Friday, September 18, 2009

Google translation from an interview in La Gaceta September 18, 2008

Rafi Melnick is one of the most knowledgeable of the Israeli economy. Vice Chancellor of the Interdisciplinary Center (IDC), a leading private universities in Israel, a former adviser to the Israeli Administration on economic issues, is also the creator of the index's State of the Economy, which assesses the major monthly economic parameters of the country.
What is the secret of Israel's economic success?

Mainly, the high level of education and what economists call human capital quality. Moreover, entrepreneurship and expertise in high technology, export the first branch in Israel. All a little leaning on the defense.

But the crisis has come to Israel ...

Yes, we had two quarters of recession, but we are real signs that Israel is leaving. It has affected less than other countries and is the effect of a long process of reforms in the last 20 years that have changed the structure of the Israeli economy from the banking sector to the labor market.

Israel has a very low unemployment rate, any parting advice for Spain?

I would not give any advice, but something must be done because I've heard that unemployment will reach 20% and that's impossible. 15 years ago I visited the Bank of Spain and at that time also had a big problem of unemployment, but attributed this to technical measurement problems today can not say that. It's a real problem, human, and almost tragic to be solved now.

As relations between Israel and Spain have gone through many ups and downs, does this has affected economic ties and investment?

There has been a division between the political controversy and the functioning of the economy.

What explains the huge differences between Israeli and Palestinian economies?

Mainly a problem of different levels of education, but there is great influence between the two sides. For example, there is a boom in the West Bank economy in the attempt to resume the peace process and this gives some hope that at least have something to lose if you start a new armed conflict.

Whenever there is talk that a peace agreement would boost the Palestinian economy but also the Israeli guess ...

Extremely, but not so much by the potential of cooperation with surrounding countries, but because it would allow Israel to better integrate into the global economy. Our exports are high technology products and Arab countries have not reached that level of sophistication, but it could be free tourism, a booming transportation, there is talk of a canal that would link the Red Sea to the Dead Sea, a project in study between Israel and Jordan. At the Madrid Conference began a peace process and one benefit was that it allowed open a relationship with Asia that did not exist because they were heavily influenced by the Arab embargo.
Are there any estimates of what the Israeli economy is failing to grow by the conflict?

It's very complicated, but it is a plunge in the growth rate from 1973 that was the Yom Kippur, before growing up to 5% per capita since then from 1% to 2%. Much can be attributed to the conflict. Yes there are estimates of the economic cost of the last intifada, the 2000, which combined with global problems in the high tech industry was the worst recession it has experienced by Israel since statehood, much worse than today.

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