ABSTRACT
The course of economic affairs may tend to reflect an equilibrium of different economic interest groups. Accordingly, this means that major decisions affecting the course of the Israeli economy reflect a political equilibrium, which is often achieved at the expense of economic rationality. American visitors to Israel are confronted by an economic paradox. Monetary and foreign exchange poor policies consist of the politicization of economic decision making, industrial policy that is relatively inefficient, a large welfare economy a relatively free economy in order to achieve progress. Domestic economic policy in Israel suffers because decision making is highly politicized. Israel has had an "industrial policy" for many years, under the "law for the encouragement of capital investment. Economic policy under the Likud seems pretty much a continuation of the kinds of policies that the Israelis had under Labor. Public consumption as a percentage of GNP increased from 11.40 percent in 1974-1977 to 12.7 percent in 1978-1981.
