I’ve been publishing a note on this every week, and it’s about time I wrap it up. So, here are my overall thoughts.
Israel, with a low starting resource base, and significant influx of strong human capital, has historically focused on drivers of economic development that made best use of its situation. These included innovative and high-tech sectors, tourism and services, and permitting the benefits of high-skilled immigration. Additionally, Israel has sought aid for its military expenditures based on mutual interest with its allies.
Israel’s highly-skilled workforce was a key factor for economic development of Israeli success, though there is no way of knowing if this will last in the long-term. Direct foreign aid has proved an asset, making up around 2% of the country’s economy, but this mainly goes to conflict expenditure. Innovation and high tech sectors of the economy have been formative in the country’s economy, and are likely to do so in the future too. Tourism has great potential to be a driver, but remains underdeveloped for reasons systemic to Israel’s overall position. Finally, the exploration and extraction of natural gas is an ongoing development, that will inevitably become a driver for Israel’s continued economic growth and development, but it is difficult to see when this will happen and how long this will last.