Vision to Reality: The Reut Blog

The government recently approved a new plan by the Ministry of Housing to subsidize the mortgages of young couples who wish to purchase property in Israel’s remote areas, often referred to as the periphery. The plan aims to attract young couples to these areas as a means of fueling economic growth.

Although the plan is well-intentioned, many have pointed out that it alone cannot led to the development of the periphery. Dror Mannor, Editor of one of Israel’s premier business newspapers Globes, responded to the initiative by stating, “it is obvious that mortgage subsidizes alone will have no real affect.” Studies by the academic community point to similar conclusions. Reversing the emigration from the periphery to the urban center, Mannor argues, requires a broader investment in education, employment, roads, trains, and yes, mortgage subsidies as well.

Though such a comprehensive approach is necessary to develop the periphery, it must also be targeted. In a globalized world that encourages similarities between economies, regions must identify their competitive advantage (see this OECD report). Thus, government policy should not just invest in impoverished regions, but rather target each regions own unique assets. By doing so, areas such as Israel’s periphery can not only develop economically but also compete globally.