ABSTRACT
This chapter analyzes Israel's past economic achievements and provides salient comparisons with countries in two reference groups the upper middle income countries as defined by the World Bank in its standard statistical tables and the members of the O.E.C.D., excluding three poorer members. A reasonable conjecture is that Israel's growth rate will accelerate along with that of the O.E.C.D. and richer LDCs, and that proper economic policies, including the encouragement of research and development, may well allow the rise in Israel's income to exceed that of peers. The dreams of visionary socialists about an agriculturally-based economy and the transcendent importance of agricultural labor disappear before the inexorable logic of Engel's Law and comparative advantage. Most observers agree that the major factor operating to aggravate the inflation resulting from supply shocks has been the unusually large government deficit and the fact that much of the financed by the issuance of money, rather than by other noninflationary.
