IMF: Israel is in the 9th place in the world in the GDP per capita ranking With $ 43,689

19th place in the world in the GDP per capita ranking - the figure that sounds almost dreamy, appears in the IMF database. With $ 43,689, Israel is below only 18 countries out of 194 countries in GDP per capita in nominal terms.
These IMF figures present a flattering picture, but they are problematic. When you look at the significant figure that allows comparison to other countries - GDP per capita in terms of purchasing power parity (PPP), GDP per capita in Israel is $ 40,547, and its place in the world ranking is 35, similar to what it had for several years And Macau, we are about 30th in the world). In this sense, Israel is very similar to Cyprus, and is below Italy, the Czech Republic and Malta.
The Ministry of Finance believes that the exchange rate reflects the current account surplus. A major factor in this is, of course, the high-tech sector. The increase in demand for services and technological products - while the share of high-tech is large in Israel's economic product - has helped the economy overcome the crisis and move forward. The demand for technology, the Ministry of Finance estimates, will continue in the coming years and will continue to fuel the economy. But is it possible to build on it in the long run?
Other countries with relatively large high-tech sectors also star in the GDP per capita tables - such as South Korea, Ireland, the United States and Taiwan - but successful high-tech industries exist in a limited number of countries around the world. It is the meeting between a willingness to invest in risk, and human capital that has training in the field. Canada is an example of a country that has invested heavily in launching high-tech and venture capital, without much success.
"Israel's economy did manage the crisis relatively well compared to other countries. The contraction in GDP and per capita GDP was relatively low, also because of the composition of the economy - high-tech that enjoys a surge in demand - we have a relatively small tourism industry, so the effect on total activity was Limited, "says Dr. Karnit Flug, former Governor of the Bank of Israel. "But over time, growth in GDP per capita is quite similar to the average of other developed countries. Comparison of GDP growth is misleading: the population in Israel has grown by 1.5% more per year than in developed countries."
Flug connects stepping on the spot with the relatively moderate growth, she says, in labor productivity. "The main factors identified by the Bank of Israel - human capital, level of education and skills of the population, poor infrastructure and inefficient regulation that weighs on the business sector. These factors have not disappeared. The fact that no strategic plan addresses these three factors continues to lower Israel's growth potential. "From what he could be. Over time, those are the things that make an impact," says Flug.
The lack of a plan is a recurring point in the words of the economists we spoke to. "The uncertainty of government policy does not allow for progress, there is no investment in infrastructure - and we are all stuck in traffic jams," says Professor Leo Leiderman, chief economic adviser at Bank Hapoalim. "Israel is at the forefront of a change of government, and it is difficult to see how there will be reforms and treatment of basic problems such as the cost of living. In my opinion, this will not change: we have many years of government instability. Instead, "says Leiderman.
The large gap between a nominal rating and a rating by purchasing power stems from the cost of living in Israel, Flug, Leiderman and other senior economists have told us. For Israel's economic decision - makers, this is one of the great challenges, which is a milestone in Israel's ability to break through and grow, and to be an economy equivalent to the advanced economies of Western Europe. Taiwan is a good example of a country where the rating by purchasing power is much higher (16) than by the nominal product (31), just the opposite of Israel - and this means that Taiwanese consumers enjoy much more of the wealth of the economy than Israeli consumers.
"I'm not surprised by these results," Leiderman says. "The calculations are sensitive to the exchange rate. In the years when the shekel strengthens, Israel becomes more expensive. At the macro level, there is no shadow of a doubt - Israel is an expensive country in international comparison." There are also positive reasons for this situation: "Last year we ended up with a surplus of 5% of GDP in the current account. We have an export surplus, which is fantastic in the year of the corona. "There are capital flows, and they are not speculative flows that seek higher interest rates, but medium- and long-term investments," he says.