Knesset passes Governance Law
World trade is not picking up, and only a handful of countries are recovering strongly - but Israel is among them.
The most recent world economic data show a disturbing ongoing tendency towards stagnation or even mild recession and deflation. Trade is not picking up to any substantial extent except in northern Europe and China. One result of this is a growing tendency on the part of several countries to take measures to weaken their currencies, especially since they blame US quantitative easing (monetization of debt) and the resulting decline in the value of the dollar vis-à-vis other currencies for their export woes. Thus there is no impetus to growth on the trade side of the ledger and a worrying trend towards competitive currency manipulation. In the US, still by far the world's largest economy, growth is minimal, unemployment is not improving and the average standard of living (mean income) is down 7% from the pre-2008 level.
There is no help on the investment side, either. Capital goods orders in the US are down 4% from the beginning of the year and capital expenditures in general are at zero growth. The same is true for Japan and for much of Europe with the exception of Germany. The major developing countries: Russia, South Africa, India, Brazil, Indonesia and Turkey, show similar patterns of stagnation, mild decline or anemic growth in both trade and investment. China again is the major exception.
In the Middle East/North Africa the situation, excluding Israel, is no better to substantially worse. Leaving aside countries in extensive political and social turmoil, such as Libya, Lebanon and Syria, where economic decline is precipitous, Egypt is heading towards financial disaster, sustained only by huge transfers from Saudi Arabia and the Gulf States. Jordan is stumbling under the burden of hundreds of thousands of Syrian refugees and Iran is suffering from the effects of economic sanctions.
In the broadest sense, those countries that are demonstrating a reasonable to strong recovery from the "Great Recession" are at this point limited to a handful, including Canada, Australia, Germany, China....and Israel. Israel is not just an island of stability, productivity, democracy and relative social calm in a stagnant world and an extremely unstable region, but it escaped entirely the Great Recession and has become the second-largest center of scientific and technological progress in the world, after Silicon Valley.
Nevertheless, Israel cannot escape being affected by the international situation, not to mention the turmoil in its neighborhood. It must resolutely stay the course in economic and financial policy while juggling urgent defense and security expenditures against also urgent social programs. It must continue as well to open and develop new markets and sources of investment capital. In this respect, the recent decision of Li ka-Sheng, the Hong Kong multi-billionaire, to donate US$130,000,000 to the Technion as well as dedicating another $150,000,000 for local costs involved in the establishment of a campus in China is of extreme significance.
Such a project would not have been initiated without the permission, support and encouragement of the government in Beijing. In other words, one of the largest countries in the world has decided it wishes to enter into partnership with one of the smallest. Ironic indeed, but a decision that makes a great deal of sense for both parties.
Norman A. Bailey, Ph.D., is Adjunct Professor of Economic Statecraft at The Institute of World Politics, Washington, DC, and a researcher at the Center for National Security Studies, University of Haifa.
Published by Globes [online], Israel business news - www.globes-online.com - on November 3, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
You comment was recieved and soon will be published.
Load more comments
The Knesset seat electoral threshold will rise to 3.25% and the number of ministers will be limited to 19.
Israel's purchasing power eroding
Prices in Israel were 13% above the OECD average in 2013.
Record tourism in February
There were 244,000 visitor entries in February 2014, 5% more than in February 2013.
BoI: Home price rise risk has moderated
The interest rate cut for March was a 4-1 majority decision.
Gov't set to approve Israel-US tax pact
The economic social cabinet will soon approve the information sharing agreement with the US IRS.
Netanyahu: We won't abandon housing front
The prime minister promises to be as active on economic as on diplomatic problems.
Budget deficit lowest since August 2011
Tax collection rose 15% in February as the deficit fell to 2.7% of GDP.
2013 Knesset record for 'communications': NIS 71,908
Shas MK Avraham Michaeli was top; prime minister and finance minister spent low.
Average salary up slightly in 2013
The average monthly salary rose by only 1.1% after adjustments for purchasing power.
"Home prices driving tech workers overseas"
Leumi deputy CEO Daniel Tsiddon: The rise in home prices in high-tech areas in Israel is costing human capital.
IEC reform talks break down
The stumbling block was the workers' demand for an amnesty on salary excesses.
Flug reopens tussle over financial regulator
The Finance Ministry opposes Flug heading the new committee to supervise the financial system.
Charity begins at home in Israel
Individuals provide 71% of total charitable donations, companies 27%, and estates 2%.
Azrieli to fund Technion Tel Aviv campus
The campus will be called "Technion Campus in Sarona named for Azrieli."
18 Israelis make "Forbes" 2014 Billionaires List
Eyal Ofer is the richest Israeli followed by Idan Ofer and Stef Wertheimer.
BoI: Regional inequality up 84%
The Bank of Israel found the income gap between the center and the periphery is rising sharply.
US removes Israel from IP blacklist
Israel passed new legislation strengthening intellectual property rights on brand drugs.
Stanley Fischer slammed by BoI Governor predecessor
David Klein attributes most of Fischer's mistakes to "the American reality from which he drew much inspiration."
Bank of Israel releases samples of new NIS 50 note
The new NIS 50 banknote is green, bears a picture of the author Shaul Tchernichovsky.
"You can't teach entrepreneurship"
Angel investor Zohar Gilon relies on his own judgement rather than due diligence when selecting investments.
If Rose Fostanes played basketball
Reforms in regulations for foreign caregivers are welcome, but don't go far enough.
Antitrust Authority disappoints on gas competition
The only new company that will compete against Tamar and Leviathan will own less than 8% of Israel's proven gas reserves.
When innovation means a refrigerator
Jamshyd Godrej believes economic development in India must go hand in hand with environmental and social awareness.
Prof. Zvi Eckstein supports NIS 3.30-3.40/$ floor rate
The former deputy Bank of Israel Governor is the first senior figure from the financial system to advocate a floor rate.
2013 boom year for Israeli high-tech
In the first half of the year, there was a 52% rise in demand for mobile and web developers, and salaries are up as well.
Strong shekel forces Israeli manufacturers abroad
Israeli manufacturers tell "Globes" they are losing money due to the current strength of the shekel.
"Ending QE3 will harm the economy"
Prof. Richard Clarida will tell "Globes" Israel Business Conference that the main risk to the US economy is its political system.
Israel offers favorable tax regime for companies
"Globes" and Baker Tilly Israel accountants found Israel's tax benefits are among the most attractive in the West.
Slowdown will worsen
The vested interests that continue to claim that the economy is improving are deceiving the public, says Eyal Horowitz.
Can the US maintain growth after QE3?
Leading economists will discuss "The US: catch 22 the zero interest rate" at the "Globes" 2013 Israel Business Conference.