ABSTRACT
Israel’s development is an outstanding success story. Starting seven decades ago as an economy that could barely feed and defend its small population, it now belongs to the club of the richest nations on earth, proud of a world-leading high-tech sector. Nevertheless, there are serious problems that Israel has been facing for quite a while and threaten its future prosperity.
In this short overview, we trace Israel’s development from its beginnings as an economy with substantial socialist underpinnings and permanent trade balance crises to its current status as the “Start-up Nation” with a strong, market-based and highly developed economy. Along the way, we present the macroeconomic situation in Israel, with special emphasis placed on the quantity and quality of the labor force. We pay special attention to the flourishing high-tech sector. Finally, we present some of the challenges facing the country that result from different education and employment patterns across Israel’s social, ethnic and religious groups, and the effect this has had on income distribution and welfare.
