from the June 2010 issue

Israel invited into OECD

Referring to the OECD invitation to Israel to become a member of the Organization: "This is an important step towards Israel's integration into the global economy," stated Stanley Fisher, the Governor of the Bank of Israel,

The Governor added: "The OECD decision to invite Israel to become a member of the Organization is an important step towards Israel's integration into the global economy, and is an expression of Israel's commitment to meet the highest international standards." The Governor added that Israel's joining the OECD will strengthen investors' confidence with regard to Israel's economic standing, and is expected to encourage investment in the economy.

The Governor noted that certain funds abroad invest only in OECD member countries, so that membership of the Organization will extend the range of potential investors in Israeli bonds and in the Israeli economy.

Israel has been active in OECD work groups since 1994. In May 2007 the OECD Ministerial Council decided to start the accession process for five new potential members, including Israel, and Israel's government immediately decided to approve the accession process in principle. The decision to invite Israel to become a member of the OECD followed a thorough investigation of Israel's economy by the OECD, via the Organization's committees.

Israel has an annual per capita gross domestic product of almost $30,000 higher than several European Union states and is similar to that of New Zealand.

A statement from the OECD said: "Israel's scientific and technological policies have produced outstanding outcomes on a world scale."

Joining the organization offers few direct benefits, although Israeli officials insisted yesterday that the national economy would receive a boost.

Yuval Steinitz, the finance minister, said: "It has economic importance. As we know, in the years after countries joined [the OECD], there was an increase of billions of dollars in foreign investment." However, Israeli leaders were quick to add a political dimension to the OECD move. Mr. Steinitz argued that the admissions marked "a political achievement of great import. We are now receiving a very significant seal of approval."

Israel has been one of the best-performing western economies in recent years - regularly achieving annual growth rate of above 5 per cent.

Israel was one of the few economies in the world to show growth in 2009 during the world economic crisis, drawing praise from the OECD. Israel's gross domestic product grew 0.7% in 2009, according to the Central Bureau of Statistics. The OECD expects Israel's economy to grow at least 3.5% in 2010.

The country emerged from the global credit crisis earlier than the US and Europe, allowing the central bank to raise interest rates before any of its counterparts in the current economic cycle.

Unemployment stands at 7.4 per cent and is expected to fall, while the economy is forecast to grow by 3.7 per cent this year and 4 per cent in 2011.

Reprinted from the Israel High-Tech & Investment Report June 2010

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