For twenty-five years after its establishment in 1948, Israel was considered an economic miracle, with one of the highest rates of growth in the world. During the 1970s, however, the country became notorious for its economic problems: growth nearly ceased, inflation accelerated, and indebtedness grew. Here is the only comprehensive, up-to-date analysis of this troubled economy. The product of a cooperative research effort, it contains contributions by seventeen top Israeli economists, many of whom have served as advisers to the Israeli government and thus are able to draw on first-hand knowledge of the country's economic administration and policy making. Their interpretation makes use of original empirical data and emphasizes the unique political economy of the country and its institutional structure.

The book considers both microeconomic and macroeconomic issues, with sections devoted to growth and structural change, human resources, the public sector (including defense), the problems of an open economy, and the dynamics of inflation. It becomes clear that Israel's current difficulties are rooted in its history and political culture. The authors' prescription for a cure is rigorous: Israel's administrators must be willing to alter their long-standing accommodating monetary policies, and the country must substantially change the organization of its major economic sectors in order to become more self-reliant.

The book will be invaluable to scholars, professional economists, bankers, journalists, policymakers, and specialists in foreign affairs. Some sections would be ideal for course use. The less technical chapters--such as the Introduction, which provides essential historical and political context--will be useful to all general readers who are interested in the challenges facing Israel today.