Israel’s Economic Miracle (or is it…?)

26 Feb

7.8% economic growth; are you sure we aren’t mistaking theses for China’s figures?! – Whilst economic growth in the developed world continues to falter the news that the Israeli economy grew by 7.8% in the final quarter of 2010 took many by surprise.

In a week where the history of the Middle East continues to be rewritten it seems pretty trivial to talk about the latest growth figures of the Israeli economy. However, last week amongst the latest reports from Bahrain, Egypt and Libya, and the opinion pieces depicting future scenarios of either hope or fear in the Middle East, one of the front pages in the Haaretz was devoted to a beaming Prime Minister Netanyahu – for once – announcing that his “sound economic policy” is helping propel the Israeli economy to dizzy new heights (Israeli GDP surges up OECD ranks in 2010) . This is nothing new, as this 2008 graph from The Economist below shows…

A graph showing Israel's impressive economic growth in comparison to the rest of the developed world.

A graph showing Israel's impressive economic growth in comparison to the rest of the developed world.


See, if you spent your life in Tel Aviv, working in the hi-tech industry parks in the latest  start-up company, living in the plush seafront neighbourhoods with your view over the Mediterranean, the idea that Israel’s successful hi-tech sector was helping drive the Israeli economy ever onwards towards OECD respectability and envy would seem inevitable.

But over the year and a bit I have now  lived in Israel it’s quite obvious that the economic dictum that a rising tide lifts all boats does not apply to Israeli society – that economic growth has not been shared fairly and the gap between rich and poor widens. As this next graph shows, for all the stellar growth and weekly pronouncements of another successful Israeli start-up, the level of income inequality continues to rise.


Income equality on the rise in Israel

Venture beyond the  Tel-Avivian seafront, past the quiet environs of the Israeli center and into the Israeli hinterland and another picture emerges. In the south Bedouin villages dot the Negev; precarious settlements often without the basic amenities and services. In Jerusalem the religious orthodox neighbourhoods are bursting at the seams as family sizes of sometimes a dozen live in deteriorating apartment blocks – with the men opting to study the Torah and the women locked in a state of constant pregnancy or childcare, families rely on state hand-outs to survive. And in the north large Arab communities find themselves marginalised with the first steps up onto the Israeli economic ladder blocked by a  lack of opportunity due to discriminatory nationalist/religious/racial hurdles.

It’s a shame that a country originally founded upon the values of economic justice and equality along with a sense of community and togetherness should now have reverted to being one of the world most unequal ‘rich’ countries. But in a country where security issues dominate the news and political agendas, it’s hard for these type of debates to be heard.


Posted by on February 26, 2011 in Domestic Israeli News


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3 responses to “Israel’s Economic Miracle (or is it…?)

  1. Al

    March 16, 2011 at 3:19 pm

    Really interesting stuff, Higinbotham. Keep it up!

    • thomassh21

      March 17, 2011 at 7:50 pm

      Thanks Al.

      Hope all is well up north. And thanks again for your very descriptive email. It was a good read and great to hear about life in Finland

      Greetings to Aino and Erin


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