Israel and the World Economy
The Power of Globalization
232 pp., 6 x 9 in, 36 figures
- Published: January 19, 2018
- Published: January 12, 2018
A rigorous analysis of the role played by globalization in key episodes in the development of the Israeli economy, from hyperinflation crisis to high-tech surge.
Anti-globalization sentiments are rising, especially in Europe and the United States, with the increasingly integrated global economy blamed for domestic economic distress. In this book, Assaf Razin argues that Israel offers a counterexample to this view, showing decisively positive economic effects of globalized finance, trade, and immigration. He offers a rigorous analysis of the role played by globalization in key episodes in the remarkable development of the Israeli economy. His findings may hold lessons for productivity-challenged advanced economies as well as for other countries such as China currently making the transition to fully developed economies.
Razin examines the wave of immigration after the collapse of the Soviet Union, as highly skilled Soviet Jews migrated to Israel and the effect on income inequality; the Great Moderation of inflation and employment in advanced economies, as Israel's inflation converged in parallel with low world inflation rates; Israel's robustness in the face of the deflation shocks of the 2008 financial crisis; and technology transmission through foreign direct investment, reinforcing Israel's high-tech sector surge. He also considers such ongoing challenges as high fertility and low labor market participation and the economic costs of the Israeli-Palestinian conflict.
Israel's economic experience contains many highly relevant lessons: how to tame inflation, how to absorb immigrants, how to make the transition to high-tech, and now how to cure the Dutch Disease. There can be no better guide than Assaf Razin to lead us through this wilderness.
Barry Eichengreen, George C. Pardee and Helen N. Pardee Professor of Economics and Political Science, University of California, Berkeley
Many countries struggle to adapt to the forces of globalization. Some turn their backs on globalization and listen to the sirens of protectionists. In this book, Assaf Razin shows how Israel did the opposite and used globalization to its advantage. It makes for fascinating reading.
Paul De Grauwe, John Paulson Chair in European Political Economy, London School of Economics