Tel Aviv, May 26: When Israel formally accepts the OECD’s invitation to join the exclusive club of the world’s leading economies on Thursday, it will mark the culmination of a 16-year effort for membership.
In the late 1970s and early 1980s, Israel was plagued by triple-digit inflation and forced to repeatedly devalue its currency.
Emerging from the doldrums, Israel in 1994 sent observers to the Organisation for Economic Cooperation and Development (OECD) in what was the first step on a long road to membership.
After the invitation was announced on May 10, Prime Minister Benjamin Netanyahu said OECD membership would open up new sources of capital for Israel.
With membership, Israel’s status with foreign investment funds switches from an emerging economy to a developed one.
Netanyahu said there was also a diplomatic and perceptual dividend for Israel in being recognised for its technological and economic achievements rather than being seen only in the context of its conflict with the Palestinians.
And he pointed out that Israel’s accession had been agreed by a consensus of the 31 existing OECD members — any of which could have cast a veto.
Israel’s per capita gross domestic product (GDP) was estimated at 28,400 dollars (23,000 euros) in 2009, which would place it 22nd among the organisation’s 31 members.
This is behind Italy but ahead of South Korea, New Zealand, the Czech Republic, Portugal, Slovakia, Hungary, Poland, Chile, Mexico and Turkey.
But there are still many challenges ahead.
By the OECD’s definition, 20 percent of Israel’s population of 7.6 million currently live below the poverty line — more than in any member state.
And about 40 percent of people of working age have no jobs, compared to about 33 percent in OECD countries, the organisation reported in January.
“Israel will have to take action on a number of fronts including education, training, childcare, support for jobseekers and working conditions if it is to ensure these children do not inherit their parents’ economic disadvantage,” the OECD said.
Jerusalem’s Taub Center for Social Policy Studies said that the current trend must change, or Israel will find it hard to survive.
“In order for tomorrow’s adults to be employed 30 years from now, then today’s pupils need to receive an education befitting the needs of a modern economy,” it said last week.
“This is not the situation today in Israel. The country’s level of education in the core curriculum subjects is the lowest among advanced Western countries.”
The centre’s director, Daniel Ben-David said one benefit of OECD membership would be having to regularly supply economic data which would be published and compared with that of other members.
“It will hold a mirror up to our faces,” he said on Tuesday. “Reporters who watch these things will write about our performance and that will put pressure on our policymakers.”
—Agencies