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Herzliya Conference 2012
National Security BalanceThe Civilian Quantitative Dimension
The Herzliya Indices
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The Israeli Paradox 2011
February 2012 Prof. Rafi Melnick - IDC Herzliya
Sep 9, 2011
Standard & Poor's Ratings Services (S&P) raised its long-term foreign currency sovereign credit ratings on the State of Israel. Also, S&P's outlook is stable.
Sep 3, 2011
'March of the Million‘
Over 460,000 protest across the country demanding social justice.
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19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
46
48
50
52
54
56
58
Development of the Economic Dimension in Israel 1990-2011
February 2012 Prof. Rafi Melnick - IDC Herzliya
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Indicator N
Observable
Indicator 2 Observable
Indicator 1 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.
National SecurityUnobservable Latent Variable
Multipule Indicators Approach
February 2012 Prof. Rafi Melnick - IDC Herzliya
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Components of the Economic 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%)
February 2012 Prof. Rafi Melnick - IDC Herzliya
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2012 Results
The Herzliya Indices
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Jo
rda
n
Sy
ria
Ira
n
Po
lan
d
Tu
rke
y
Cze
ch
Re
p
Eg
yp
t
Hu
ng
ary
Gre
ec
e
Isra
el
Po
rtu
ga
l
lre
lan
d
Ko
rea
, Re
p
Ne
w Z
ea
lan
d
Sp
ain
Fin
lan
d
De
nm
ark
Au
str
alia
Be
lgiu
m
Sw
ed
en
Au
str
ia
Ne
the
rla
nd
s
Ca
na
da
No
rwa
y
lta
ly
UK
Sw
itze
rla
nd
Fra
nc
e
Ge
rma
ny
Ja
pa
n
US
A
-
20
40
60
80
100
120 Chart Title
Economic Base - 1990
February 2012 Prof. Rafi Melnick - IDC Herzliya
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Sy
ria
Jo
rda
n
Ira
n
Cze
ch
Re
p
Tu
rke
y
Po
lan
d
Hu
ng
ary
Eg
yp
t
Gre
ec
e
Po
rtu
ga
l
lre
lan
d
Ne
w Z
ea
lan
d
Sp
ain
Isra
el
Fin
lan
d
Ko
rea
, Re
p
De
nm
ark
Sw
ed
en
Au
str
ia
Be
lgiu
m
Au
str
alia
lta
ly
UK
Ca
na
da
Ne
the
rla
nd
s
Fra
nc
e
No
rwa
y
Sw
itze
rla
nd
Ge
rma
ny
Ja
pa
n
US
A
-
20
40
60
80
100
120 Chart Title
Economic Base - 2011
February 2012 Prof. Rafi Melnick - IDC Herzliya
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19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
45
50
55
60
65
70
75
80
Israel G7 Euroland OECD
Development of the Economic DimensionIsrael and the Developed Countries
February 2012 Prof. Rafi Melnick - IDC Herzliya
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Ira
n
Au
str
alia
Sy
ria
Ko
rea
Tu
rke
y
Sw
itze
rla
nd
Ne
w Z
ea
lan
d
Sw
ed
en
Cze
ch
Re
pu
blic
De
nm
ark
No
rwa
y
Fin
lan
d
Po
lan
d
Jo
rda
n
Ne
the
rla
nd
s
Sp
ain
Isra
el
Au
str
ia
Ge
rma
ny
Ca
na
da
Hu
ng
ary
UK
US
A
Fra
nc
e
Be
lgiu
m
Po
rtu
ga
l
Ire
lan
d
Ita
ly
Gre
ec
e
Ja
pa
n0
20
40
60
80
100
120
140
160
180
200
General Government Financial Liabilities
2011 (Gross – percent GDP)
February 2012 Prof. Rafi Melnick - IDC Herzliya
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Ge
rma
ny
Isra
el
Ita
ly
Fra
nc
e
Po
rtu
ga
l
Sp
ain
OE
CD
-To
tal
Ja
pa
n
Gre
ec
e
UK
US
A
Ire
lan
d0
2
4
6
8
10
12
Government deficit 2011(percentage of GDP)
February 2012 Prof. Rafi Melnick - IDC Herzliya
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1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
-25
-20
-15
-10
-5
0
G7-Israel Euroland-Israel OECD-Israel
Economic Dimension GapIsrael and the Developed Countries
February 2012 Prof. Rafi Melnick - IDC Herzliya
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1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
25
30
35
40
45
50
55
60
Israel Iran Jordan Egypt Syria
Development of the Economic DimensionIsrael and Regional Countries
February 2012 Prof. Rafi Melnick - IDC Herzliya
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1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
0
5
10
15
20
25
30
Israel-Iran Israel-Jordan Israel-Egypt Israel-Syria
Economic Dimension GapIsrael and Regional Countries
February 2012 Prof. Rafi Melnick - IDC Herzliya
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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
USA 101.59
Japan 71.27
Germany 69.56
Switzerland 66.64
Norway 65.00
France 63.95
Netherlands 63.75
Canada 63.57
UK 63.04
ltaly 61.88
Belgium 61.38
Australia 61.13
Austria 60.79
Sweden 60.69
Denmark 60.44
Korea, Rep 59.71
Finland 57.84
Israel 57.51
Spain 56.77
New Zealand 56.65
lreland 54.50
Portugal 49.71
Greece 48.74
Egypt 48.44
Hungary 48.33
Poland 44.11
Turkey 43.17
Czech Rep 42.08
Iran 38.22
Jordan 33.92
Syria 33.77
February 2012 Prof. Rafi Melnick - IDC Herzliya
Economic Index 2011
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The Sources of Protest
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2002 2003 2004 2005 2006 2007 2008 2009 2010 201180
100
120
140
160
180
200
Ireland Spain United States Israel
February 2012 Prof. Rafi Melnick - IDC Herzliya
Housing Price Index International Comparison (2002 – 2011, 2002=100)
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2004 2005 2006 2007 2008 2009 201090
95
100
105
110
115
GDP Real wages
February 2012 Prof. Rafi Melnick - IDC Herzliya
Real per capita GDP and Average real wages per employee post 2004-2010 (2004=100)
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Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5
-1.2
-1
-0.8
-0.6
-0.4
-0.2
0
0.2
0.4
0.6
Change in net wages by quintiles 2000-2008(Average, percent change)
February 2012 Prof. Rafi Melnick - IDC Herzliya
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19
79
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
10
15
20
25
30
35
40
After taxes and transfers Before taxes and transfers
Poverty Incidence Israel 1979-2009 )Population, Families, Percent)
February 2012 Prof. Rafi Melnick - IDC Herzliya
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Orthodox Jews Arabs General population0
10
20
30
40
50
60
70
38.2 38.7
12
48.150.9
12.9
58.5 57.4
12.8
1997 2003 2009
February 2012 Prof. Rafi Melnick - IDC Herzliya
Incidence of Poverty by Population Groups (individuals, 1997 – 2003 – 2009)
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1980 1985 1990 1995 2000 2005 20090
5
10
15
20
25
60
64
68
72
76
80
Arabs Orthodox Jews**Other*** Jews*
* Excluding orthodox Jews, right axis** Bank of Israel calculation*** Till 1995 included in the Arabs
Average rates of growth (percent)
Orthodox Jews* Arabs Jews*
3.5 3.1 1.5 1995-2009
4.2 2.8 1.5 2005-2009February 2012 Prof. Rafi Melnick - IDC Herzliya
Demographic Trends by Groups (percent 1980-2009)
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19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
30
35
40
45
50
55
60
65
70
Total Israel Civilian Israel Total OECD Average
Total disbursements, Gen. Government 1985-2010 (percentage of GDP)
February 2012 Prof. Rafi Melnick - IDC Herzliya