chapter  4
49 Pages

Economic structure and institutions

In this chapter we shall survey the distinctive pluralistic composition of the Israeli economy and the unique structure it developed. A brief attempt is made to explain, based on the historical discussion of chapter 2, how this unique structure of institutions came into being and to analyze the changes introduced in the political economy of Israel once the Likud came to power. We shall start by looking at the public sector's share in the GNP and the means it uses to finance its operations. We shall move to discuss the many off-budget methods of intervention adopted by the Israeli government. Then we shall explain the structure of the unique Israeli institutions, show the evolution of the relative size of each sector, analyze the peculiar characteristics of each sector and the role of their managers. We shall point out some of the strengths and weaknesses of the institutional structure of Israel. We shall also point out the problems institutions face going into the 1990s. We shall explain the sectors, how big they are and what significance their operations have. We shall also show the impact of the many attempts in Israel to create cooperative institutions rather than to rely on unfettered market operations. The role of government in the different economic branches of the economy is discussed in the following chapter.