The document discusses the Israeli economy, highlighting some of its key challenges and strengths. It provides two case studies - the first on an internal economic stabilization plan from 1985 that brought inflation under control, and the second on Israel's minimal impact from the 2007-2009 global financial crisis due to a strong starting point and quick response. Some goals and challenges mentioned are promoting economic growth while reducing gaps, increasing investment and productivity. Israel is recognized as a global leader in science, technology and innovation, and has free trade agreements with many countries.

1. THE ISRAELI ECONOMY
Sharon Kedmi | Former Director General,
Ministry of Economy (Industry Trade & Labor)

2. Challenge's and Eco-System
Overview
Case study 1 - Internal
Case study 2 - External
Goals and challenges ahead
Orange's to Apple’s

3. Israel Challenges
Developing a global-facing Innovative industry
A small
Israeli
country,can overcome geographic & geo political
that
economy is
lacking natural
export oriented
challenges while leveraging the advantages
resources
of its population Israel Challenges
3

4. Existence of key Success Ingredients
Israeli “DNA” mixture of
knowledge, innovation & entrepreneurship
WORLD RECOGNIZED SOURCE OF INNOVATIVE TECHNOLOGY
High quality of human resources: academia, defense, immigration
Commercialization of defense-related technologies
Strong presence of major global technology companies
Critical mass: capital, investors, VC funds, start-ups
Government support: incentive plans, tax benefits
4

5. A small open atypical economy
Economic Survey: Israel
Open
• Market oriented policy
• Inflation targeting & Public
debt reduction
• A leading export base
high-tech sector
• Stable banking system
5

6. A small open atypical economy
Economic Survey: Israel
Atypical
• Significant resource
absorption by defense needs
• Substantial international
trade –but limited with
neighboring economies
• Complex society structure
6

7. Challenge's and Eco-System
Overview
Case study 1 - Internal
Case study 2 - External
Goals and challenges ahead
Orange's to Apple’s

8. Main Economic Indicators
Criteria
2007
2008
2009
2010
2011
2012
(*GDP (current prices in $B
161.8
184.1
189.9
199.0
243.9
240.9
(%(GDP Real Growth Rate
5. 3
4.0%
0.8%
4.8%
%4.6
3.2%
$25,762
$28,473
$28,526
$29,901
$31,419
$30,476
3.4%
2.2%
0.9%-
2.9%
2.7%
1.3%
Exports (Goods & Services(
$B* (As Percentage of GDP(
71.3
(44%)
83.3
(45.1%)
75.1
(39.5%)
85.3
(42.9%)
91.0
(37.3%)
90.1
(37.4%)
Imports (Goods & Services(
$B* (As Percentage of GDP(
73.7
(45.5%)
81.3
(44.0%)
71.0
(37.4)
80.0
(40.2%)
92.2
(37.8%)
92.7
(38.5%)
7. 3
6.1%
7.6%
6.6%
7.1%
6.9%
GDP per Capita (PPP
adjusted(
GDP per Capita Growth
Rate
(%, Current prices(
Unemployment Rate (%(
Source: Ministry of Finance, Bank of Israel and CBS
8

9. GDP and Business GDP
Annual rate of change, constant prices, 2005
GDP
4.1
Business GDP
5.0
4.4
5.4
4.6
5.1
3.2 3.3
2.9
3.2
3.5
2.9 2.8 2.9
2.6
2.6
2.7
2.2
1.1
0.5
9

10. GDP Growth
Israel experienced
Israel’s a 1.1% growth
growth rate has
in it’s average
exceeded the GDP
Advanced economies,
growth rate of advanced
2009
annual rate of change,
economies
constant prices
2004
ISRAEL
compared to
10

11. GDP per Capita
$ U.S, Current prices, Current PPP, 2012
100
90
80
CDage
OEver
A
70
60
50
40
30
35.0
35.0
Isr
el
a
30.5
28.0
20
10
0
11

12. Public Debt
As % of GDP
100%
95%
93.9%
Effects of the
global economic
crisis
90%
85%
80%
75%
85.1%
78.6%
79.6%
77.4%
76.3%
74.0%
73.2%
70%
12

13. Unemployment Rate
Latest available data
25%
20%
15%
10%
C D age
OEver
A
8.0
8.0%
Isr
el
a
6.9
6.9%
5%
0%
13

14. Challenge's and Eco-System
Overview
Case study 1 - Internal
Case study 2 - External
Goals and challenges ahead
Orange's to Apple’s

15. Case study – 1
The Economic Stabilization Plan 1985
The plan was implemented in Israel in
response domestic situation of the early 1980s
a
The years after the 1973 Yom Kippur War
were
lost decade, as growth stalled, inflation soared and
government expenditures rose significantly.
1983 Israel suffered what is known as
"the Bank stock crisis"
To
From
1984 inflation was
annual rate close
Social-Democratic reaching an Liberal-Capital
to 450% and projected to reach over 1000% by the
Economy
end of the 1984
Economy
15

16. Case study – 1: Continue
The Economic Stabilization Plan 1985
This was done after a series of smaller, so-called
"package deals" that were negotiated with selected
entities in the Israeli economy
The plan brought together all the
main players in the economy at the time
(the government, labor unions, and the central bank)
Inflation was successfully brought to under 20%
in less than two
1985 the Knessetyears
implemented
an economic stabilization plan
In response, in
16

17. Case study – 1: Continue
The Economic Stabilization Plan 1985
Some of its main points included:
1. Significant cut in government expenditures and deficit.
2. Reaching an agreement with the labor union to enact
wage controls, thus decoupling rampant wage from
price inflation
3. Emergency measures imposing temporary price controls
4. A sharp devaluation of the Shekel, followed by a policy
of a long-term fixed foreign exchange rate.
5. Curbing the Bank of Israel's ability to print money
17

18. Challenge's and Eco-System
Overview
Case study 1 - Internal
Case study 2 - External
Goals and challenges ahead
Orange's to Apple’s

19. Case study – 2: External
2007-2009
World Financial Crisis
It resulted in the threat of total collapse of
The crisis played a significant role
in the failure of key businesses,
Largedeclines in consumer wealth
The bailout of
Downturns in
Financial
banks by national
stock markets
estimated in trillions of U.S. dollars
Institutions
governments
around the world
The worst financial crises
since the great depletion of the 1930s.
19

20. Case study – 2: External
1
Strong Entry Point
2
Quick and Strict Response
Minimal Impact by the Global Financial Crisis
20

21. Challenge's and Eco-System
Overview
Case study 1 - Internal
Case study 2 - External
Goals and challenges ahead
Orange's to Apple’s

22. Goals
Supporting
economic growth
while reducing
socio-economic
gaps via
Responsible the
Increasing investment
Strengthening
Improving competition
Promoting government
Increasing labor
fiscal policy
participation rate
economic capital and
regulation periphery
and productivity and
in human
strengthening weak
infrastructure
populations
22

23. Challenge's and Eco-System
Overview
Case study 1 - Internal
Case study 2 - External
Goals and challenges ahead
Orange's to Apple’s

24. Leading in Science, Technology, and Innovation
1st in R&D
expenditure as
% of GDP*
1st in quality of
scientific
research
institutions**
3rd in venture
capital
availability
4th in PCT patents
applications per
million population
1st for
entrepreneurship
5th for strength
of investor
protection
2nd in public
expenditure
on education
6
Nobel Prizes
24
24

25. Leading in Science, Technology, and Innovation
Civilian R&D as % of GDP, 2009
25
25

26. Uruguay
Brazil
Sweden
Cooperation in Industrial R&D
Ireland
Spain
Cyprus
Netherland
26

27. Israel’s Free Trade Agreements
EFTA
CANADA
1997
1993
EURO
USA
2000
TURKEY
1997
JORDAN
1985
MEXICO
2000
EGYPT
2004*
1998*
27

28. Start up nation
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