March 18, 2008
Israel Biz at 60 explores country’s dynamic economy
Binyamin “Fouad” Ben-Eliezer, Israeli minister of national infrastructure, addresses the Israel Biz at 60 conference attendees. (Photo by Jeff Watts)
Sixty years ago, Israel was the world’s newest nation. Much of it was desert, and there were few natural resources. Today, its economy is on a par with much of Europe.
How did Israel achieve its economic success? And is its success as spectacular as it appears? Those were the questions raised at the recent daylong conference, “Israel Biz at 60: Lessons and Directions in Israel’s Business and Economy.” It was hosted by the Center for Israel Studies and cochaired by Professors Erran Carmel and Richard Linowes of the Kogod School of Business.
By any standards, the trajectory of Israel’s economic growth has been striking. Israel, after all, began as an agricultural society with minimal resources, but is now the foreign country with the most NASDAQ-listed firms and is, in the words of Linowes, “a major high-tech dynamo.” It was, he noted, “founded on socialism with idealistic kibbutzim and forceful labor unions,” but has become a player in global capitalism with a spectacular Tel Aviv skyline.
Yet skeptics can counter that Israel’s success is not as unique as it may appear. All of the nations in the Organization for Economic Cooperation and Development (OECD), which Israel joined only last year, were once largely agrarian societies that have industrialized and then moved into high tech. Israel is hardly the only developing nation that made the transition from socialism to capitalism. As for the glitter of Tel Aviv, noted Carmel, “the skyline in Dubai is even more impressive.”
So what is special about the Israeli economic story?
The conference explored Israel’s economy from numerous angles, looking at the role of government, market, and enterprises, and examining its economic achievements and future
challenges.
It drew an audience that, as College of Arts and Sciences dean Kay Mussell noted, “are not always denizens of college campuses.” They came from investment firms, consulting firms, law firms, corporations, think tanks, and other organizations to hear about and discuss topics ranging from financial markets to the high-tech sector to family-owned enterprises to green business in Israel.
A cabinet minister joined the gathering to give Tuesday’s keynote address. Binyamin “Fouad” Ben-Eliezer, minister of national infrastructure, was introduced by Carmel as “the embodiment of all we recognize as Israeli,” having emigrated to Israel as a teen, lived on a kibbutz, and served many decades in the military, rising to the rank of general, before being elected to the Knesset, the Israeli legislature.
Ben-Eliezer spoke first about the recent challenges faced by Israel as militants fire rockets into southern Israel from the Gaza Strip. He still supports the peace process, he said, but has been disappointed that efforts on the Israeli side have not been matched by a decline in violence.
He reiterated his controversial willingness to release and work with jailed Palestinian leader Marwan Barghouthi, saying that the present Palestinian leadership “are good people; they’re very nice people; they’re great believers in peace, but I’m not sure they can deliver.” It would be better, he said, to “release this killer from prison, [so that] we can do business.”
That such issues would arise in an economic talk underscored one of his main points: that Israel’s economy has boomed in spite of its security situation. No other country in the world has matched Israel’s success in such a situation, he said.
But there are other concerns in addition to military matters, he said, including the security of the energy supply. A forward-looking Israel needs to recognize that the next decades are likely to bring shortages in oil and natural gas, while alternative technologies are still not developed at a level to meet society’s needs.
“Imagine $150, $200 a barrel oil,” he said. “That’s a real problem for the functioning of an economy.” That’s a particular challenge for Israel, with its “problematic geopolitical position,” since “we cannot put our fate in the hands of irrational leaders like Ahmadinejad or Chavez,” he said.
He has been negotiating with Turkey to construct an undersea pipeline to ensure a regular energy and water supply. Israel is one of the world’s leaders in renewable energy, particularly solar, he said.
“However, taking into account the cost, these technologies cannot be a complete alternative to fossil fuels [yet],” he said. “I do believe, however, that the situation regarding renewable energy will change as technology develops . . . I call upon young Israelis and Americans to consolidate the innovative spirit.”
From left, Gil Mehrez, Vered Dar, Ohad Cohen, and professor emeritus Howard Wachtel, who chaired the session “The Israeli Economy and Financial Markets” (Photo by Jeff Watts)
