chapter  7
40 Pages

Foreign trade and the balance of payments

The threat to the very existence of Israel from its neighboring countries resulted in a decision to create an integrated military machine that consumes a much larger proportion of the GNP than that of practically any other country in the world. The breakdown of economic relationships by its neighboring countries deprived Israel of considerable exports and of cheaper sources of imports. Israel pays higher insurance rates and shipping tariffs and its tourism is affected by the absence of peaceful relationships with most of its neighbors and by terrorism. One major cost of the 'no war, no peace' situation, however, has been that it saps strength necessary to build a strong civilian economy.