An international comparison of economic growth in Palestine/Israel, 1922-98

Middle Eastern Studies

Volumn 43, Issue 2, 2007, Pages 311-320

  Schein, Andrew ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

ECONOMIC GROWTH; ECONOMIC HISTORY; GROSS DOMESTIC PRODUCT;

ASIA; EURASIA; ISRAEL; MIDDLE EAST; PALESTINE;

EID: 33847226946     PISSN: 00263206     EISSN: 17437881     Source Type: Journal    
DOI: 10.1080/00263200601114182     Document Type: Article

References (23)

1. J. Metzer, The Divided Economy of Mandatory Palestine (Cambridge: Cambridge University Press, 1998).
2. This study also expands on the study by E. Helpman, 'Israel's Economic Growth: An International Comparison', Israel Economic Review, Vol.1 (2003), pp.1-10.
3. The studies are A. Maddison, The World Economy: A Millennial Perspective (Paris: OECD, 2001)
4. and A. Maddison, Monitoring the World Economy, 1820-1992 (Paris: OECD, 1995). The countries included in the data set from 1922 to 1950 are mostly the relatively large countries from Europe, North America, and South America, along with New Zealand, Australia and a few countries from Asia. The data from 1950 to 1989 covers every region of the world except Eastern Europe, though the USSR is included, while the data from 1990 to 1998 covers eight additional countries in Eastern Europe. For the period 1950-98, Maddison provides data for the West Bank and Gaza, but this was excluded from the study since he writes (The World Economy, p.211) that he used a logarithmic trend to interpolate the data from 1950 to 1994. This method gives a smooth growth rate for GDP for all the years from 1950 to 1994, but ignores the dramatic change in the growth rate of these areas after 1967.
5. Maddison, The World Economy: A Millennial Perspective, pp.211, 214.
6. Metzer, The Divided Economy of Mandatory Palestine, p.242, presents per capita data for the Jewish and Arab sectors separately, and the combined NDP for both sectors, but not the combined per capita NDP data. The new GDP data series in 1990 international dollars was obtained by multiplying the multiplicative factor to the combined NDP data.
7. Population data is from ibid., p.215.
8. Population data is from ibid., p.215 and Maddison, The World Economy, p.211.
9. All annual growth rates in the study are geometric means.
10. With regard to the other two Asian tigers, Hong Kong and Singapore, Maddison does not provide estimates for 1922, though he does provide an estimate for Singapore for 1913, and Singapore's annual growth rate from 1913 to 1998 was 3.44 per cent, see Maddison, The World Economy, p.215.
11. H. Samuel, An Interim Report on the Civil Administration of Palestine, during the Period July 1, 1920 to June 30th 1921 (London: His Majesty's Stationary Office, 1921), p.4.
12. The beginning of this development preceded the Mandate period, as by the end of the Ottoman period the export of oranges had begun to flourish.
13. J. Sachs, The End of Poverty: How We Can Make It Happen in Our Lifetime (London: Penguin Books, 2005), p.24.
14. A. Koestler, Promise and Fulfillment: Palestine 1917-1949 (New York: The Macmillan Company, 1949), p.27.
15. Since 1998, Israel's ranking has continued to fall, as according to the UN's 2005 Human Development Report, in 2003 Israel's per capita GDP was the 25th highest out of 177 countries.
16. The UN's 2005 Human Development Index shows a further decline in this percentage as in 2003, Israel's per capita GDP was 53 per cent of US per capita GDP.
17. B.J. Smith, The Roots of Separatism in Palestine: British Economic Policy, 1920-1929 (Syracuse, NY: Syracuse University Press, 1993), argues that by the second half of the 1920s, the British Administration in Palestine veered from its initial non-interventionist policy and adopted a protectionist policy with regard to Jewish industry in the country. Even if one accepts this argument, which is largely based on the tariff policies of the British Administration, still this intervention does not compare to the intervention of the Israeli government in the economy. The Mandatory authorities did not subsidize industries, did not direct factories to be set up in certain areas, did not set up government monopolies, and did not control the granting of credit in the country.
18. For a discussion of this issue see N.T. Gross, 'Israel's Economic Policies, 1948-1951: Problems of Evaluation', Journal of Economic History, Vol.50, No.1 (March 1990), pp.67-83.
19. A. Lerner and H. Ben-Shahar, The Economies of Effeciency and Growth (Cambridge: Ballinger Publishing Company, 1975), pp.xiii, xiv, note the great economic growth in Israel during its first 25 years, but even before the slowdown of growth became evident, they wrote 'the success was achieved in considerable measure despite Israel's economic policy', as they claim that the government's economic polices hampered Israel's economic growth" Their argument is based on economic theory, but they provide no data to support their claim.
20. D. Horowitz, The Enigma of Economic Growth: A Case Study of Israel (New York: Praeger Publishers, 1972), p.7. Furthermore, Horowitz noted that the growth of the Israeli economy after the founding of the state occurred despite three obstacles, the high rate of immigration, the lack of natural resources, and the difficult geopolitical situation.
21. Horowitz had previously made this identical argument in David Horowitz, The Enigma of Economic Growth: The Case of Israel (London: The Anglo-Israel Association, pamphlet no.9, 1965). Yet these issues also existed during the Mandate period. The rate of immigration was much higher in the first years of the founding of the state than during the Mandate period, but from 1953 onwards the ratio of immigrants to total population was very similar to the ratio in the Mandate period. In addition, there was no significant di.erence between the level of natural resources in the two periods, though due to the Mandate authorities, there was significantly better infrastructure in the country at the beginning of the period of statehood than at the beginning of the Mandate. Finally, the geopolitical situation was also diffcult during the Mandate period, as the Arab revolt from 1936 to 1939 caused considerable damage to the economy, much more than the wars in 1956 and 1967.
22. Maddison, The World Economy, p.126.
23. Japan's growth also counters the claim that Israel could not have continued to grow as fast in the statehood period as during the Mandate period since the country had become richer, as Japan managed to continue growing after it reached Israel's level of per capita GDP and became one of the wealthier countries in the world.