Israel is considered a developed country. Its GDP per capita is at the level of other rich countries, such as South Korea and France, and higher than that of Spain and Japan. The incredible thing about the Israeli story is that it is a small country, located in the desert and in the middle of a hostile and complex region, bordering Lebanon, Syria, Jordan and the Gaza Strip. It is a very young country. Its independence was declared only in 1948. In addition, it lacks natural resources, so in its early years it depended on donations from the American Jewish community and later on financial aid from the United States. Even in the 1980s, the country was on the verge of bankruptcy. Inflation was running at almost 500% per year and due to its location in the middle of a troubled region, it was spending 17% of its GDP on defense. To get an idea, in 2022, Russia had a military expenditure of 4.1% of its GDP and the United States 3.5%. The Israeli economy only stabilized from the 19 90s onwards, following measures to cut public spending and give the Central Bank independence to control inflation. But these reforms, although they generated stability, were not the main reason for Israel's economic miracle. The origin of its successful model lies in the rapid growth of its technology sector. However, there are reasons to believe that the Israeli economic miracle is coming to an end. So the questions are: How did Israel overcome so much adversity to become a developed country so quickly? But what could be threatening the Israeli economic miracle today?

#economicsnation #israel

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