This article analyses the roots of the deep crisis that has afflicted the Israeli economy since 1973 and the attempt at economic reform and recovery since 1985. All of these are discussed against the background of the long-term evolution in Israel's structure and growth process. At the center of the analysis lie the implications of an oversized government and especially the devastating effects on growth and inflation of the large and persistent public sector deficit on top of the growing tax and public expenditure levels. The norm of "living beyond one's means" at the public sector level has also severely affected the norms of behavior of the private, household as well as business, sectors. Since 1985 there have been signs of recovery originating from the balancing of the budget and the relative stabilization of the currency. Labor and capital markets are gradually becoming more flexible and real interest rates are coming down. Even so, inflation rates are not yet down to international levels, continued budget balance is not assured and excessive wage increases have substantially diminished profit rates and investments in the business sector. Structural problems, rooted in economic mismanagement of the crisis years, are surfacing. Resumption of a sustained growth process requires persistent budget balance and a substantial additional reduction in public expenditure and tax levels. Structural reforms, only barely started, have to be persistently followed in the labor and capital markets, in the fiscal system, and in the further opening up of commodity and financial markets to competition from both home and abroad

Considers the phenomenon of the high inflation processes of the 1970s and 1980s as exemplified by Argentina, Brazil and Israel. The author examines common characteristics of such processes and their possible cures, focusing on the Israeli experience of the political economy of stabilization.

This book examines Israeli strategies of adapting to a crisis of governability brought on by institutional stagnation. The book uses a new theory emphasizing the role of policy entrepreneurs in political institutions, and ultimately offers a method of electoral reform to address systemic maladies in the Israeli political system.

Ben-Rafael shows how the crisis brought together a general pro-change Zeitgeist with the interests of the kibbutz's stronger social segments and individuals to produce widespread changes and the fragmentation of kibbutz reality as a whole. The book's findings are based on a large-scale research investigation (1991-1994) headed up by Ben-Rafael that included twenty research studies and involved the participation of researchers from diverse social-science disciplines.

The debate about globalisation and its discontents

A rigorous analysis of the role played by globalization in key episodes in the development of the Israeli economy, from hyperinflation crisis to high-tech surge. Anti-globalization sentiments are rising, especially in Europe and the United States, with the increasingly integrated global economy blamed for domestic economic distress. In this book, Assaf Razin argues that Israel offers a counterexample to this view, showing decisively positive economic effects of globalized finance, trade, and immigration. He offers a rigorous analysis of the role played by globalization in key episodes in the remarkable development of the Israeli economy. His findings may hold lessons for productivity-challenged advanced economies as well as for other countries such as China currently making the transition to fully developed economies. Razin examines the wave of immigration after the collapse of the Soviet Union, as highly skilled Soviet Jews migrated to Israel and the effect on income inequality; the Great Moderation of inflation and employment in advanced economies, as Israel's inflation converged in parallel with low world inflation rates; Israel's robustness in the face of the deflation shocks of the 2008 financial crisis; and technology transmission through foreign direct investment, reinforcing Israel's high-tech sector surge. He also considers such ongoing challenges as high fertility and low labor market participation and the economic costs of the Israeli-Palestinian conflict.

An authoritative economic history of Israel from its founding to the present In 1922, there were ninety thousand Jews in Palestine, a small country in a poor and volatile region. Today, Israel has a population of nine million and is one of the richest countries in the world. The Israeli Economy tells the story of this remarkable transformation, shedding critical new light on Israel's rapid economic growth. Joseph Zeira takes readers from those early days to today, describing how Israel's economic development occurred amid intense fighting with the Palestinians and neighboring Arab countries. He reveals how the new state's astonishing growth continued into the early 1970s, and traces this growth to public investment in education and to large foreign transfers. Zeira analyzes the costs of the Arab-Israeli conflict, demonstrating how economic output could be vastly greater with a comprehensive peace. He discusses how Israel went through intensive neoliberal economic policies in recent decades, and shows how these policies not only failed to enhance economic performance, but led to significant social inequality. Based on more than two decades of groundbreaking research, The Israeli Economy is an in-depth survey of a modern economy that has experienced rapid growth, wars, immigration waves, and other significant shocks. It thus offers important lessons for nations around the world.