Gaza Flotillas: Bumps on the Path of Israel’s Economic Growth

1. The 1948/9 War of Independence, the 1956 Sinai Campaign, the 1967 War, the 1969/70 War of Attrition, the 1973 Yom Kippur War, the 1981 US Military Embargo and global condemnation following the bombing of Iraq’s nuclear reactor, the 1982 war against the PLO in Lebanon, the 1987-92 1^st Intifadah, the 1994-2000 Palestinian Suicide Bombers, the 2000-2002 2^nd Intifadah, the pre-1948 and the 1948-2010 systematic Palestinian terrorism, etc. have been bumps on the path of unprecedented Israeli economic, technological, medical, agricultural and cultural growth!

2. Israel’s June, 2010 Omnibus High Tech Encouragement Plan (Currently, R&D amounts to 4.9% of GDP and high tech accounts to 15% of Israel’s GDP, 41% of Israel’s exports, employing 270,000 persons):

*Tax benefits to private-investors, “Angels,” who are critical at the seed stage.

*Tax benefits to institutional investors (US institutional investors invest 2% in high tech, while Israeli institutional investors invest 0.2% in high tech).

*Intellectual Property reforms, which would facilitate sale of start ups, while encouraging start ups to reach “mezzanine” and “mature” state before “Exit.”

*Benefits to Transaction Processing and Payment Technologies.

*Enhancement of High Tech dialogue with the Academia. For example, benefits to the commercialization of academic R&D.

*Enhancement of High Tech dialogue with the Military R&S, bolstering the commercialization of Israel’s cutting-edge military R&D.

*Expanding High Tech-oriented subjects in high school curriculum.

*Encouraging Ultra-Orthodox youngsters to join high tech industries.

*Benefits to Israeli expatriates who return to Israel.

(“Calcalist”, “The Marker” and “Globes”, June 9, 2010).

3. The global Swiss cancer drugs giant, Roche, acquired Israel’s Medingo for $200MN (Globes, May 31). Intel acquired Israel’s Comsys for $30MN (Globes, May 25). India’s Connectiva acquired Israel’s Olista for $20MN (Globes, May 11).

4. Taiwan’s Inventech and the US-based Matrix Partners and OVP Venture Partners co-led a $10MN 2^nd round of private placement by Israel’s Tigo (Globes, June 10). Greylock Capital led a $9MN round by Israel’s Zend (Globes, May 18). Battery Ventures and Benchmark Capital co-led a $7MN 3^rd round of private placement by Israel’s Panaya (Globes, June 11, 2010). Battery Ventures and Greylock Capital invested $6MN in Israel’s Zerto (Globes, May 27). Britain’s Pond Venture and Singapore’s Plan B Ventures co-led a $5MN 2^nd round by Israel’s EmEfCy (Globes, May 10). Benchmark Capital, Accel Partners and DAG Ventures invested $5MN in Israel’s MetaCafe (Globes, (June 9). Trilogy Equity Partners and Ignition Partners invested $3MN – in addition to $8MN invested in 2008 – in Israel’s InstallFree (Globes, May 11).

5. While Russia’s membership was rejected, Israel has joined the OECD, in defiance of Palestinian/Arab political pressure. Israel was admitted due to Israel’s sustained impressive economic growth, controlled-inflation, restrained budget deficit, stable unemployment, reformed/clear and transparent (declining rates) tax structure, current accounts and trade balance surplus, all of which have attracted significant international investors, who present steep business/legal demands and high expectations.

In 2009, Israel’s economy grew by 0.9%, compared with a 3.5% average decline by OECD members. For example, the USA – 2.5%, Canada – 2.7%, Japan – 5.3%, Germany – 4.9%, Britain – 4.7%, France – 2.3%, Spain – 3.6%, etc.. (Globes, May 11).

Institutional investors in developed markets, who were barred from investing in Israel, while it was classified as an emerging market, may bolster the flow of overseas investments into Israel.

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

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

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.
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.
Israel is ranked 12^th from the bottom among the 37 OECD countries in the number of deaths per million inhabitants: 645 compared to 1,145 OECD average.
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.
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%.
In 2020, Israel was ranked 20^th 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).
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.
Israel’s foreign exchange reserves-to-GDP ratio of 41% (3^rd 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.
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.
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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