Vision to Reality: The Reut Blog

In the context of the current economic crisis, Merav Arlozorov brings the example of how Japan dealt with its own depression during the 1990s.
In contrast to Japan’s massive expenditure on infrastructure, Arlozorov claims that in order to get out of the crisis and reach sustainable growth, governmental expense should focus on the economy’s relative disadvantage. In this way, the market can obtain the necessary tools for future growth. According to Arlozorov, this requires departing from fixed perceptions.
Arlozorov stresses that in addition to investing in infrastructure, Israel should deal with the failure in the education system, inefficiency in government management, problems in the development of the country’s periphery and the harsh problems in the labor market.
The Reut Institute recently published a document which claims the current crisis can act as an opportunity for a social and economic leapfrog. Among other things, regulating the labor market is an essential issue in order to achieve accelerated growth. Moreover, global trends should be utilized by industrial policy that accelerates changes in product space and expands the scope of exports.
In fact, it was by utilizing the sudden growth of India and China and turning them into an export market that Japan ultimately got out of its recession.