Israel

The large influx of well-trained and Western-educated European and North American immigrants contributed greatly to a rapid rise in Israel’s gross national product (GNP) after 1948. Although most of them had to change occupations, a nucleus of highly skilled labour, in combination with the country’s rapid founding of universities and research institutes, facilitated economic expansion. The country obtained large amounts of capital, which included gifts from world Jewry, reparations from the Federal Republic of Germany for Nazi crimes, grants-in-aid from the U.S. government, and capital brought in by immigrants. Israel has supplemented these forms of revenue with loans, commercial credits, and foreign investment.

The goals of Israel’s economic policy are continued growth and the further integration of the country’s economy into world markets. Israel has made progress toward these goals under difficult conditions, such as a rapid population increase, a boycott by most Arab countries, heavy expenditure on defense, a scarcity of natural resources, high rates of inflation, and a small domestic market that limits the economic savings of mass production. Despite these obstacles, Israel has achieved a high standard of living for most of its residents, the growth of substantial industrial export and tourism sectors, and world-class excellence in advanced technologies and science-based industry. However, this economic progress has not been uniform. Israeli Arabs are generally at the lower rungs of the economic ladder, and there are substantial economic divisions among Israeli Jews, mainly between the Sephardim and Ashkenazim.