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MARCH, 2017.


This term paper seeks to chronicle the history of an advanced nation from

their creation to the present age, in this section; the nation of Israel is focused on.


A Brief History

The nation of Israel was created on the 14th of May 1948 after a Partition plan was

adopted by the United Nations General Assembly for the Palestine area and a declaration

was made by David Ben-Gurion of the establishment of a Jewish state (Galnoor, 2015).

Justification for choosing Israel as an advanced Nation

The suitability of the Israeli nation for this paper as an advanced nation is based

on the following statistics: Israel is ranked as the world‘s 35th largest economy with a

nominal Gross Domestic Product of $327.630 billion (56th highest GDP in the world) and

a per capita GDP of $37,778 (23rd highest per capita GDP in the world), with the highest

standard of living in the middle east and the third highest standard of living in Asia

(Schleicherr, 2015).

The country has experienced rapid development of the agricultural and industrial

sectors and is largely self-sufficient in food (excluding grain and beef) despite very

scarce natural resources, this can be shown in the fact that imports to Israel worth

000 years to achieve their advanced status. grains. the . mathematics and chemistry. It has been said that Asian civilizations took 3. this has resulted in rapid technological advancement as Israel has become a global leader in cutting-edge technology such as water conservation. military technology. Intel. Facebook.t. Microsoft. communications and so on. Tel Aviv University.) have research and development facilities in the country. fuels.c) are almost counterbalanced by her exports (electronics. HP.000 years to achieve the same while the United States of America spent about 300 years to get to a developed nation status. it took European civilizations 2. software. Hebrew University of Jerusalem.59billion dollars (raw materials. Apple. software. this can be further buttressed with the fact that Israel is ranked first in the world according to OECD in expenditure on Research and Development (R&D) as a percentage of GDP.74billion The country can also be described as advanced based on the strength of her educational strength ranking as one of the countries with the highest percentage of her citizens holding a tertiary education degree and Israeli Universities consistently ranked among the 50 best universities in the world in computer science. fruits e. Google. and Weizmann Institute of Science with six nobel Laureates since 2002. computerized systems. Major technological multi- national corporations (the likes of IBM. among others. communications technology. Motorola. pharmaceuticals. however.t.c) worth $64.$77. geothermal energy. Cisco systems. military equipment. e. some of these universities are: Technion.

they were a farming community near a river which overflowed its banks and washed away their agricultural produce and mud cabins. through the 1930s and late 1940s as Adolf Hitler‘s Nazi anti-Semitism activities increased and peaked during world war II. other families joined them and it was in this manner that this Jewish settlement and others like it grew. prior to the official formation of the sovereign state of Israel. the immigration rate soared beginning in the 1920s. Other Jewish families joined these settlements in the Palestine area and assisted in solving problems by innovation and the application of knowledge which is the baseline of Israel‘s advancement as a nation. however. a group of Jewish settlers settled in a town called Petach tikva. more Jews migrated to the Palestine area and a sizable Jewish community developed. other Nazi occupied countries and other places where there were hostilities against Jews. in 1880. . however. a new member who was an agricultural expert suggested the planting of eucalyptus trees which soaked up the water and dried the swamps. preserving agricultural produce and preventing cases of malaria and dysentery for the settlers. The immigrant Effect It is important to take a look at Israel‘s history in relation to the technological and economic progress discussed above.nation of Israel since her creation in 1948 has required only about 60 years to achieve a fiftyfold economic growth and seal her place in the committee of advanced nations. a short distance from modern day Tel Aviv. the Israeli founders (David Ben Gurion) and others decided to create a Jewish state to absorb Jews fleeing Germany.

this was powered by small communities of people called Kibbutz. These settlements were able to solve agricultural problems and were the herald of the excellence in research that was to come. the kibbutz are less than 2% of the Israeli population and yet are responsible for 12% of her exports. The resulting immigrant situation had both a positive and a negative effect: Positive in the sense that the crowd of Jews from all over the world were a potpourri of people with various skills: Doctors. the community managed to lay a six inch pipe to channel water in from an area about forty miles away in the space of one year. an example is the Hatzerim Kibbutz which was located in the Southern Negev desert on a barren Hilltop. 2000) agricultural settlements that were focused on equality and the cultivation of agricultural produce for the nation. and the community learned to flush the soil to be able to plant crops. it was also discovered that the salty water. in the course of these challenges. On the other hand. there were the logistics and managerial problems of resettling millions of people in such a nascent country with scarce resources and surrounded by hostile nations. the technology of drip irrigation was developed. the water supply was cut off. Engineers. (Gavron. however. difficult to use in planting was applicable in raising . Scientists. David Ben-Gurion often referred to as the ―father of modern Israel‖ then channeled the nation‘s energy into nation building through a significant agricultural revolution. and various professionals who were well educated and established in their various fields before coming to Israel and they therefore formed the much required human and intellectual capital required to build the fledgling nation. during the war of Israel‘s independence in 1948. however.

As opposed to expectations. The overall growth of the Israeli economy has been pushed by this kind of innovation and aptitude for problem solving. fish that naturally grew in sea water. The first economic growth was majorly driven by government policy with very limited participation by the private sector. the different periods will be discussed. capital projects were massively invested in by the government such as a national water carrier which brought water from the sea of galilee to the desert area of Negev in the south. 2005). this involved a legacy of informal . the Israeli economy responded with a 13% increase per year between 1950 and 1955. a period of inflation and stagnation between 1970 and 1990. It is important to note that the success of this economic boom was due to the relatively low level of corruption among public officers because a corrupt system would lead to wastage of funds earmarked for developmental projects especially in developing countries. The three periods of Israeli Economic growth The rapid economic advance of Israel stated above can be divided into three periods: a period of rapid advancement between 1948 and 1970. and a final period of accelerated development from 1990 till date (Dan Senor. rapid housing development in Kibbutizm. this first period of economic growth was marked by a strict control of economic factors by the government. 2009). and an increase in per capita income relative to the United States‘ from 25% in 1950 to 60% in 1970. this kind of economic growth is referred to as an ―economic leapfrog‖ (Reut. and deliberate creation of industries as entrepreneurial projects (they went as far as creating an aeronautics industries from used world war 2 planes).

how much electricity was consumed. an example of this can be seen in the managerial style of Pinchas Sapir who was at different times finance minister and minister of trade and industry during the 1960s and 1970s. They intervened in the market. The size of the Nigerian economy itself is quite large and therefore may not be amenable to idealistic economic principles as opposed to the initial structure of the Israeli economy.‖ Sanbar also believes that this system could have worked only in a small. and decided whatever they wanted. . And this is how he knew. the first governor of the Bank of Israel. his economic policy was so micro that he established different foreign currency exchange rates for different factories— called the ―100 exchange rate method‖—and kept track of it all by jotting each rate down in a little black notebook. striving. and idealistic nation: there was no government transparency. etc. The rampant and prevalent corruption among Nigerian public officers. ―One of them was his own personal central bureau of statistics: He had people in every large factory reporting back to him on how much they sold. . Sapir famously had two notebooks.‖ It is worthy of note that this sort of iron hand control of the economy might be what is being attempted to practice by the present Nigerian administration. but ―all the politicians then . died poor. well before official statistics were kept. It is worthy of note that the transition from central development to a private entrepreneurial economy should have occurred in the mid-1960s. . . however. but at no point did anyone pocket even one cent. to whom. ii. this may not work in the Nigerian situation for two basic reasons: i. how the economy was doing. According to Moshe Sanbar. . The twenty-year period .government meddling in the economy.

from 1946 through 1966. with no more frothy investment targets. As a result. the territory was equal to more than three times the size of Israel. from 1967 to 1968. massive spending was necessary for defense installations. Gaza Strip. The second period was characterized by an economic decline which began towards the end of the first period described above (around 1968) this was due to the fact that infrastructure construction had peaked and there was the absence of the massive funds pumped into the economy. But instead. and other costly infrastructure. And since the IDF needed to establish positions in the new territories. Israel had captured the West Bank. The timing of the war reinforced the worst instincts of Israel‘s central planners. 1967. It was another giant economic ―stimulus‖ program. Within one week of June 6. needed reforms were staved off by the Six-Day War. This should have convinced Israel‘s government to open the economy to private enterprise. Israel suffered heavy casualties (three thousand fatalities and many more wounded) and enormous damage to its infrastructure. and Golan Heights. paralyzing companies and even entire industries. Business . Forced to mobilize large numbers of reserves. The effect of such a massive and protracted call-up was jarring. In 1966. the IDF pulled most of the labor force out of the economy for up to six months. investment in construction equipment alone increased by 725 percent. Sinai Peninsula. Collectively. Israel experienced for the first time nearly zero economic growth. was coming to an end. the Yom Kippur war of 1973 coincided with this. however the country chose not to lower salaries of workers and the effect was massive borrowing to finance the economy and a consistent budget deficit. Suddenly the Israeli government was once again busy with new large-scale infrastructure projects. border security. when most of the largescale infrastructure investments had been made.

As the Bank of Israel itself described it at the time. ―The government‘s involvement transcends anything that is known in politically free countries.‖ from the mid-1970s through the mid-1980s. and malaria. which in turn increased interest payments. the government artificially propped them up through a vehicle that resulted in extremely high levels of public debt. every tax rate—including on capital investment—was raised. New immigrants have always been a key source of Israel‘s economic vitality. There had been a net gain of nearly one hundred thousand new Israelis between 1972 and 1973. But the Israel that Intel found in 1974 was nothing like what it is today. In order to try to offset the ballooning debt.‖ The government set the terms and interest rate for every loan and debt instrument for consumer and business credit. Instead of allowing salaries to fall. Intel‘s decision to search for scarce engineers in Israel seems like an obvious move. In any normal economic environment. Today. But the number was down to fourteen thousand in 1974 and almost zero in 1975. private incomes among domestic workers would have experienced a corresponding decline. Short-term and high-priced debt was used to finance the deficit. This was the condition of Israel‘s economy during what is often described by economists as Israel‘s ―lost decade. All this coincided with a decline in net immigration. swamps. But in Israel they did not. While it may no longer have resembled an expanse of sand. Commercial banks and pensions were forced to use most of their deposits to purchase non-negotiable government bonds or to finance private- sector loans for projects that had been earmarked by the government. visitors during the 1970s might have been . What made recovery especially unlikely—if not impossible—was the government‘s monopoly of the capital market.activity came to a halt.

and they did not carry many international products. Major international retail chains were nonexistent. quaint. one could pick up from Jordan or Lebanon. or ask a visitor to bring it back for you. but much of the country‘s infrastructure was antiquated. (David. It had a Soviet- style utilitarian feel as one arrived and entered immigration. High customs duties—many of them were attempts to provide incentives for local producers—made most imports prohibitively expensive. If you needed something from abroad. Supermarkets. The reason was that phone lines were still being slowly rationed out by a government ministry. and appeared to be on its way to a four-digit figure within a year or two. There was no major road that could pass for a real highway. but it hardly mattered since there was only a single government-owned station broadcasting in Hebrew. Not everyone had a telephone at home. were a novelty. with a powerful enough antenna. As late as the early 1980s. Television reception was shoddy.. and not because they all had cell phones.excused for thinking they had landed in a thirdworld country. 2001). this led to inflation soaring from 13% in 1971 to around 111% in 1979 and about 130% in 1980 and 450% in 1985. Israeli universities and Israel‘s engineering talent were by this time fairly advanced. The airport was small. you had to go yourself. along with a couple of Arabic channels that. and shabby. and it took a long time to get one. and would rush to buy basic items in advance of expected price . since their value didn‘t change as their price rose sharply. which didn‘t exist yet. unlike the small food marts common in neighborhoods. Israel also suffered from hyperinflation: going to the supermarket meant spending thousands of almost worthless shekels continued to skyrocket beyond other countries‘ People would hoard phone tokens.

when the finance minister Shimon Peres led a stabilization plan developed by U. a new war. it required three additional factors: a new wave of immigration (which has been mentioned). when the shekel would be worth less. the economy had a limited capacity to capitalize on the entrepreneurial talent that the culture and the military had inculcated. Most of the economy—wages. But this didn‘t yet generate for Israel a private and dynamic entrepreneurial economy. A main reason for the hyperinflation was. one of the measures the government had taken for years to cope with inflation: indexing. a measure of inflation. limited spending. transforming Israel to a developed economy. ironically. it was better to take a taxi from Tel Aviv to Jerusalem than a bus. According to a joke of that time. which was not addressed until 1985. . And further stifling the private sector was the extended period of hyperinflation. gave the private sector a large girth in the economy and reformed the government‘s role. Indexing seemed to protect the public from feeling the effects of inflation. rents—were linked to the Consumer Price Index. another important driver of the economic growth was a new wave of immigrants from Russia (the old soviet union) and Ethiopia.S. For the economy to truly take off. and a new venture capital industry. secretary of state.hikes. prices. they were educated in the already effective educational system and formed part of personnel who were involved in the private sector that also contribute majorly to the second ―economic leap frog‖ which has been maintained till date. Up to that point. since you could pay the taxi at the end of the ride. since their incomes rose with their expenses. But indexing ultimately fed an inflationary spiral. The second-phase turnaround began after 1990. George Shultz and IMF economist Stanley Fischer which dramatically cut public debt.

and Cambridge—came in at number two. Oxford. and one or two in chemistry. our computer scientists are apparently even better.Science and Technology Education in the Israeli Economic Miracle The effect of science and technology education on this economic development will be analyzed below: To be sure. students learn more effectively under circumstances like this where they are able to question their lecturers and therefore broaden their knowledge. A global 2008 survey by Scientist magazine named two Israeli institutions— the Weizmann Institute and the Hebrew University of Jerusalem—as the top two ―best places to work in academia‖ outside the United States. therefore. And Israel was number one. Israel is a leader in the international academic community.‖ Ben-David crowed to us. relative to their field. Economist Dan Ben-David pointed us to a study by two French academics that rank nations outside the United States according to publications in top economic journals between 1971 and 2000. ―And as good as Israel‘s economists are. Germany had fewer than half as many publications per faculty member as the British had. after the secondary level of education (referred to as high school in some climes). but seven times more—in a league of our own. students are made to undergo a compulsory two-year national programme involving military service . there‘s an easy accessibility between subordinates and bosses and this is extended to the classrooms and lecture halls. ―Not five or ten percent more. Also.‖ Another observation is the informality in Israeli society referred to as Chutzpah. it is of significant importance that the Israeli science and technology educational structure is intensely practical based and hands-on. The United Kingdom—including the London School of Economics. We have two Nobel Prizes recently in economics.

Every moment has strategic always in question. . The notion that one should accumulate credentials before launching a venture simply does not exist. during this two year programme. They learn about training their mind to do things especially if they are in the front line or doing something operational. this helps to bring alive seemingly abstract topics and bolster basic understanding. Israelis have been keenly aware that the future- both near and distant. When an Israeli entrepreneur has a business idea. ‗When an Israeli man wants to date a woman. This sort of discipline and mental stamina is taken into the business world. not what could be transformative‘. he will start it that week. after which they can choose to proceed to any of the nation‘s universities or continue in the military as officers. This is actually good in business. They also have to learn discipline. described it. As Mark Gerson. This maturity is especially powerful when mixed with an almost childish impatience.and an intensive math and science curriculum. having had to handle challenging situations in the constant battles the nation has to fight against her belligerent neighbors. It is also important to note that the military service aspect of the National service programme engenders responsibility in individuals. Too much time can only teach you what can go wrong. he asks her out that night. Since their country‘s founding. students are divided into groups and made to solve real life problems encountered in the military by the application of the mathematical and scientific concepts learnt. an American entrepreneur who has invested in several Israeli start-ups. The military environment exposes young people to situations where they have to think on their feet and make instant life-and-death decisions.

R&D investment has the highest rate of return. Israel‘s economy grew faster than average. Seven-tenths of the rise in its GDP is explained by an increase in hours worked and investment in machinery. domestic R&D 17 percent. we find that education contributed 12 percent. rose by 60 percent in this period. In the US. which in turn was fed by improved levels of schooling. TFP contributing three-tenths (41 percent) of this.Contribution of Productivity to Israel’s Growth [Imitator] Israel benefited from technological advances made in other countries. but not exceptionally fast. we find that knowledge spillovers contributed 8 percent to GDP growth. investment in R&D.‘ Nonetheless. it was estimated that this high rate of return justifies the doubling of R&D investment. calculated as the trade-weighted average of the R&D capital stocks of its principal trading partners. Israel is by no means a shining example. to a large extent. one-fifth of TFP growth in the Israeli economy. as measured by the share of imports in GDP. The results are presented in Table 1.e. structures. even though the US R&D capital stock is far higher than Israel‘s. this investment was made possible. Israel‘s foreign R&D capital stock. The elasticity of productivity with respect to the foreign R&D capital stock is proportional to the level of openness of the economy. i. and knowledge spillovers from other countries. and equipment. by the increase in productivity. and foreign R&D respectively. . Compared with countries at a similar level of development. GDP rose by 137 percent in 1971–90. and foreign R&D 8 percent. When the increase in TFP is decomposed into the contribution of education. so that most of its growth was through ‗sweat and tears. domestic R&D. for example. Using the Coe and Helpman (1995) estimates. together accounting for the entire increase in TFP. To sum up.. and especially in countries with which it engages extensively in foreign trade.

Israel. Ben-David is worried.Table 1: Contribution of Productivity to growth. based on the level of schooling and the stock of R&D. thirteen of whom were actually based in Israel. Nevertheless. economics. Since that study was published. He told us that Israel‘s academic lead has lessened in recent years. In his own field. Ben-David pointed to a study that found that of the top thousand economists in the world. and will fall further as older faculty members retire and many of the rising stars leave to teach abroad. as measured by citations of their work between 1990 and 2000. only four . it is reasonable to presume that there exists in Israel considerable growth potential that has not been tapped into so far. 1971-90 Percent Business-sector product 137 Total factor productivity 41 Contribution of education 12 Domestic R&D 17 Foreign R&D 8 Similar estimates do not exist for Israel. however. Threats to Israel’s continued Economic dominance But despite all this success. and its components. twenty-five were Israelis.

this is evidenced in the various technological institutions mentioned above. ―You have all the cylinders in the engine. But we‘re using fewer and fewer of the cylinders to move this machine forward. You have all the population in the country.‖ he says. a solid science and technology educational frame work. this helps in fostering national unity and patriotism. it . thirdly and finally. we are where we should have been had we not had the recession. ―It‘s like an engine. the first thing is that the government actually has to understand the problem of the economy. In total. Ben-David is one of those four top economists who remain in Israel. students proceed on a compulsory two year military and science/mathematics programme. Ben-David argues.‖ The problem. They also need to understand that investment and providing incentives for private firms is not the solution to the problem. Israel grew substantially faster than most developed countries. the Israeli educational system is such that after the secondary education. And none of the twelve Israelis working abroad in 2000 have returned to Israel. the tech sector is financing the rest of the country. Secondly.of these have remained in Israel full-time.‖ There are lessons to be learnt for our country Nigeria from Israel‘s developmental story. And he is sounding the alarm on Israel‘s continued economic growth. But there was a recession the previous few years so. the rest of the economy has not been keeping up. an estimated three thousand tenured Israeli professors have relocated to universities abroad. From 2005 through 2008. is that while the tech sector has been surging ahead and becoming more productive. according to Ben-David. We‘re not in uncharted territory. which is ―not getting the tools or the conditions to work in a modern economy.‖ In essence. ―all we‘ve done is return to the long-term path.

can be drawn from this that the National Youth Service Corps (NYSC) if restructured and properly implemented may be beneficial to Nigeria in the long run. .

il Galnoor. Gavron. (2005). A. (2009). David.: Rowman & Littlefield. S. (2001.mfa. January). Retrieved from Reut Institute: http://www. (2015). .Education at a glance 2013. R.reut- institute. The Partition of Palestine: Decision Crossroads in the Zionist Movement. D. Retrieved from Ministry of foreign Affairs Web site: http://www. The Story of Israel's Economic S. ISRAEL . July 4). Bibliography Dan Senor. "Israel 15 vision". New York: Hachette Book Group. The Kibbutz: Awakening from Utopia. SUNY Press. Start-Up Nation. Reut. (2015. (2000). I. "Inflation-the Rise and Fall". Lanham.aspx?EventId=6 Schleicherr.

LIST OF GROUP 1 MEMBERS S/N NAMES MATRIC No SIGNATURE 1 ISOWAMWEN Osakpolo Faith PHY/2011/015 2 ATETEDAYE Ajibola Emmanuel CHE/2008/005 2 ABIDOYE Ahmed Kayode CHE/2011/001 3 ABIODUN Micah Olumuyiwa CHE/2011/002 4 ABIOLA Aanuoluwapo Priscilla CHE/2011/003 5 ABIOYE Mary Abimbola CHE/2011/004 6 ADAMOLOJA Oluwaseun Thomas CHE/2011/005 7 ADEBAJO Ayobamidele Damilola CHE/2011/006 9 ADEBAYO Yusuf Tunde CHE/2011/008 .

10 ADEDIPE Ayooluwa Isaiah CHE/2011/009 11 ADEGBAJU Rebecca Oluwaseun CHE/2011/010 12 ADEGBESAN Mojirade Mathilda CHE/2011/011 13 ADEJUMO Moses Tolu CHE/2011/012 14 ADEPOJU Babatunde O CHE/2011/013 15 ADEROMOLA Yetunde Esther CHE/2011/014 16 ADEYEMI David CHE/2011/015 .