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ECONOMIC INDICATORS
Economic growth in Israel was very high (11%) between 1948 and 1958,
reflecting high immigration and accelerated development in order to
achieve a reasonable standard of living. Then, from 1960 to 1972, annual
growth was 9.2%, dropping sharply by 1985 to 3.2% (Figure 5). The growth
rate per capita dropped from 5.6% to 0.4% during the same period. Three
factors have contributed to this drastic decline in growth: (i) the
necessity of spending more than 30% of the national budget on defense;
(ii) increased energy costs; and (iii) recession in the world economy.
Israel's employment structure is unusual, in that the economy is neither
predominantly agricultural nor predominantly industrial. Agricultural
employment though not production, or percentage of GNP peaked in
the mid-1950s at 17%. Today, only 4.5% of the Israeli workforce is
involved in agriculture; this figure continues to decline. Because most
industry in Israel post-dates the 1960s, that sector has never been
labor-intensive. Thus, in 1974 when industrial employment reached its
highest level, it accounted for only 25% of the Israeli workforce. In
the 1990s this percentage is expected to stabilize at about 20%. By
contrast, the services sectors has grown consistently over recent
decades. Among services subsectors, financing and business have grown
most rapidly (from 5% in 1970 to 10% by 1989). Public and community
services have also grown (from 24% in 1970 to 29% in 1989) (Figure 6).
In general Israel is shifting to more and more high-tech industries and
to industrial activities with service characteristics. Information
technology occupies a larger percentage of the workforce yearly. This
transition makes sense for Israel, as the country is basically
resource-poor: it lacks mineral wealth, fossil fuels, water and arable
land. Human resources constitute the one asset which the country enjoys
in abundance and will continue to exploit. The recent immigration wave,
which includes a high percentage of skilled professionals, is expected
to further strengthen this essential resource.
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