Is Israel a healthy Economy?

The first thing that came to my mind when I thought about Indian economy was the image of the Bombay Stock Exchange. It is quite similar in case of the Tel Aviv Stock exchange (TASE) of Israel. Like the BSE Sensex, the TA-25 Index is TASE's flagship index. It was first published in 1992. It tracks the prices of the shares of the 25 companies with the highest market capitalization on the exchange.

To begin to think of it, the stock exchange is a very small part of the whole economy.

Israel is generally considered a technologically advanced market economy. It was never an agriculture dependent economy because of its limited natural resources. It exports machinery and equipment, software, cut diamonds, agricultural products (mainly fruits), chemicals, textiles and apparel, military equipment. Israel’s main export partners are United States, European Union, Hong Kong, India and Turkey (in 2011 the exports were worth 4479 million USD). Israel depends on imports of petroleum, coal, food, uncut diamonds, other production inputs, and military equipment. Israel’s main imports come from European Union, United States and China (in 2011 the imports were worth 5760 million USD).

During the 2009 economic crisis Israel was one of the least affected nations (not just 2009, Israel has remained impervious to most of the global financial disasters). The ministry immediately raised taxes (but the two year budget after that did have provisions for tax reduction) and didn't inject money into the system, exactly opposite to what the other countries did. In an interview the then finance minister, Yuval Steinitz, justified by saying, “our economy is quite different than most other countries in the West. We manufacture almost no consumer goods. In the U.S., if you lower taxes to encourage people to consume, they'll buy American cars, or at least Japanese cars produced in America. In our economy, if people use the money to buy a new car, it won't be an Israeli car. So if I encourage people to buy more, it doesn't help.”

(There is a rumour that prior to the collapse of Lehman Brothers, they transferred 400 billion dollars to Israeli banks)

Now, let’s look at what one might call the dark side of this country especially in terms of its economy. It is often said that Israel’s economy is doing better than other countries because it runs some of the most non-ethical businesses in the world. It is a leading trader in blood diamonds and the fourth largest weapons dealer in the world. Israel, every now and then, is also caught engaged in organ trafficking and organ harvesting.

According to a report in the Guardian, “out of the seven oligarchs who controlled 50% of Russia’s economy during the 1990s, six were Jewish.” During 1990s and after, many of these Russian oligarchs have acquired Israeli citizenship and secured their money.

Also, Israel is listed at the top of the scale, when it comes to the gap between the rich and the poor. Only 18 families control 60% of the equity value of all the companies in the country (please watch this video, if unavailable, the interview has been transcribed under the video, please read).

Maybe one of the strongest economies in the world today, Israel is definitely not the best example for a healthy economy.