ABSTRACT
The Stabilization Plan, announced in July 1985, is undoubtedly the significant transformative event in the economic history of Israel. The plan, which was designed as a response to an economic crisis, triggered institutional changes that deeply transformed the Israeli economy, taking it from the age of intervention and regulation and thrusting it into the age of liberalization and globalization. This chapter notes that the two key factors that shaped the Stabilization Plan were the government prioritization export promotion as well as national security policy issues. Other factors, such as the position of the United States and the policy advice of economists also played a role, but secondary to state preferences.
