“the herzliya indices” יירות... · israel data updated for 200 8 countries` data updated...

Prof .Rafi Melnick - IDC HerzliyaFebruary 2010 1

Herzliya Conference 2010

“The Herzliya Indices”

National Security BalanceThe Civilian Quantitative

Dimension


Team MembersMs. Leah Achdut – The Ruppin Academic Center; Van Leer

Jerusalem Institute

Dr. Michel Strawczynski – Bank of Israel

Mr. Tommy Steiner – IDC Herzliya

Dr. Zalman Shiffer – Economic Advisor

Team LeaderProf. Rafi Melnick - IDC Herzliya

With thanks to Gila Weinberger (Bank of Israel), and Gilad Skutelsky (IDC Herzliya) for their assistance with research.

Herzliya Indices Team


45

47

49

51

53

55

57

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Development of theEconomic Dimension in Israel

1990- 2009


94

95

96

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Development of theSocial Dimension in Israel

1990- 2008


65

70

75

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Development of theGovernmental/ Political Dimension

in Israel 1996- 2008


Dimensions of National Security

National Security

CivilianDimension

MilitaryDimension

SocialEconomic Governmental/Political


Multiple Indicators Approach

National SecurityUnobservable Latent Variable

Indicator N Observable

Indicator II Observable

Indicator I Observable

...

• N indicators are measurable; they affect and are affected by national security, which is an unobservable latent variable.• The presence of multiple indicators allows (under defined assumptions) one to quantify national security.• A rise in each indicator means improvement in national security, in the corresponding dimension.


Components of theEconomic Indicator(relative weight in parenthesis)

1. GDP Per Capita, PPP (16%)

2. GDP, PPP (15%)

3. Unemployment (15%)

4. High-Technology Exports – % of Manufactured Exports ( 11%)

5. General Government Gross Financial Liabilities (11%)

6. Inflation Rate (11%)

7. Current Account Balance (11%)

8. Foreign Currency Reserves (10%)


1. Poverty Incidence (14%) *

2. Gini Inequality Coefficient (12%) **

3. Human Development Index – Education (11%)

4. Chronic Unemployment (10%)

5. Human Development Index – Life Expectancy (10%)

6. Rate of Participation in Labor Force – Men (10%)

7. Rate of Participation in Labor Force – Women (10%)

8. Human Development Index – GDP (9%)

9. Population Aged 65+ (7%)

10. Population Aged 15- (7%)

Components of theSocial Indicator(relative weight in parenthesis)


Components of theSocial Indicator(notes)

* Gini data :Israel data updated for 200 8

Countries` data updated for mid 2000’s except: Austr ia, Belgium, Egypt, Greece, France, Hungary, Ireland, Italy, Poland , Portugal, Spain, Switzerland (updated for early 2000’s) ; Czech Republic (updated for mid 1990’s) ;

Syria- No data.

** Poverty data :Israel data updated for 200 8

Countries` data updated for mid 2000’s except: Austri a, Greece, Hungary, Iran, Ireland, Jordan, Netherlands (updated fo r early 2000’s); Czech Republic (updated for mid 1990’s)


1. Political Stability and the Absence of Violence ( 11%)

2. Rule of Law (11%)

3. Democracy (10%)

4. Political Rights (9%)

5. Civil Liberties (9%)

6. Control of Corruption (8%)

7. Quality of Regulation (8%)

8. Efficiency of Government (8%)

9. Voice and Accountability (8%)

10. Alliances (6%)

11. Membership in International Organizations (6%)

12. Hosted Embassies (6%)

Components of the Governmental/ Political Indicator(relative weight in parenthesis)


The Model

• Construction of a panel data set of 31 countries

• The model includes:– Israel

– 26 OECD countries– 4 regional countries: Egypt, Iran, Jordan, and

Syria

• Data ranges from 1990 through 2008• Economic data is through 2009


Economic Data SourcesPrimary Sources• World Bank• IMF – World Economic Outlook• OECD Economic Outlook• Israel’s Central Bureau of Statistics

Secondary Sources• IFS – International Financial Statistics (IMF)• Economist Intelligence Unit-Iran• Bank of Israel and various central banks• Other sources


Social Data Sources

Primary Sources• OECD • Luxembourg Income Study• ILO – Key Indicators of the Labour Market• Israel’s Central Bureau of Statistics • UN Human Development ReportsSecondary Sources• OECD, Labor Market Statistics Data LFS by sex• CIA• National Tobacco Information Online System• Statistical, Economic and Social Research and Training Center

for Islamic Countries• World Bank• Eurostat Data, Indicators of the 20 New Cronos


Primary Sources• World Bank• Freedom House • Polity IV Project• A.T. Kearny - Foreign Policy Magazine • Europe World online• Treaties and Alliances of the World

Governmental/Political Data Sources


Methodology

• A preliminary base is calibrated for each dimension• Each variable is measured in percentage change or

percentage difference in the case that its basic measurement is in percents

• An annual weighted average is calculated using the weights obtained from a panel of experts

• The indices are formed, over time, by cumulating annual weighted averages


Herzliya Indices 2010Results


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Iran

Pol

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US

A

Economic Base | 1990


0

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120S

yria

Jord

an Iran

Cze

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Pol

and

Tur

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Hun

gary

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Por

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Gre

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Isra

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New

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Rep

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Aus

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Can

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Fra

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Japa

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US

A

Economic Base | 2009


Development of the Economic Dimension Israel and the Developed Countries

45

50

55

60

65

70

75

80

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

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2001

2002

2003

2004

2005

2006

2007

2008

2009

Israel G7 Euroland OECD

Economic Dimension GapIsrael and the Developed Countries

-25

-20

-15

-10

-5

0

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

G7-Israel Euroland-Israel OECD-Israel

February 2010 Prof .Rafi Melnick - IDC Herzliya21


25

30

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45

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55

60

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

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2001

2002

2003

2004

2005

2006

2007

2008

2009

Israel Iran Jordan Egypt Syria

Development of the Economic Dimension

Israel and Regional Countries

0

5

10

15

20

25

30

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

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2007

2008

2009

2009

Israel-Iran Israel-Jordan Israel-Egypt Israel-Syria

Economic Dimension GapIsrael and Regional Countries

February 2010 Prof .Rafi Melnick - IDC Herzliya23


-5

-4

-3

-2

-1

0

1

2lre

land

Japa

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Spa

in UK

Can

ada

Den

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US

A

Net

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ltaly

Sw

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Fra

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Hun

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Fin

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Ger

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Por

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New

Zea

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Bel

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Tur

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Aus

tria

Kor

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Rep

Nor

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Gre

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Sw

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Aus

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Pol

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Egy

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Jord

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Isra

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Iran

Economic Change (percent) | 2007-2009


Economic Index 200917

18

19

20

21

22

23

24

25

26

27

28

29

30

31

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

USA 102.9

Japan 72.0

Germany 68.8

Switzerland 65.3

Norway 65.0

France 64.2

UK 63.6

Netherlands 63.3

Canada 63.2

ltaly 61.7

Australia 61.1

Austria 60.6

Belgium 60.5

Denmark 60.1

Korea, Rep 58.9

Finland 58.7

Sweden 58.7

Spain 57.4

lreland 56.5

New Zealand 56.5

Israel 56.0

Greece 51.7

Portugal 50.6

Egypt 48.1

Hungary 47.6

Turkey 44.2

Poland 43.3

Czech Rep 41.7

Iran 38.2

Jordan 31.1

Syria 30.3


0

20

40

60

80

100

120S

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Iran

Egy

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Jord

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Turk

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Gre

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Kor

ea, R

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and

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Por

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Isra

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Bel

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US

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Ger

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Aus

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Aus

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Den

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Sw

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Finl

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Social Base | 1990


0

20

40

60

80

100

120S

yria

Egy

pt

Iran

Jord

an

Tur

key

Gre

ece

Kor

ea,

Rep ltaly

Por

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Isra

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Pol

and

Spa

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lrela

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Bel

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New

Zea

land

Japa

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Hun

gary

Ger

man

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Cze

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US

A

Fra

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Aus

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Aus

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Sw

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Net

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nds

Fin

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Can

ada

Sw

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Nor

way

Den

mar

k

Social Base | 2008


90

92

94

96

98

100

102

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008


Development of the Social Dimension

Israel and the Developed Countries


65

70

75

80

85

90

95

100

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Israel Egypt Iran Jordan Syria

Development of the Social Dimension



-0.2

0

0.2

0.4

0.6

0.8

1

1.2

1.4

US

A

Japa

n

Iran

ltaly

Finl

and

UK

Den

mar

k

Por

tuga

l

Can

ada

Hun

gary

Egy

pt

Sw

itzer

land

Fran

ce

Turk

ey

Cze

ch R

ep

Bel

gium

Gre

ece

Kor

ea, R

ep

Aus

tral

ia

Net

herl

ands

Sw

eden

Nor

way

New

Zea

land

Ger

man

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lrel

and

Aus

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Isra

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Jord

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Spa

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Pol

and

Syr

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Social Change | 2004-2008


Social Index 2008

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

Denmark 106.2

Norway 104.9

Sweden 104.7

Canada 103.4

Finland 103.3

Netherlands 102.3

Switzerland 102.1

Australia 101.8

Austria 101.6

France 100.5

USA 99.8

Czech Rep 99.8

Germany 99.7

Hungary 99.4

UK 98.9

Japan 98.6

New Zealand 97.8

Belgium 97.6

lreland 97.0

Spain 96.0

Poland 95.7

Israel 95.7

Portugal 95.2

ltaly 94.8

Korea, Rep 93.8

Greece 93.4

Turkey 85.2

Jordan 79.8

Iran 75.7

Egypt 75.1

Syria 73.8


0

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120

Iran

Syr

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Egy

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Tur

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Jord

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Kor

ea,

Rep

Isra

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Pol

and

Gre

ece

Hun

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Cze

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Spa

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New

Zea

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Fin

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Aus

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man

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Sw

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Sw

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Nor

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K

Den

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Net

herla

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Can

ada

US

A

Governmental/ Political Base | 1996


0

20

40

60

80

100

120

Syr

ia

Iran

Egy

pt

Jord

an

Tur

key

Isra

el

Kor

ea,

Rep

Gre

ece

Pol

and

Hun

gary

ltaly

Cze

ch R

ep

Spa

in

Japa

n

Por

tuga

l

lrela

nd

New

Zea

land

Fra

nce

Bel

gium

Aus

tralia

Fin

land

Aus

tria

Sw

itzer

land

Sw

eden U

K

Nor

way

Ger

man

y

Den

mar

k

Net

herla

nds

US

A

Can

ada

Governmental/ Political Base | 2008


65

70

75

80

85

90

95

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008



Israel and the Developed Countries


25

35

45

55

65

75

85

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Israel Egypt Iran Jordan Syria




-1

-0.5

0

0.5

1

1.5

2

Fin

land

Bel

gium

Kor

ea,

Rep

New

Zea

land

Sw

itzer

land

Sw

eden

Jord

an

Den

mar

k

ltaly

Gre

ece UK

Nor

way

Aus

tria

Ger

man

y

Egy

pt

Net

herla

nds

lrela

nd

Syr

ia

Can

ada

Iran

Tur

key

Japa

n

Isra

el

Spa

in

Hun

gary

Aus

tralia

Cze

ch R

ep

Fra

nce

Por

tuga

l

US

A

Pol

and

Political Change | Marginal 2008


Governmental/ Political Index 20081

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

Canada 101.0

USA 99.8

Netherlands 96.3

Denmark 96.0

Germany 95.5

Norway 94.7

UK 94.6

Sweden 94.4

Switzerland 93.8

Austria 93.7

Finland 93.0

Australia 92.2

Belgium 91.8

France 91.7

New Zealand 90.7

lreland 89.8

Portugal 88.1

Japan 87.1

Spain 85.6

Czech Rep 82.1

ltaly 82.0

Hungary 81.7

Poland 80.1

Greece 78.2

Korea, Rep 74.9

Israel 72.8

Turkey 60.6

Jordan 55.4

Egypt 51.2

Iran 30.7

Syria 30.5


SummaryIsrael During the World Financial Crisis

0

1

2

3

2007-2008 2007-2009

The Herzliya Indices: Period of World Financial Crisis

Economic Social Political

• The Herzliya Indices provide a quantification of the relative positive development of the national security indices, in all the dimensions, during the world financial crisis.

• The rise of the Economic Dimension in 2008 and 2009, in the background of a general decline in the developed world, is due to a combination of a healthy period of growth, that preceded the world crisis, and appropriate macroeconomic policies implemented during the crisis. Israel succeeded in closing the gap with the developed countries.


SummaryIsrael During the World Financial Crisis

0

1

2

3

2007-2008 2007-2009

The Herzliya Indices: Period of World Financial Crisis

Economic Social Political

• After a prolonged period of deterioration and stagnation in the Social Dimension of national security in 2008 we report a marginal improvement. This is due to a significant rise in the labor force participation of woman and men and in the decline in the rate of the chronic unemployed. In the most important components, the incidence of poverty and the income inequality, there was no improvement and Israel continues to lag behind the developed world.

• Also the Governmental/Political Dimension of national security shows a marginal improvement but the problem here is the low level of the index. This indicates that a major reform is needed to pull Israel out of its position in the lower part of the distribution. In this dimension Israel is only higher than the countries in the region including Turkey and lower than all other countries.

February 2010 39

“the herzliya indices” יירות... · israel data updated for 200 8 countries` data updated...

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