Comparative Approach is Fundamental to Achieving a Development Leap

The Reut Institute contends that an economic development leap depends on employing a comparative approach: measuring Israel's quality of life over time and in relation to a relevant peer group.

The Reut Institute contends that an economic development leap depends on employing a comparative approach: measuring Israel's quality of life over time and in relation to a relevant peer group.

Shlomi Sheffer's article in Haaretz echoes this view and cautions perspective when analyzing the recently published data on Israel's economic growth:

  • Time horizon: Because Israel's economy shrank from 2001-02, when looking at a longer time horizon, Israel's growth rate is a modest 3% p.a. (2001-07)

  • Comparative view: Israel still lags behind the Western world with a GDP per capita of $26,800 in 2006 compared to Luxemburg's $71,400, Norway's $46,300, US's $44,000, etc. Furthermore, while the previous two years have shown strong growth rates for Israel, developing economies such as India and China are growing significantly faster at 9-10% p.a.

Looking over a long time horizon and in comparison to other well established knowledge economies may indicate that Israel has indeed made the first step towards a development leap. However, in order to bring the quality of life of its citizens to one of the Top 15 in the world, Israel must continue this high rate of growth.

Sources

Sheffer, Haaretz, 8/26/2007. Full article