Israel’s technology-driven economy just received a stamp of approval from the world’s most developed nations.
The country, which has weathered the global financial crisis better than many Western economies, achieved a nearly two-decade goal last month when it was admitted into the then-31-member Organization for Economic Cooperation and Development, or OECD, the Paris-based club that includes the most advanced economies worldwide.
Israel recently received another pat on the back for its economic accomplishments: The country was upgraded to developed from emerging country status by research firm MSCI Barra, whose stock indexes are tracked by investors with about $3 trillion in combined assets. Although the Milken Institute, a Santa Monica–based economic policy think tank, warned in November that the move may prompt emerging-markets fund managers to sell up to $2.5 billion of Israeli stocks, the Israeli Finance Ministry expects as much as $4 billion in new foreign equity investments in the next three years as a result of the shift.
Ohad Bar-Efrat — head of the information and international relations division at the Bank of Israel, the country’s central bank — who helped coordinate Israel’s accession to the OECD, tells Institutional Investor that “both events will enlarge the potential pool of investment into the Israeli economy, and they strengthen the already close connection between the Israeli economy and the global economy.”
Palestinian officials and representatives of the Jewish state’s Arab minority had sought to block the OECD move because of Israel’s settlements in the West Bank and alleged discrimination against Arab citizens, but the lobbying failed to persuade OECD members such as Turkey. Notwithstanding a deterioration of Turkish-Israeli ties, highlighted by Israel’s seizure of Turkish ships off Gaza, Ankara endorsed Israel’s admission.
