ABSTRACT
This chapter seeks to trace the extraordinary metamorphosis which has seen the Israeli economy move from being weak and marginal to being strong and, in many respects, a global powerhouse. From a longer-term perspective, the very fact that the Israeli economy is firmly entrenched in the "developed economy" category—let alone in its top echelon—is a testimony to how far it has come. In the domestic economy, the labor force has seen consistent progress since 2003: unemployment has fallen to record low levels, employment has steadily risen, as has the participation rate. Only in 2003 did a tentative turnaround begin, as the battered domestic economy began to emerge from the intifada, while exports responded to the renewal of global growth. The domestic economy was largely unaffected because, fortunately, the global crisis did not last long enough for its negative impact to filter through into what was a healthy economic organism.
