How did Israel become wealthy? It defeated its biggest enemy that is Inflation. Let’s rewind to 1948, when Israel was formed. By the early 1980s, constant wars had crippled Israel’s economy. By 1984, Israel economy had collapsed. It was similar what we see in Pakistan today. After such an economy collapse, how did Israel managed to stand up? That’s interesting to know.
Despite being 148 times smaller than India, with a population of less than one crore and surrounded by enemies. Israel has become one of the richest countries in the world in just 75 years. We must agree one thing that Israel is a country of Paradoxes.
Israel should be very poor country, why? For three reasons;
1. Israel is surrounded by enemies. The countries three sides do not treat as its neighbors.
2. Israel is constantly involved in wars. War means instability, war means high costs.
3. Israel has no natural resources, it’s a desert and unlike its Arab neighbors. It doesn’t have vast oil reserves.
The Secret of Israel’s Wealth:
Israel’s Talent;
Israel’s biggest asset is its talent. Every action taken with a sense of urgency as if it’s a do-or-die situation. Despite being a small country with a population smaller than Mumbai, Israel is home to 95 unicorns. And the reason for this is Israel Defense Forces (IDF). Every Israel is required to undergo mandatory military training at the age of 18. They learn important skill which is necessary for every individual that is problem-solving. The military teaches Israeli youth hard work, discipline, ability to network, collaboration, how to take risk, accept failure and try again. This mindset is crucial to Israel’s success.
Business role:
Also, Israel exports security services worldwide, including cyber security, antivirus and data protection, amounting to 40% of global sales. Also, Israel is also a pioneer in fields like semiconductors and artificial intelligence. Israel is an expert at attracting the foreign investors. 4% of Israel’s GDP comes from foreign direct investment (FDI). The government actively invites investors by offering tax breaks and incentives.
Religious Tourism:
Additionally, Religious tourism supports the economy of Israel because Israel and Jerusalem are considered holy places for Jews, Muslims and Christians. Every year 4 million tourists visit Israel, almost half of its population. In addition, Mainly the rich Jews community is praised for staying connected to their homeland while being spread across the world. Therefore, tourism also boost the economy of Israel.
US Aide to Israel:
Moreover, Another biggest key to Israel’s wealth is its relationship with the United States. Israel receives $4 billion every year, which is more than any other country. Israel’s population is 0.01% of the worlds, yet its per capita GDP is $49,900, which means Israel is far from being poor. The US gives money to Israel, and Israel uses to buy American weapons. Which helps the US with its military goals. Israel becomes the military partner for the USA in the Middle East. This support brings stability to Israel and builds confidence for investors. Which is why Israel’s companies always find funding, even in times of war.
Israel’s Current State:
Today Israel’s economy is diverse. Only 1.1% of its GDP comes from Agriculture, 17.3% from Manufacturing and 81.6% from Services. 40% of Israel’s GDP comes from export, including cut & uncut diamonds, electrical machinery, medical equipment and fertilizers. The best thing is that Israel has free trade agreement with the United States and Europe, which helps the trade in a big way.
Finally, its better to recall that, at the time of economy collapse in Israel in the year 1984, then Prime Minister Shimon Peres and Finance Minister Yigal Allon implemented an economic stabilization in 1985. The plan focused on price freezes, wage control, devaluation, fixed foreign exchange rates, no printing of money and reduced government spending. This helped the economy to raise again.
