ABSTRACT

The major incentives for industrial dispersal were incorporated in the Law for Encouraging Capital Investment. This law was originally passed in 1950 with the purpose of encouraging capital investment, particularly foreign investment, in the Israeli economy. The benefits provided by the law included tax concessions, reduced obstacles to importing inputs, and permission to transfer profits abroad. The law was amended twice during the 1950s with the intention of strengthening and extending the incentives by subsidising capital investment. Population dispersal has been stated as one of the goals of the law since 1950, but only in 1959 were specific measures, differentiating between central areas and development zones, incorporated in the law. The public organisations in charge of implementing the law-The Investment Centre and the Industrial Development Bank of Israel, as well as the Development Regions Unit in the Ministry of Commerce and Industry-were all established during the 1950s. Thus, the basic system of incentives for industrialisation and industrial dispersal, which prevails to the present, was formulated during that decade.