History of Israel
1948 - Present

10. Economic History of Israel
1948 - Present
Innovative Economy: The Start-Up Nation
Israel is known for its unique entrepreneurial and innovative spirit. Israel excels in:
Total Expenditure on R&D as % of GDP
Skilled Labor
Quality of Scientific Research
Entrepreneurship
Venture Capital Availability
Utility Patents per Million

11. Economic History of Israel
1948 - Present
High-Tech Economy: The Silicon Wadi

12. Economic History of Israel
1948 - Present
High-Tech Economy: The Silicon Wadi

13. Economic History of Israel
1948 - Present
From Socialism to an Open Market, super Capitalism
Smart Government policy enables the Israeli high tech story
OSC Funds
Creation of the VC industry
Incubators

14. 1948 to 1973
The new state possessed
- no natural or financial resources,
- no monetary reserves,
- little economic infrastructure, and
- few public services.

15. Quasi-socialist economy
Lack of private ownership of economic entities, including of banks. Histadrut.
1948 to 1973
- Massive capital and inflow of immigration during the 1950s and 1960s.
- The new state had to supply food, clothing, shelter, and employment for its new
citizens; set up civil and community services; and establish an independent foreign
exchange, monetary, and fiscal system.
- Given the shortage of private capital, the burden of dealing with main problems
naturally fell upon the public sector
* Service sector and industrial sector - monopoly in such areas as public
transport, bank and insurance and the production and marketing of many
agricultural products

16. 1973 to 1985
Significant growth in the government deficit.
- The trade deficit (reached a high of 35 percent in 1973.)
- Increase in defense expenditure (escalated to over 25 percent of GNP)
- Oil crisis (The total direct losses US$12 billion--the equivalent of one year's GNP)
- Increases in spending on domestic welfare programs
“Lost Decade”

17. 1985 - 2008
Stabilization Plan in July 1985
A transformation from unusually heavy government involvement
- Reducing the share of government spending in the GDP
- Lessen government involvement in the economy
- Reduction of government debt through a continuous process of economic reforms

18. 1985 - 2008
Stabilization Plan in July 1985
A transformation from unusually heavy government involvement
- Public spending (from about 60% to 43%) and
- Public debt (from about 163% to 78%),
- Defense expenditure – from more than 20% of GDP to 10%

19. 1985 - 2008
Stabilization Plan in July 1985
A transformation from unusually heavy government involvement
- Cutting government spending, raising taxes and abolishing subsidies
- The Bank of Israel’s freedom (“Non-Printing” law)
- U.S. loans for the financing of defense acquisitions – into grants.
Hyper-inflation (of over 400%) to double-digit inflation (around 20%) by
mid-1986 and eventually to the current price stability

20. 1985 - 2008
Stabilization Plan in July 1985
A transformation from unusually heavy government involvement
- The beginning of the 1990s was characterized both by a massive wave
of immigration from the Soviet Union
- Domestic demand increased dramatically, which led to accelerated
economic growth and a sharp increase in investment.
- Acceleration of development in the hi-tech industries, particularly from
the mid-1990s onward.

21. 1985 - 2008
Stabilization Plan in July 1985
A transformation from unusually heavy government involvement
- This drop to a new plateau was the result of a number of factors
- the effect of the wave of immigration on the labor market
- a reduction in the dollar prices of imports
- a supply surplus in the housing market that reflected a significant
reduction in demand
- an increase in the interest rate

22. 1985 - 2008
Stabilization Plan in July 1985
A transformation from unusually heavy government involvement
- During the period 2001–2003, the country experienced its most serious
recession since the establishment of the State of Israel.
- A process of economic growth began and gained momentum from 2004
to 2007. This period was also characterized by growth in per capita
income, a decline in unemployment rates, the achievement of the
government's deficit targets, low inflationary pressures and a strong
banking system.

23. 1985 - 2008
Stabilization Plan in July 1985
A transformation from unusually heavy government involvement
- Israel emerged from the 2008-09 global crisis
with strong economic growth, a resilient
banking system and unemployment at
historic lows.
- 2008’s trade deficit of $2 billion became
2009’s trade surplus of $5 billion. While other
countries fell deeper into recession, Israel
brushed its shoulders off.

24. Economic History of Israel 1948 - Present
An advanced, resilient, innovation-driven and knowledge-based
economy