Sustainable growth: Israeli and UK models differ

Israel’s economic model of February 2010 is the envy of many analysts. The Bank of Israel is in dispute with the OECD, IMF and others as to whether growth to December 2010 will be 2.5% or 3.5%. 

Argue it either way. But when you compare Israel to many other developed countries, few can offer similar predictions for the near future. In fact, even the techy issue of inflation is now close to control, as the Bank plans to increase interest rates gradually.

By way of comparison, I was struck by economic news from the UK. The two major political parties are waist-deep in slogans, as a general election approaches. Much of the debate concerns which economic model will deliver sustainable growth.

Again here, I will not pass judgement. What I did find amusing was that the Conservative Party this week rolled out a series of top industrialists, who commented on their vision of growth. To quote selectively from the “Parliament Today” website:

Paul Walsh, Chief Executive of Diageo, FTSE 100 company

“Our economy is struggling to keep up with its competitors. We need a new economic strategy to encourage businesses to invest and grow. The Conservatives plan would protect our international competitiveness and help get Britain’s economy growing.”

 Andrew Witty, Chief Executive of GlaxoSmithKline, FTSE 100 company

“If we are to rebalance and grow the economy then we need to ensure we look at ways to support manufacturing, innovation and research. I therefore welcome the focus on these areas and this plan to encourage savings, pensions and investment.”

Mick Davis, Chief Executive of Xstrata, FTSE 100 company

We are in a very complex economic environment where difficult policy choices need to be made. One of the key factors for success is renewed investment by the private sector. I think that this plan contains the important elements that will encourage such investment, addresses other imbalances and put us on the road to recovery”

Wonderful stuff for the Conservatives, but where have you been for the past 2 decades? And this question is rally applicable across the whole political spectrum. To call for growth is one thing. But you have to create the conditions over time, allowing agility and innovation. That ain’t really on the horizon for the moment.

Has Israel got it totally right? No. Is the Israeli economy in reasonable shape? You bet it is. So the lesson for the day is: Before you create another mouthwatering load of spin for your electorate, why not base your comments on a real case study of success. Have a look at why Israel is in her current economic position.

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