Vision to Reality: The Reut Blog

The Prime Minister recently gave his first speech since his election concerning economic issues. According to analysis by Guy Rolnik, the PM expressed his belief in the necessity of harnessing Israel’s periphery. In addition, Rolnik argues that decision makers around the PM are starting to realize that the current policy is ineffective. Reut also believes that Israel’s current policy is out of date. However we argue that the alternative policy focus is unlikely to make a significant difference.

The End of the Intel-ization era – Rolnik writes that “soon the national policy for the development of the periphery through subsidies will be declared dead” and that the PM has referred to “the end of the Intel-ization era” (after the company Intel given subsidies to build one of its plants in Qiryat Gat.)

The Alternative Policy: Building ‘Bedtime Communities’ – The alternative policy focus suggested by the PM focuses mainly on closing the geographical distance between the periphery and the center. The only way to raise standard of living is by transforming the periphery into “bedtime communities” – places from which people commute on a daily basis to the center. This will be the only way to persuade high earners to move to the periphery.

However, while this policy could lead to growth, it is unlikely to instigate socio and economic leapfrog. Cases from around the world show that national leapfrogging goes hand in hand with regional leapfrogging. This is based on the regions’ indigenous assets. In this context Israel has clear geographical variety: Though small, Israel possesses distinctive diverse regions. Policies that focus only on infrastructure and ignore regions’ unique assets could impede Israel’s ability to compete on the global level and leap forward towards the 15 leading countries in terms of Quality of Life.