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At 70 – Israel’s economy exceeds expectations

Straight from the Jerusalem Boardroom #228, April 25, 2018

  1. In 1948, conventional wisdom considered the newly-reestablished Jewish State insolvent economically, indefensible militarily, a basket case, totally dependent upon handouts.
  2. In 2018, Forbes Magazine quoted Warren Buffett (February 26, 2018): “I’m not Jewish, but Israel reminds me of the USA after its birth. The determination, motivation, intelligence and initiative of its people are remarkable and extraordinary. I’m a big believer in Israel’s economy.” According to Forbes, “Buffett just purchased a $358MN stake in Teva Pharmaceutical, 1.8% of Teva’s outstanding shares…. In 2006, Buffett’s Berkshire Hathaway purchased an 80% stake in Israel’s Iscar for $4BN, its first international acquisition…. In 2013, Berkshire bought out the remaining 20% for $2BN…. Other Israeli companies purchased by Berkshire include eVolution Networks, creators of wireless network energy savings software, Ray-Q Interconnect, a distributor of electronic components and AgroLogic, a designer of electronic control units for agriculture….”
  3. Amazon’s Israel – Island of Success by Adam Reuter and Noga Kainan provides critical data on Israel’s surging economy:

From 1987 to 2017, Israel’s population upsurged from 4.4MN to 8.75MN; GDP – from $35BN to $358BN; GDP per capita – from $8,000 to $41,000; tax burden – from 45% to 30%; foreign exchange reserves – from $4BN to $112BN; national debt to GDP ratio – from 155% to 59%; defense expenditures- from 17% to 4.5% of GDP; US foreign aid (actually, US investment in Israel) – from 7% to 1% of GDP; exports – from $10BN to $102BN; independent energy resources – from 4% to 65% (66% of electricity consumption); desalinated water – from 3% to 50%; annual inflation – from 16% (450% in 1985) to 0.30%; life expectancy – from 75 to 82 years; women’s participation in the job market – from 36% to 58%.

Since the year 2000, Israel’s economy has grown 65% – 2nd best among the OECD countries.

During 2000-2016, the number of wage-earners in the lowest (poorest) ten percent grew by 58%, in the second lowest – 73%, in the third – 45% and in the fourth – 35%.

Israel’s unemployment – 4% – is the lowest in 40 years.

Israel’s median age is the youngest among the OECD countries – 30.

Israel’s fertility rate is the highest among advanced economies – In 2017 the Jewish rate (3.16 births per woman) exceeded the Arab rate (3.11), while the ultra-orthodox rate declined moderately and secular rate surged. In 1969, the Arab fertility rate was 6 births higher than the Jewish rate.

Brain drain? During 1980-2010, 30,000 Israelis with academic degrees left Israel for a year+, while 265,000 Olim (Jewish immigrants) with academic degrees settled in Israel – a net gain of 235,000.

During 2011-2016, 4,000 Ph.ds returned to Israel following, at least, three years abroad; more than 50% of the 4,900 newly-hired senior university staff were  returning emigrants, half of them 30-40 year old. About 2,500 returning academicians were absorbed by Israel’s industrial sector.

  1. In 2018, Silicon Valley $19BN giant, KLA Tencor, acquired Israel’s Orbotech for $3.4BN (Globes Business Daily, March 20, 2018). It is one of the 10 top exits in Israel’s high-tech: Intel acquired Mobileye ($15.3BN), Lucent acquired Chromatis ($4.75BN), HP acquired Mercury ($4.5BN), a Chinese consortium acquired Playtika ($4.4BN), KLA Tencor acquired Orbotech ($3.4BN), Sundisk acquired M-Systems ($$1.6BN), Mitsubishi acquired Neurodrum ($1.1BN), Google acquired Waze ($1BN) and Edwards Lifesciences acquired Valtech Cardio ($1BN).

5. In 2018, the $17BN cyber security giant, Palo Alto Networks, acquired Israel’s startup, Secdo, for $100MN.  Nike acquired the computerized-vision Israeli startup, Invertex (Globes, April 11). The medical equipment giant, Medtronic (85,000 employees), acquired Israel’s Vision Sense (invasive mini surgery) for $75MN, its 9th Israeli investment in 13 years, including three research & development centers (Globes, April 10). Intel led – along with Sequoia Venture Capital Fund, BMW and iVenture – a round of $50MN private placement in Israel’s Moovit public transportation navigation (Globes Feb. 22).  China’s Principle Capital acquired the PCB division of Israel’s Priortech for $35MN and then invested $20MN in Priortech (Globes, April 5). Israel’s $5BN Elbit acquired the American company, Universal Avionics Systems Corp., for $120MN.




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Israel’s Covid-19 Economic Trends

Straight from the Jerusalem Boardroom #248
https://bit.ly/3u29k9g

Foreign investment in Israel’s high-tech companies surged to new heights in the 1st quarter of 2021 – $5.7bn in 172 deals – which is up 89% over the impressive 4th quarter of 2020 and double the volume of the 1st quarter of 2020.

2020 was the first year of surpassing $10bn in capital raised by the Israeli high-tech sector from investors in the US, Asia and Europe, who trust the maturity of Israel’s brain power. Investments in Israeli companies more than tripled in six years, reflecting the effective response by Israeli startups to the technological, medical, pharmaceutical, educational, social and digital challenges posed by Covid-19.

Israel’s economic performance in defiance of Covid-19 is presented by Dr. Adam Reuter, the Chairman and Founder of “Financial Immunities,” Israel’s largest financial-risk management firm, and the co-author of Israel – Island of Success:

  1. Israel has led the globe in the rapid administration of Covid-19 vaccinations due to effective negotiations with Pfizer and an efficient, country-wide medical infrastructure.
  2. Israel is the second lowest among OECD countries in the number of Covid-19 deaths per number of Covid-19 cases: 0.7% compared to the 2.3% OECD average. Israel features a young population (median age of 30 compared to the OECD’s 42) and an effective country-wide medical infrastructure, including top level HMOs and hospitals.
  3. Israel is ranked 12th from the bottom among the 37 OECD countries in the number of deaths per million inhabitants: 645 compared to 1,145 OECD average.
  4. The International Monetary Fund’s 2025 GDP growth forecast for OECD countries: Israel – 4%, OECD average – 2.2%, US – 1.8%, Australia – 2.5%, Ireland – 2.6%, France and Canada – 1.7%, the UK – 1.6%, Germany – 1.2%, etc.
  5. Israel’s 2020 GDP was reduced by 2.5%, compared to the OECD average reduction of 4.1%, South Korea – 1%, Norway – 0.8%, Australia – 2.6%, US – 3.5%, Japan – 4.8%, Germany – 5%, France – 8%, the UK – 10% reduction, etc. GDP growth was recorded in New Zealand – 2.4% and Ireland – 3.5%.
  6. In 2020, Israel was ranked 20th among the 37 members of the OECD in terms of GDP per capita, featuring $43,000 (GDP – $408bn), ahead of Japan, Italy and Spain, and very close behind the UK ($44,000) and France ($45,000).
  7. Israel’s debt-to-GDP ratio increased from 60% in 2019 to 72% in 2020, compared to the OECD’s average increase from 66% to 82%. The 2020’s debt-to-GDP ratio was 266% in Japan, Italy – 161%, the US – 131%, Germany – 73%, etc.
  8. Israel’s foreign exchange reserves-to-GDP ratio of 41% (3rd among the OECD countries) attests to its financial stability, and Israel’s capability to raise foreign credit promptly in a cost-effective manner. Israel’s foreign exchange reserves in March 2021 – $186bn.
  9. During the past decade, Standard and Poor (S&P) accorded Israel a positive credit rating trend, unlike the negative trend for the G-7 countries. In 2020, notwithstanding Covid-19, Israel’s credit rating (S&P) remained at AA.
  10. Some 380 global high-tech giants operate in Israel, including Microsoft, Amazon, IBM, Intel, Cisco, Apple, Verizon, Applied Materials, Dell, HP, Kodak, Oracle, Philips, SAP, Medtronics, GM, eBay, GE, etc. Israel leads the world in the ratio of research and development investment to GDP: 4.9%. 85% of this investment comes from the business sector.

 




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Exposing the myth of the Arab demographic time bomb