How to Catalyze a Leapfrog in ISRAEL?
Leapfrogging is not a luxury. It’s a necessity
According to international indices, Israel ranks among the richest nations in terms of its human capital and the quality of its business sector. In a number of areas, such as innovation and research and development, it is one of the leading countries in the world. Yet in spite of this, the quality of life experienced by its citizens is low relative to other developed countries. Thus, it is no surprise that Israel exports more quality talent per capita than almost any other country. If this gap between the quality of its population and the quality of life continues and grows it could lead to such a critical loss of educated and qualified citizens that Israel may experience a socioeconomic collapse.
Therefore, a leapfrog that closes the gap in quality of life between Israel and developed countries is not a luxury, but a necessity.
Specifically, leapfrogging is fast and continuous annual real GDP growth of 3.5% for at least 8 years. To be considered an 'economic miracle,' average 7% real growth needs to be sustained for at least 25 years. For example, whereas Germany and Ireland have leapfrogged, China, Singapore and South Korea have experienced 'economic miracles.' In fact, Israel also leapt between 1951- 1972 when it had an average annual real growth of 5.5%.
Leapfrogging requires a combination of sustainable rapid growth that enlarges the pie, 'inclusiveness' that distributes the pie to improve quality of life of all the country's citizens, and sustainability that preserves natural resources for the benefit of future generations.
There is no single recipe for leapfrogging; it is a unique phenomenon. Each country that leapfrogged acted out an economic and social plan relevant to its own unique history, social structure, system of government, assets, and burdens.
Nonetheless, the key to leapfrogging is a country's ability to effectuate deep and durable changes—its 'capacity to transform.' Since it requires accelerating the pace of socioeconomic change, leapfrogging depends on the establishment and cultivation of institutions and processes, first and foremost in the labor market, which can adapt to such change.