ABSTRACT
This chapter argues that between 1949 and 1965 the state went through a gradual process where preferences were re-defined leading to the emergence of the local policy paradigm of economic independence. The process culminated in the enactment of the austerity policy in 1965 (“The Recession Policy”), in which the state abandoned the objective of full employment and embraced a policy of export-oriented development. Whereas hitherto most scholars have argued that the Israeli transition to neoliberalism took place in 1985, this chapter argues that the process was gradual and demonstrates that the gradual policy change took place during the 1950s and the 1960s toward market-oriented policies. This change, it is argued, was not driven by a re-definition of state preferences amid the acceleration of the European Integration process and the establishment of the European Common Market.
