Can Israel Support Herself?
The Means: Production and Austerity
With the announcement in Sep tember 1955 of the Egyptian-Czechoslovak arms deal and the emergence of the Soviet Union as a major force on the Middle Eastern scene, Israel entered the most critical period of her existence since the end of the war of liberation. Largely—though not entirely—unrelated to these political and military factors, Israel also entered, during 1955 and 1956, upon a crucial stage in her struggle to build an economy sustained by its own production and resources and free of the need for foreign gifts and loans.
Progress toward the goal of economic independence had been steady and impressive during 1952–54, and one might have confidently expected it to continue. Israel’s economic system was developing under a generally capable and selfless administration. It was being guided by many qualified economists and some outstanding foreign economic advisers. It was being closely watched by the country’s newly established central bank, by the economic ministries in the government, and by an alert press. The country had received over two billion dollars from various sources abroad and had benefited from heavy investments in all spheres of economic activity. By the end of 1954, most of the investments channeled into agriculture, industry, and mining had had sufficient time to mature and bear fruit in the form of exports and substitutes for imports. Moreover, solid achievements had been made in production and in the rate of productivity (output per man and machine), and as a result exports were expanding.
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