2009 OECD Economic Surveys: Israel 2009

image of OECD Economic Surveys: Israel 2009

This first OECD review of Israel's economy includes chapters covering recent economic developments and policy challenges, the macroeconomic policy framework, education reform, reducing poverty and raising employment rates, and policies affecting the business environment.

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Assessment and recommendations

Israel’s economic development has certain parallels with that of some OECD countries, in particular its earlier move towards market-oriented policies that aided an expansion of high-value adding export sectors. A sea change in macroeconomic policy and a shift towards market-oriented structural reforms was prompted by chronic hyperinflation and unsustainable public-debt levels in the mid-1980s. Anti-inflationary measures were particularly successful, allowing the introduction of inflation targeting in the early 1990s, which brought price increases down to low, single-digit levels by the end of the decade. The early 1990s also saw the emergence of a world-class, export-based high-tech sector specialising in computer hardware and software, medical technologies and pharmaceuticals. Thus, the economy rode high on the dot.com bubble but also slumped following its collapse, with a recession in the early 2000s.

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