S.R LUTHRA INSTITUTE OF MANAGEMENT
MANAGERIAL ECONOMICS
ASSESSMENT 3
TOPIC:-
ECONOMY OF ISRAEL
SUBMITTED BY (GROUP 13)
NAME
ROLL.NO
DALAL RAJ
16
MANJRAWALA DHRUV
21
MODI FEYASH
28
JOTANIYA ANKIT
51
KOSHTI KUNAL
66
SUBMITTED TO: - MR. PARESH DAVE
SUBMISSION DATE: - 15TH NOVEMBER 2022
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❖ About Israel :
- Under the British Mandate (1920–1948), the whole region was known as
'Palestine', Upon independence in 14 May, 1948, the country formally adopted
the name 'State of Israel'
- Israel is bordered by Egypt, Jordan, Lebanon, Syria, and the Palestinian
territories (West Bank and the Gaza Strip;) it shares maritime borders
with Cyprus.
- With an area of 22,072 km², the country is slightly larger than half the size
of Denmark, or somewhat larger than the US state of New Jersey.
❖ Demographic :
- As of 31 August 2021, Israel's population was an estimated 9,393,500.
- About 92% of Israelis live in urban areas.
- Data published by the OECD in 2016 estimated the average life expectancy of
Israelis at 82.5 years, making it the 6th-highest in the world.
- Spoken languages are Hebrew and Arabic.
❖ Major Urban Areas :
- Designated capital is Jerusalem, the country's largest and most populous city.
However, Israel's sovereignty over Jerusalem is internationally disputed. The
country's second largest city is Tel Aviv; it is Israel's economic capital; the city is
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host to almost all foreign diplomatic missions, embassies, and consulates in the
country.
❖ Governments & Politics :
- Israel is a parliamentary democracy, The prime minister is the head of
government and head of the cabinet.
❖ Education :
- Israel has a school life expectancy of 16 years and a literacy rate of 97.8%.
- Education is compulsory in Israel for children between the ages of 3 and 18.
- Israel has 9 public universities that are subsidized by the state and 49 private
colleges.
- In 2012, the country ranked third in the world in the number of academic degrees
per capita (20 percent of the population).
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❖ Administrative Map of Israel :
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❖ GDP & Economic Wellbeing :
Israel GDP - Historical Data
Year
GDP ($)
Per Capita ($)
Growth (%)
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
481.59 B
407.10 B
397.93 B
373.64 B
355.28 B
319.02 B
300.08 B
310.94 B
294.17 B
258.42 B
262.29 B
51,430
44,178
43,951
42,063
40,774
37,330
35,808
37,848
36,499
32,668
33,776
8.19
-2.15
3.77
3.98
4.38
4.46
2.28
4.12
4.78
2.82
5.54
- The essential economic performance of a country is reflected by the gross
domestic product. So the total of all goods and services sold.
- GDP in Israel, on the other hand, reached USD 51,430 per capita, or 481.59 billion
USD in the whole country.
- Israel is therefore currently ranked 28 of the major economies. If this is
calculated per inhabitant taking into account the purchasing power parity, then
Israel is in the list of the world's richest countries in place 31.
❖ GDP by Sector :
Service
70.6%
Industry
26.9%
Agriculture
2.4%
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❖ Economic Performance :
- Israel ranked 7th in the Bloomberg Innovation Index in 2021. The index is
calculated annually and most recently included 60 countries. The front-runner
was South Korea.
- 10 of the 2000 largest listed companies in the world originate from Israel. This is
determined annually in the Forbes Global 2000 list.
- The 10 largest companies in the country were in 2021:
- Rank 936: Teva Pharmaceutical (Petach Tikva)
- Rank 948: Bank Hapoalim (Tel Aviv)
- Rank 968: Bank Leumi (Tel Aviv)
- Rank 1281: Mizrahi Tefahot Bank (Ramat Gan)
- Rank 1402: Check Point Software (Tel Aviv)
- Rank 1554: Migdal Insurance (Petach Tikva)
- Rank 1689: Israel Discount Bank (Tel Aviv)
- Rank 1903: Harel Insurance Investments & Financial Services (Ramat Gan)
- Rank 1929: FIBI Holdings (Tel Aviv)
- Rank 1975: Clal Insurance Enterprises (Tel Aviv)
❖ GNP :
Israel GNP - Historical Data
Year
GNP ($)
Per Capita ($)
Growth (%)
2021
2020
2019
2018
2017
2016
2015
2014
2013
464.12 B
392.68 B
394.23 B
367.07 B
330.82 B
312.32 B
303.32 B
298.21 B
279.43 B
49,560
42,610
43,540
41,320
37,970
36,540
36,200
36,300
34,670
5.61
-2.61
3.26
4.44
4.81
4.40
2.00
5.59
5.33
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- GNP) is the sum of value added by all resident producers plus any product taxes
(less subsidies) not included in the valuation of output plus net receipts of
primary income (compensation of employees and property income) from
abroad.
- Over the past decade Israel’s GNP increased with the average growth of 3.65%.
- After pandemic in 2020 Israel post its highest ever GNP growth rate of 5.61% in
2021, which shows countries economic boom.
❖ INFLATION :
Year
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
Inflation Rate (%)
1.49
-0.59
0.84
0.82
0.25
0.55
-0.63
0.49
1.58
1.69
3.48
- Inflation as measured by the consumer price index reflects the annual
percentage change in the cost to the average consumer of acquiring a basket of
goods and services that may be fixed or changed at specified intervals, such as
yearly.
- In Israel, after 2011 this year inflation rate came down to 1.49% from 3.48%.
- Here we can conclude that Central Bank of Israel did well to control inflation
over the years using monetary policy.
- Some how after pandemic Israel’s inflation (CPI) breached 9 years high. Which
is may be due to rising crude price and Russia Ukraine war effect.
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❖ Israel’s Manufacturing Output :
Year
Billions of US $
% of GDP
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
46.10 B
44.91 B
42.92 B
40.28 B
37.68 B
38.11 B
38.95 B
37.46 B
35.96 B
35.79 B
11.32
11.29
11.49
11.34
11.81
12.70
12.53
12.73
13.91
13.64
- Manufacturing refers to industries belonging to ISIC divisions 15-37. Value
added is the net output of a sector after adding up all outputs and subtracting
intermediate inputs.
- Israel’s Manufacturing output as % of GDP continuously decreasing since 2011.
IT came down to 11.32% from 13.64% in 2011. But total value of manufacturing
output in Billions of US $ reached to all time high IN 2020.
❖ Standard of Living in Israel :
- Israel's standard of living is significantly higher than all of the other countries
in the region and equal to West European countries, and is comparable to
that of other highly developed countries.
- Israel was ranked 19th on the 2016 UN Human Development Index, indicating
"very high" development. It is considered a high-income country by the World
Bank.
- Israel also has a very high life expectancy at birth.
- Israel’s income disparity was a contributing factor to the reported 1.8 million
people that were living in poverty in the country in 2016.
- Israel ranked at the bottom in terms of women participation in
higher education with only 28 percent.
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❖ The Great Innovation :
- Like many Middle Eastern countries, Israel does not have a lot of fresh water
sources. There is a lack of water in the country that has led to many innovative
techniques for water conservation such as agricultural modernization, drip
irrigation and the formation of a large desalination facility.
- The plant uses reverse osmosis to convert sea water to fresh water and is
responsible for 40 percent of Israel’s drinking water.
- Israel’s innovation in clean water is paving the way for to be a leader in future
water exports.
- Country’s R&D sector is very strong, with international cooperation a particular
focus.
- Israel has led the world in research and development (R&D) investment,
spending more on R&D as a share of GDP than any other developed country.
❖ Israel Government’s Economic Policies :
- With its long-term trend of stable growth, Israel receives comparatively high
rankings (rank 8) in the area of economic policies.
- The pandemic led to a sharp decline in economic growth in mid-2020, followed
by a quick recovery and modest growth rates thereafter. Deficits rose to 5.5% of
GDP in 2020 and 4.6% in 2021. Initially limited financial assistance sharply
increased the rate of business failure. Relief ultimately included extended
unemployment benefits, household cash benefits and employee retention
grants.
- Economic policy in the last year has mainly focused on coping with the effects of
the COVID-19 pandemic and has substantially diverged before and after the
formation of the new government in June 2021. To compensate for the negative
impact on economic activity of the lockdown policies, the previous government
implemented various short-term plans to support households and businesses.
These included extended unemployment benefits, ad hoc universal cash benefits
for households, support for the self-employed, and compensation and employee
retention grants for businesses
• Taxes :
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- Israel’s taxation policy appears to be quite effective in terms of raising revenues.
Over the past five years, Israeli authorities have collected more in tax revenue
than had been projected in the government’s budget proposals. Nevertheless,
tax revenues in Israel are comparatively low and this sets limits on government
spending.
- A large share of taxes in Israel are indirect. This includes VAT, which is levied
equally on all products. Furthermore, although the direct income tax is
progressively structured, and a large portion of the population makes too little
money to pay any income tax at all, the system creates a curve that forces
middle-income individuals to pay proportionately more tax than high-income
individuals.
- Over the past year, tax income is up 23.1% from the same period in 2020.
- Consequently, the increase of public debt has been relatively low in comparison
to other OECD countries.
❖ Distribution of Expenses :
- Here is a pie chart of where Israelian spends their earnings for living.
- We can see that people in Israel spend 27% of their earnings just for Rent.
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- Which seems to be high as comparatively Middle East countries.
- People spend 29.3% in Markets followed by Restaurants 17.5%.
- Transportation spending stands at 11.7% , Utilities at 5.8%, Sports spending at
5.9% and Clothing & Shoes remains at 2.8%.
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