Israel

Note: This column mainly includes countries along the Belt and Road and countries that have signed cooperation agreements with China on Belt and Road Initiative.

Israel is a small, narrow, semi-arid country on the southeastern coastline of the Mediterranean Sea. It entered history some 35 centuries ago when the Jewish people forsook its nomadic way of life, settled in the Land and became a nation.

Land

The country is bordered by Lebanon to the north, Syria to the northeast, Jordan to the east, Egypt to the southwest and the Mediterranean Sea to the west.

Mountains and plains, fertile land, and desert are often minutes apart. The width of the country, from the Mediterranean Sea in the west to the Dead Sea in the east, can be crossed by car in about 90 minutes; and the trip from Metulla, in the far North, to Eilat at the country's southern tip takes about nine hours.

State

Services provided by local government include education, culture, health, social welfare, road maintenance, public parks, water, and sanitation. Each local authority functions through by-laws complementing national laws, which have been approved by the Ministry of the Interior. Some authorities operate special courts in which transgressors of local by-laws are tried. Financing for local authorities comes from local taxes, as well as allocations from the state budget. Every authority has a comptroller who prepares an annual report.

The law recognizes three types of local authorities: municipalities, which provide the framework for urban centers with populations of over 20,000; local councils, which manage towns with populations of between 2,000 and 20,000; and regional councils, which are responsible for several villages grouped within a certain radius.

Each local authority is administered by a mayor or chairperson and a council. The number of council members is determined by the Ministry of the Interior, according to the authority's population. Currently there are 73 municipalities, 124 local councils and 54 regional councils.

All municipalities and local councils are united, on a voluntary basis, in a central body, the Union of Local Authorities, which represents them before the government, monitors relevant legislation in the Knesset and provides guidance on issues such as work agreements and legal affairs. Affiliated with the International Association of Municipalities, the union maintains ties with similar organizations throughout the world, and arranges twin cities programs and exchanges of international delegations.

- Israeli municipalities and local government on Internet

Local Elections 

Elections for local government are conducted by secret ballot every five years. All permanent residents, whether Israeli citizens or not, are eligible to vote in local elections from age 17 and to be elected from age 21. In elections for municipal and local councils, ballots are cast for a party list of candidates, with the number of council seats attained by each list proportional to the percentage of votes received. Mayors and chairpersons of local councils are elected directly.

In regional council elections, one candidate of each village is elected by a simple plurality, with those elected becoming members of the council. Heads of regional councils are selected from among the regional council's members.

Local elections are financed by government appropriations, on the basis of the number of mandates that each faction or list wins in the local authority.

Economy

After having enjoyed for many years one of the fastest GDP growth rates among world economies, Israel continued the economic recovery it began in 2003, after a two-year distinct slowdown in almost all economic activities. This trend continued in 2007, according to all economic parameters. In the years 2006-2007, Israel's gross domestic product (GDP) continued its rapid growth, reaching 5.1 percent in 2006, in spite of the Second Lebanon War, which caused a temporary loss of 0.7% of the GNP. The speedy recovery and the continuation of the rapid growth were again led by the business sector, which expanded by 6.4 percent, resulting in a $20,138 per capita GDP in 2006.

In 2006-2007 Israel continued to achieve its main macroeconomic objectives: a very low, sometimes even negative rate of inflation, a very low budget deficit, and a limited increase in public expenditure. At the same time, Israel continued to attract foreign investments as well as enjoying a rapid growth in exports and a positive trade balance for the first time. These trends continued in the first half of 2007 and the forecast for the whole year was of continued economic growth with no inflation, a low budget deficit, and economic stability on all fronts.

In late 2008, as some of the world’s financial giants began to stumble and markets around the world seemed on the verge of collapse, no one was sure how Israel’s fragile, export-based economy would fare. As time wore on, however, Israel showed its economic strength lay not only in its capability for expansion during the boom years, but in its resilience during times of economic contraction.

Now, as the global economy haltingly emerges from recession, Israel has quickly regained economic momentum, shown first in a stock market which outperformed all Western bourses in 2009, and later finding expression in increased exports, declining unemployment and robust consumer demand.

A strong position on the eve of the crisis

Israel was well prepared when, in 2008, the effects of the financial crisis began to ripple across world economies. From a macroeconomic perspective, Israel found itself in one of its strongest positions since its inception. The budget deficit had been largely reined in and the national debt was greatly reduced, thanks to aggressive spending cuts and increased tax revenues. Israel was a sought-after target of foreign investment and was enjoying a positive trade balance for the first time in its history.

The crisis could have spelled an end to these halcyon days, but Israel’s growth proved to be robust enough to withstand the consequences of the financial downturn of 2008.

Israel withstands the recession

Three main reasons are often cited to explain Israel’s strength in the face of such severe challenges.

The first reason is Israel's conservative banking sector. A strong regulatory system and a moderate banking tradition kept Israel’s banks away from the adventurous instruments which proved so disastrous in the US and Britain. In addition, as world investors got jittery, they were assured by Israeli banks’ strong capitalization.

Another reason was the labor market’s elasticity in coping with the new reality. Major players, including the Histadrut (Israel's largest labor federation) understood the wisdom of accepting short-term pay cuts during the early stages of the crisis, and unemployment also increased significantly, in parallel with global developments.

As the economy recuperated over the course of 2009, wages and employment quickly returned to their previous levels, even as labor markets in the US and Europe remained sluggish.

However, the strength of domestic consumption over the course of the crisis is really what stands Israel apart in its macroeconomic adjustment. As the recession hit, Israelis cut their durable goods expenditures, but largely kept their nondurable goods spending even with pre-recession levels, cutting into personal savings to "smooth out" the drop in income. This was a primary factor in maintaining a stable GDP, and allowing the Israeli economy to weather the recession successfully. As the world moved out of recession in 2009, domestic spending on both durable and nondurable goods picked up quickly, further aiding the country’s recovery.

Long-term potential

The Israeli "economic miracle" is much more than a story of recession and recovery - it is the story of an economy that was built from scratch, survived numerous crises and severe economic deprivation, and has finally emerged as a successful, freemarket economy whose citizens enjoy a high standard of living.

With a population in 2010 of more than 7.5 million, Israel has been internationally acclaimed throughout the years, in particular for its extraordinary achievements in agriculture and agrotechnology, irrigation, solar energy, and in many hi-tech industries and start-ups. Based on intensive R&D, even in traditional industries, Israel today is not only the land of milk and honey but also the land of hi-tech, including software, communications, biotechnology, pharmaceuticals, and nanotechnology.

Free-trade agreements reached over the past three decades with the United States, the European Unionand several countries in Latin America have facilitated Israel's expanding exports of goods and services - more than $80 billion in 2008 - as well as its participation in international business enterprises that contributed to the country's accelerated growth.

OECD

The date of May 10, 2010, will remain a remarkable milestone in Israel’s economic history. After years of struggling against pressures and challenges of all kinds, Israel has finally joined the ranks of the world's foremost economies, as it was granted membership in the Organization for Economic Cooperation and Development, the OECD.

The country's accession to the OECD will have substantive effects, as Israel is committed to the organization’s regulations governing sectors ranging from the environment to the pension market. Indeed, the accession process pushed Israel to make fundamental changes befitting a modern economy, including reduction of Israel's debt, maintaining fiscal and development policies, cutting taxes and making the capital market more sophisticated.

OECD membership will allow Israel greater access to certain types of managed investment funds, which are required to reserve a proportion of their holdings for developed countries.

But the true significance of Israel's OECD membership is the recognition by the world economy of the tremendous progress that Israel has made during its 62 years of existence.

Science

As at universities all over the world, advancement in scientific knowledge is the chief objective of researchers at Israel's universities. Books and journal articles by Israelis, encompassing all scientific fields, are a primary expression of the university sector’s output. Israel publishes a disproportionate percentage (about 1 percent) of the world's scientific publications, and in many fields, such as chemistry and computer sciences, they have a particularly high impact on the world scientific community.

Relative to the size of its labor force, Israel has a significantly larger number of publishing authors in the natural sciences, engineering, agriculture, and medicine than other countries, and an exceptionally high share of the country's publications are co-authored by Israeli scientists and those of other countries.

To integrate Israeli science into the international scientific community, post-doctoral research positions and sabbaticals abroad as well as attendance at foreign scientific conferences are encouraged, and a wide range of exchange programs and joint projects are maintained at institute, university, and government levels with counterpart organizations overseas. Israel is also an important center for international scientific conferences, hosting many such gatherings annually.

Concomitant with their scientific research activities, the universities continue to play an important and innovative role in Israel’s technological advancement. The Weizmann Institute of Science was among the first in the world to set up an organization for the commercial utilization of its research (1958); today, similar organizations exist at all Israeli universities. The establishment of sciencebased industrial parks adjacent to university campuses has been pioneered with great commercial success. Universities have also set up spin-off industrial firms for the commercialization of specific products based on their research, often in partnership with local and foreign concerns.

Interdisciplinary research and testing institutes are functioning at universities in diverse scientific and technological fields vital to the country's industry, serving areas such as construction, transportation, and education as national focal points for applied R&D. In addition, a high proportion of faculty serve industry in an advisory capacity on technical, administrative, financial, and managerial matters.

Editor: liuyue