May 15, 2008
A 15-year plan for Israel
This is why the ISRAEL 15 Vision, a Reut Institute plan that calls for Israel to become one of the 15 most developed nations within 15 years, is so compelling. It requires improving the quality of life of all citizens.
Quality of life is a very elusive issue. Its definition changes by geography. The quality of life of a religious and spiritual person is different from that of a secular businessperson.
Notwithstanding, quality of life is also visible and tangible. For example, anyone can tell that the average quality of life in countries like Canada or Australia is higher than in Greece or Spain. Furthermore, although income per capita is an important factor determining life, other public goods such as health, education, employment and social cohesion play a critical role as well.
Israel's growth of recent years can be intoxicating. However, we often tend to forget that the world economy has experienced significant growth as well in recent years. Hence, impressive rates of growth notwithstanding, Israel didn't succeed in leapfrogging -- catching up with the leading nations of the world.
In contrast, during the first 20 years of the state, Israel's economy bounced upwards. Israel doubled its well-being relative to the United States, starting with an average income of 30 percent of the U.S. average and reaching 60 percent by the early 1970s. Since then, however, Israel has not been able to bridge the gaps with the richer countries while countries such as Ireland, Singapore and South Korea have made leaps ahead.
The importance of closing the gaps with the richest nations stems from the mobility of people, technology and investment. As these highly mobile resources "choose" which country to go to, nations compete for them. Success in this fierce battle is essential for the future of any country, but is critical for the survival of Israel.
Israel suffers from the largest gap between the level of talent of its population and the quality of life offered its residents. Israel is ranked 28th in the world in quality of life, yet our population is among the most educated and technologically savvy in the world. Indeed, Israel is a leading exporter of talent, with one of the highest levels of brain drain among developed nations.
Becoming one of the 15 leading nations -- roughly at the level of Holland, Singapore or New Zealand -- requires leapfrogging our socioeconomic performance and growing at an annual pace of 7 percent to 8 percent for at least 10 years. This is a national challenge that will require widespread mobilization of the key sectors of society.
The phenomenon of leapfrogging is different than growth. While the world has established a recipe for stability and growth in the form of a set of accepted principles known as the Washington Consensus, which primarily calls for fiscal and monetary discipline and privatization, there is no such recipe for leapfrogging. In other words, each country charts its own path.
However, the common denominator among the countries that have leaped ahead has been their agenda. They all established an ambitious vision, identified growth engines and exhausted them, benchmarked their performance to other countries, improved the capacity of their government to make decisions and implement them, enhanced collaboration among key sectors of society and invested in human capital.
In addition, nations that leaped ahead contained their unique challenge and tapped into their individual potential. For example, Singapore understood that it was located at a junction between East and West and therefore developed the world's leading airport, seaport and airline, while Ireland tapped the benefits of its inclusion into the European Union.
We also know that leapfrog happens as a consequence of a combination between top-down leadership by the government and bottom-up mobilization of the key sectors of society. Hence, on the one hand, reforming Israeli governance is key since it is significantly underperforming compared to our business sector.
At the same time, we have to find ways to harness mayors and local governments, businesspeople, philanthropists, nonprofits and world Jewry to the ISRAEL 15 Vision and create the space that allows them to make contributions, as well.
Finally, growth and development have to turn into a national obsession. We have had such passions in the past: greening the desert, redeeming the land or immigration absorption. The challenge for the ISRAEL 15 Vision is to become a household phrase and a framework that inspires for action.
The ISRAEL 15 Vision might be ambitious but it is attainable. Israel already is a world leader in key areas such as research and development, human capital or technology. We have outperformed expectations in the past. There is no reason we cannot do it again.
Gidi Grinstein is the founder and president of the Reut Institute. This article is based on a speech he gave at the 2008 Herzliya Conference.