Problems of Israel's Economy:
Much Still to be Resolved
IN THE 1948-58 period, the State of Israel has become a solid political unit and a recognized military power in the Middle East. Socially, the “ingathered exiles” have been integrated within the existing framework of the Jewish community which had been constructed during the British Mandate over Palestine. Though the majority of its residents were born outside Israel, Hebrew has become-in fact as well as in law-the common unifying bond of the country.
But economically-has the country advanced and is it today less dependent on outside aid than it was ten years ago? Admittedly, a deliberately engineered inflation has reduced the purchasing power of the Israeli pound (IL) in 1958 to one-third of its 1948 value, but (except for a few rentiers and owners of rent-controlled houses) most citizens have not been adversely affected by this financial juggling, and their standard of living has improved during these years. Official propagandists have measured Israel’s economic progress in terms of the number of new houses and farms, the growth of the industrial potential and power supply, the absolute increase of the national product, etc., etc. In some ways this is a correct method of appraising material advance, particularly since the national product of Israel grew during this decade at a faster rate than that of most other countries. Nevertheless, I intend to argue that this is not a measuring rod which can prove a reliable guide to Israel’s economy.
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