Israel's National Security Economy: Defense and Social Challenges

Over the past five years the Israeli economy has demonstrated impressive stability and growth in comparison with other developed countries, and in May 2010 Israel gained membership in the Organization for Economic Cooperation and Development (OECD). Nonetheless, the Israeli economy faces difficult long term challenges, with potential implications for the state’s ability to finance high defense consumption, the economy’s effect on internal socioeconomic stability, and even Israel’s global status. These risks are in part a function of the decline of human capital in Israel (due to the weak education system), instability in the global economy, and the security situation. On the other hand, Israel also has opportunities that allow rapid long term growth. This chapter analyzes Israel’s economic situation in the broader sense of national security.