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Dr. Adam Reuter & Noga Kainan
Against all odds
* Israel has significant challenges that need attention, like: inequality, price of housing, bureaucracy, defense expenditures and others
CEO and founder of Financial Immunities, Israel's largest financial risk management firm – advises to hundreds of international and local Israeli companies. [email protected]
Chair and founder of both CFO Forum and Companies’ Leaders Forum, who's members are senior executives from leading companies. [email protected]
Dr. Adam Reuter
Noga Kainan
Economic Success • Economic Success facts:
o GDP growth o Resilience & Stability o Debt to GDP Ratio o Employment rate & participation
• The 4 Israeli Advantages:
o Technological o Entrepreneurial o Global o Demographic
• 3 Revolutions in progress:
o Victory over the Desert o Energy o Transportation
• The challenges
• The Future
In the past 20 years the Israeli economy has grown by 180% while the
number of Israeli citizens has grown by only 45%
Israeli GDP reached more than 300 billion $.
GDP per capita of $35,000, places Israel 24 out of 187 countries
Tel A
viv. Ph
oto
: Eli Me
sser
GDP Growth
5.63
11.86
15.02 16.25
21.62
26.65 29.51
32.86 35.46
38
3.16 5.86
8.1
4.66 7.67
9.61 10.9 12.11
13.96 15.97
0
5
10
15
20
25
30
35
40
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
GD
P G
row
th
Accumulated GDP Growth Rate ($ terms)
Israel OECD Total
In the year 2000, the Bank of Israel conducted a comprehensive forecast for the economy: "If we act right" it stated "the Israeli economy will reach a GDP of 750 billion NIS within 15 years".
In 2015 Israel reached a real GDP of 875 875 billion NIS, higher by a 16% rate more than
that forecast.
GDP Growth
90 billion $ foreign-exchange reserves make Israel one of the leading countries in terms of foreign-exchange reserves per capita. An indication of
financial stability $0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
The Israeli economy is more immune to world-wide slowdown, due to the flexibility of thousands of export companies dispersed across many industries.
Economic Success Facts
Israel is one of very few developed economies where Debt to GDP Ratio
is shrinking
Ash
do
d Po
rt
Israel’s Employment rates had the highest increase among OECD countries. OECD Report 2014
Economic Success Facts
68.5
69.0
69.5
70.0
70.5
71.0
71.5
72.0
72.5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Dat
a ex
trac
ted
on
30
Jan
20
16
fro
m O
ECD
.Sta
t
labour force participation rate
Israel OECD countries
3.0
5.0
7.0
9.0
11.0
13.0
15.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Unemployment rate Israel OECD countries
Technological Advantage
Israel is among the only 8 countries that launch satellites into space. 7 other countries are much larger: Russia, USA, France, Japan, China, UK, India.
Israel is the world leader of R&D employees per capita with 140 per 10,000. In second place is the USA.
1st in business expenditure on R&D
1st in cyber security
2nd in scientific research
2nd in public expenditure on
education
3rd in qualified engineers available
in labor market IMD competitiveness yearbook, 2014
Cloud Solutions Architect, Cloud Platform Engineer, Application developer, Nanotechnologist, Integrator of ecological construction, CRM database Administrator, Database Architect ,Director of Health Information Network ,Machine Learning Engineer, Webmaster ,Application Support Analyst ,Marcom Professional, Director of Visual Communication, PHP Developer, Cyber Expert, Website Protection Expert, Application Infrastructure Engineer, Full Stack Developer, SW Developer, Community manager, Blog Manager, Cyber researcher, Bioinformatician...and much more
That's one reason unemployment will remain low in Israel
In a world that is losing trades fast, due to automation and robotics. High-tech industry in Israel invents new trades faster:
Ro
be
rt Y
isra
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ann
Avram
He
rshko
Arieh Warshel Ada Yonath
Dan
iel K
ahn
em
an
Michael Levitt
Aaron Ciechanover
Dan
She
chtm
an
3rd in the world for the No. of Turing awards in computing.
30% of winners of the Gödel Prize for outstanding
papers in theoretical computer science.
8 Israeli Nobel laureates since the beginning of the 21st century,
make Israel the no. 1 country of Nobel Prize winners per capita! That means 50 times more than their proportion in world population.
Technological Advantage
# 2nd in Venture Capital Confidence
Technological Advantage
1st in innovative capacity
1st in the world for entrepreneurship IMD competitiveness yearbook, 2014
Entrepreneurial Advantage
Israel has a remarkably high level of entrepreneurial activity, mostly opportunity-driven and export-oriented GEM – Global Entrepreneurship Monitor 2013
5.3 7.1
8.6 11
9.5 6.9
13.8
9.2
5.3
10
6 7.1 8.5 9
11 12 12 13 14
24
Global Entrepeneurship Monitor 2013
Total early stageentrepreneurialactivity
EntrepreneurialIntention
Total early stage entrepreneurial activity – percentage of 18-64 population who either nascent entrepreneur or owner-manager of a new business Entrepreneurial Intention – percentage of 18-64 population who are latent entrepreneur and who intend to start a business within three years
Reasons for Israel’s Global Advantage: • 3-4 generations of immigrants from around
the globe that have vast knowledge of foreign languages and cultures
• Jews are spread around the world
• Developed entrepreneurial culture and boldness
• Long-term focus on exporting
• The culture of the “Wandering Jew”
• High percentage of travelers (Backpackers & others)
A small and isolated economy will succeed only by becoming global.
Jewish merchants family, Jacob & Mitya Reuter with Mongolian clients. around 1920.
# 3 in Best USA’s Allies list (after UK and Canada). Israel is
known as USA’s footing in the Middle East and provides a strong strategic position in the region, through which America has been able to play a significant though controversial role in the Greater Middle East. (listaka.com 2015)
75% of the military aid US provides to Israel, is for
military procurement in the US alone and, in a circular motion, the US administration
increases demand for US defense industries & helps job creation in American industry.
The Israeli army provides a huge experimental field of
innovative technologies to the US military
Counter terrorism intelligence Israel
provides, saves the US billions of $ every year
86 Nasdaq Israeli companies
The highest number after USA and China
Over 300 leading international companies
Facebook, Microsoft, IBM, Intel, Google, Apple,
HP, Cisco, Motorola, Philips, Applied Materials,
EMC, Siemens and many others, chose Israel as a target to establish R&D centers
All Products are developed for the world.
Israel is just a Beta Site.
Global Advantage
ISRAEL
Cyprus
Netherland China
India Singapore
Korea
Australia
ISRAEL
Hungary
Turkey
Portugal
Finland Sweden
Ireland
Spain
ISRAEL
USA
Argentina
Uruguay
Brazil France
Russia
Italy
ISRAEL
Germany
Greece
Czech Rep.
Bulgaria
Lithuania
Slovenia
Denmark
Global Advantage R&D Agreements
ISRAEL
Russia
Singapore
Slovak Rep.
Slovenia
South Africa
South Korea
Spain Sweden Switzerland Taiwan Thailand Turkey UK
Ukraine
USA
Uzbekistan
Vietnam
ISRAEL
Denmark
Estonia
Ethiopia
Finland
Greece
Georgia
Germany
Greece
Hungary
India
Ireland
Italy
Jamaica
Romania
ISRAEL
Japan
Latvia
Lithuania
Luxemburg
Malta
Mexico
Moldova Netherlands
Norway
Panama
Philippines
Poland
Portugal
ISRAEL
Austria
Belarus
Belgium
Brazil
Bulgaria Canada
China
Croatia
Czech Republic
Global Advantage TAX Agreements
• Youngest population in the OECD. Median age of 31 (42 in the OECD)
• 3rd most educated population in the world
• Positive immigration • Highest fertility rate within the developed
countries
Demographic advantage
Demographic Advantage
Number of ultra-orthodox men participating in the labor force jumped to 49% in 2015 Compared to 32% in 2005. Ultra-orthodox women participation rate jumped from 40% to 71% (above average participation of women in general, which stands at 58%). At the same time, there is also an increase of participation by Israeli Arabs in the workforce, especially among Arab women from 23% a decade ago to 32% in 2015.
Victory over the Desert
Israel, surrounded by desert, has today more water than it needs.
Almost 100% of all water supply to households is from desalination.
Israel is the number 1 leader in waste-water recycling with a rate of 90% (Australia, the second, has a rate of only 22%).
Israel will reach energy independence within 4 years and will become an energy exporter within 7 years*
Energy Revolution
The state of Israel is expected to receive royalties and tax revenues from gas exploitation in the amount of more than 80 billion $ in the 30 years to come*
*This forecast may change according to new decisions by the supreme court of Israel.
The plunge in global commodity market prices and especially of crude oil will contribute to the Israeli economy almost more than any other economy
(according to an analysis by BLOOMBERG, 2014)
Energy Revolution
Transportation Revolution Trends: investing in the peripheral areas
40
90
140
190
240
290
340
2007 2008 2009 2010 2011 2012 2013 2014
Km
.
CBS Data.
Less to the center
more to the south and to the
Jerusalem district
much more to the north and
to the Haifa area
Transportation Revolution Trends: investing in public transportation
30,000
32,000
34,000
36,000
38,000
40,000
42,000
44,000
46,000
48,000
50,000
2008 2009 2010 2011 2012 2013 2014
Railway passengers (thousands)
350,000
400,000
450,000
500,000
550,000
600,000
2007 2008 2009 2010 2011 2012 2013 2014
Buses kilometers travelled (thousands)
Two main challenges: Poverty rates & Gini coefficients
before tax and transfer
After tax and transfer
Improve in Israel's Gini coefficients
Taub Center 0
10
20
30
40
50
60
70
Ultra Orthodox Jews Israeli Arabs Others
57
50
13
70
57
27
% of households under the poverty line (2012)
after before tax and transfers
Due to the increase of labor force participation among ultra-orthodox Jews and Israeli-Arab groups
which are the main households under the poverty line
Two main challenges: Poverty rates & Gini coefficients
Are improving by the revolutions which open new job opportunities to all sectors
“Total road investment in 1992–2004 increased men’s average wages by 10 percent” Bank of Israel
Other main challenges
bureaucracy, cost of living & Housing, Defense expenditures
Ashdod, Musical Fountain
The HDI is a composite statistic of: • l i fe expectancy • Education • Income
* Dec, 2015
The Place for the Future
Zichro
n Yaako
v. Ph
oto
: Eli Messer
Israel ranked higher than Britain, France, Japan and Italy in a “worthwhileness where to be born” Economist
index, for providing the best opportunities for a
healthy, safe and prosperous life in years to come.
Dr. Adam Reuter CEO Financial Immunities
Noga Kainan Chair CFO Forum, IEL Forum
The main reason for this presentation is to introduce and explain this wonder that so many people are interested in: a country that succeeded against all odds. A safe-heaven for persecuted Jews anywhere, creating in the process a revolution in agriculture, winning the desert, building defense industries that are reaching exceptional solutions such as "Iron Dome", exporting the phenomenon of "Start-up Nation", achieving a rate of GDP growth which is third highest of all OECD countries since the 2008 crisis, and suffering probably the least from that crisis.
A country that is the third most educated nation in the world, and produced since the beginning of the 21st century the highest number of Nobel Prize winners in relation to the size of the population. One of only eight countries that launches satellites into space and a country that creates such powerful secret services like the Mossad and the best air force in the world. A country that invests more in R&D than any other country, despite a chronic shortage of resources in an atmosphere plunged in chaos and disintegration under an "Islamic winter“. A country of great achievements in Music, Literature and Architecture. A country of the future.
