FREE ESSAY ON IRAEL'S ECONOMY

IRAEL'S ECONOMY

Israel's Economy
1.) I believe any country should be able to qualify for admission to the World Trade
Organization regardless of its human rights policies. Israel has many main human rights.
The Government usually respects the human rights of its citizens. Some of Israeli human
rights include the following: Due to the lack of major terrorist attacks, which reduced
the overall level of tension as well as the number of security related arrests. Israeli
security forces abused Palestinians suspected of security offenses. A landmark decision
by the High Court of Justice in September stopped the use of different abuse practices,
including violent shaking, painful shackling, depriving sleep for extended periods of
time, and prolonged exposure to extreme temperatures. The law prohibits arbitrary arrest
of citizens. The law prohibits forced exile of citizens, and the Government does not use
it. The law provides for an independent judiciary. The law provides for the right to a
hearing with representation by counsel. The law provides freedom of the press and freedom
of religion. The law provides for the right of assembly and the right of association. The
law provides freedom of movement within the country and the right to change their
government peacefully. The law provides no discrimination on basis of sex or marital
status and prohibits forced labor. Prostitution is not illegal and workers have the right
to strike and it is exercised regularly. So as you can see from the examples of human
rights in Israel, I don't see where these laws would affect qualifying for the World
Trade Organization. China is not a member of the World Trade Organization due to its
human rights and I don't believe that is fair. This organization is a great opportunity
for all countries and should be open to all countries. The World Trade Organization (WTO)
is the only international organization dealing with the global rules of trade between
nations. Its main function is to ensure that trade flows as smoothly, predictably and
freely as possible. The result of WTO is assurance. Consumers and producers know that
they can enjoy secure supplies and greater choice of the finished products, components,
raw materials and services that they use. Producers and exporters know that foreign
markets will remain open to them. WTO also binds governments to keep their trade policies
within agreed limits to everybody's benefit. The agreements were talked over with and
signed by governments. But their purpose is to help producers of goods and services,
exporters, and importers conduct their business. The WTO's goal is to improve the welfare
of the peoples of the member countries. I believe every country should have a chance at
qualifying to be a member regardless of its human rights.
2.) I believe the world's wealthiest nations should not forgive all the debt owed to them
by the world's poorest countries because all countries are in debt. Israel has many
different debts owed but they are mostly in debt to the United States, just like many
other countries. I think there should be a limit of debt, spending within a country and
lending to other countries. I think when a country takes money from another country there
should be a sure way to make sure the money is returned in a limited amount of time to
avoid massive amounts of debt.
3.) I believe global environmental concerns are very important but I believe for the
better of all peoples within a country that economic development should receive greater
priority. 
Israel's economic history is varied: a series of major achievements accompanied by
serious problems. The 1950's, 1960's and early 1970's were highly successful in terms of
economic growth, with the exception of the 1966-67 recession. The Yom Kippur War of 1973
and the oil shock of 1973-74 greatly aggravated inflationary pressures and balance of
payments problems. The second oil shock (79-80) raised Israel's oil import bill to over
$2 billion per year, a value that exceeded the grants which Israel received from the
United States. The oil shock and huge revenues taken by the rich Arab states helped the
Middle East arms race, bettering the Israeli economy. Economic growth slowed, dropping
from 9-10 percent per year between 53 and 73 to 3.2 percent per year between 75 and 85,
and barely exceeded the population growth rate.
In 1985, a national unity government came to power and adopted important economic
measures designed to reduce inflation and put greater stress on economic efficiency.
Initially economic growth rates were slow, which is usually the case when
anti-inflationary measures are taken, but these policies laid the groundwork for the
favorable economic performance of the Israeli economy during the first half of the
1990's. Since 1990, Israel has a high rate of economic growth, around 6 percent per year.
This is three years before the signing of the Declaration of Principles. The growth rate
of GDP, 5.7 percent from 1993-95 was somewhat lower than the previous three years, 6.4
percent per year in 1990-92. The business GDP shows a more significant drop in the growth
rate in the latter period, from an annual average 7.8 percent in 1990-92, to 6.6 percent
in 1993-95. The high rate of economic growth since 1990 was started in part by the large
amounts of immigrants from the former Soviet Union. During the period of immigration
unemployment rose. In later years though when immigration was at a more "normal" level
unemployment steadily declined. The improving state of employment had a steady pattern of
growth over the past few years (despite recession) in jobs of such service sector fields
as tourism, health care, education, financial services, wholesale and retail trade, and
others. Though employment was improving it also included a bit of inflation, which by
1995 was down to 10 percent.
The good news came with the bad. Since 1993 Israel experienced deterioration in the
balance on current account of the balance of payments, which were worse in 1994, and even
more in 1995. In 1993-95, there was a sharp deterioration with a total deficit of $7.8
billion, which $4.1 billion was brought upon Israel in 1995 alone. Loans and a growing
external debt covered Israel's deficits, for the most part. Israel's recent economic
problems are linked mainly to unwise government economic policies. One example is the
large wage increase made by the government to public sector employees in 1993-96 that
made increases in private consumption, imports and inflation. A second example is the
government providing a lot of financial support to politically favored groups, changing
the budgetary deficit and indirectly the deficit in the balance of payments.
Israel adopted some important new economic policies in the mid 1980s which supported
efficiency, productivity, and profitability, and the favorable results became very
visible in the early 1990s. Wise economic policies underlay Israel's prosperity, and poor
economic policies explain the problems that arose in more recent years. Wise domestic
policies hold out the promise of prosperity. Only basic, fundamental economic changes can
improve the performance of the Middle Eastern economies, and provide jobs and decent
incomes for the vast army of unemployed and underemployed, the poor and suffering - not
the interstate politics.
Israel's economy has responded favorably in recent years to the restructuring imposed
after the crises and hyperinflation of the mid-80's. The government still faces economic
challenges associated with taking in nearly 900,000 immigrants since 1989 in a country of
only six million. In 1998, growth slowed to only 1.9 percent, implying a per capita
decline in GDP of .5 percent, and unemployment grew over 8.7 percent. Israel's political
and economic stability, stressed by the recent take in of numerous amounts of immigrants,
continues to be important in furthering the United States foreign policy objective of
supporting the Middle East Peace Process.
Since 1993, export competitiveness has improved, and inflation has been reduced.
Expanding business investment and governmental infrastructure investment, coupled with
sustained export growth, are projected to help Israel reach its gross domestic product
growth rate potential to about five percent.
This past year, industrial output has suffered a one percent decline. Merchandise exports
have declined by four percent while high tech exports have declined by two percent.
Revitalizing the Israeli economy and bringing it back to its potential growth rate of 4-5
percent is one of the principal challenges that Israel faces.
The economic interaction between Israel and neighboring countries is very limited in
absolute terms, reflecting fifty years of conflict and tension. The total two-way trade
between Israel and Jordan last year, for example, was only on the order of $40 million.
Due to Israel having relatively high wages, technological skills, capital availability,
and purchasing power. Neighboring Arab countries feature lower labor costs and offer
consumer goods and other basic products at costs that are highly economic from Israel's
perspective. Due to all this the prospects for a significant increase in trade and
investment between Israel and its neighbors is excellent.
To strengthen the economy, more work is needed to liberalize and restructure the large
public sector. Continued expenditure reductions and privatization of public sector
enterprises are needed, but political obstacles remain. "As we enter the new millennium,
I believe that we stand on the verge of a new era in the Middle East, a new era of peace
and prosperity in the region. It will be the product of courageous leaders in the region
supported by the substantial political and economic resources of the United States and
other friends of peace. It will be fueled by creativity in technology, substantial
capital inflows, doubling and tripling tourism nights, construction of the infrastructure
of peace, and significant integration among the regional economies."