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Three years of Palestinian violence have scared away investors, a worldwide economic downturn has devastated Israel's once-thriving high-tech industry, factories are closing because of foreign competition and government cutbacks in welfare and social spending in response to a $6 billion deficit have taken their toll.
Southern California's economy already has withstood the past year's downturn -- and the cataclysmic events of Sept. 11 -- better than many competing regions.