A new report explores the success stories of the Israeli economy in addition to presenting obstacles that prevent the country from achieving its economic potential.
The book, Israel’s Path to Economic and Social Prosperity, was published by the Tikvah Fund in association with the Kohelet Policy Forum under the direction of former Israeli Ministry of Finance chief economist Michael Sarel.
From a pro-growth, smaller-government perspective, the literature presents a series of charts to exhibit the economic successes and weaknesses of modern Israeli society.
The analysis demonstrates, among various successes, the positive performance of the Israeli labor market over the last 10 years. The country has witnessed an increase in the labor participation rate coupled with a decrease in the unemployment rate, which has in turn led to a decline in inequality among Israeli citizens over the last five years.
Notably, Israel’s labor market has seen more improvement than those of many other developing countries over the last several years.
The book singles out areas in need of policy attention in the country, such as per-capita income, labor productivity, and education. It also laments Israel’s government spending, which is higher than that of the United States and other growing economies.
The document points to obstacles that prevent the country from spurring individual economic growth. Israel’s market restrictions and state control, barriers to entrepreneurship and high income tax rates make the country unfriendly to economic growth.
Among the economies of developing countries, Israel’s government is one of the most intrusive. The country also has the second-most complex regulatory procedures among all member countries of the Organization for Economic Co-operation and Development (OECD).
The chart analysis also emphasizes Israel’s high minimum wage, labeling it a "classic constraint on hiring and growth" and cautioning against any further hikes.
While celebrating strides the Israeli economy has made over the past decade, the literature demonstrates the way government overregulation has hindered the country in its push toward growth.
"Arbitrary and complex regulation, bloated bureaucracy, and protection of incumbents keep Israel uncompetitive and inefficient," the book reads. "Bureaucracy, protection, and regulation need to be reduced."