Israel’s Economic Growth: An International Comparison
10 Pages Posted: 7 Nov 2012
Date Written: April 1, 2003
I examine the growth rate of GDP per capita in Israel, and compare it with the growth of many other countries. Although Israel’s growth rate was above average, its ranking changes when the comparison is conditioned on the initial level of development, as measured by GDP per capita. This is particularly the case when decade-long averages are used to compare growth rates, because it then transpires that Israel’s growth rate was relatively high only in the 1960s. Israel’s relative growth rate fell significantly in the 1970s and was extremely disappointing in the 1980s. An examination of the sources of the rise in total factor productivity (TFP) in the 1970s and 1980s shows that slightly more than half the rise in TFP can be attributed to R&D investment and the rest to a rise in the level of education.
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