1. The Reut Institute Designing a Future Av, 5770 July, 2010

2. 2 What is Reut? Established: 01.01.2004 Objective: Providing Pro Bono Decision Support to Government of Israel and its agencies Financing: Community of 3,000 people and 150 donors

3. 3 Complex Challenges Volatile Environment Long term, Substantive Broad View Short, Unstable Tenures Fragmented Parliament & Gov Short Term, Populist, Sectarian conduct Effectuate ChangeModel to Emulate Training Future Strategists Why Reut?

4. ISRAEL15 Vision To Become One of the 15 Leading Countries in Quality of Life Av, 5770 July, 2010

5. 5 Heavy security burden Weak education system Low participation in work force Danger of Collapse Large Gap in Quality of Life According to The Economist Israel ranks 38 th in Quality of Life Israel is 2 nd in the world in the export of Human Capital Developed Countries Leapfrogging is not a luxury; it is a necessity! Israel Must Leap Gaps continue to widen Israel

6. 6 ISRAEL15 Vision: Becoming one of the fifteen leading countries in terms of Quality of Life This Vision requires a Social and Economic Leapfrog in order to close the gap in Quality of Life between Israel and other developed countries ISRAEL15 Vision Rapid Growth Change in the pace of change Inclusiveness All citizens enjoy the fruits of growth Sustainability Preserving resources for future generations

7. 7 Israel leapt between 1951-72 Since then, Israel has grown by 1.5% and has not closed the gap 0.2.4.6.8 The Story of Israel ’ s Economy US = 1 195019601970198019902000 2007 Source : Professor Ricardo Hausmann GDP Rate Compared to the US (1950-2007) 30% of the US 60% of the US 1985 Stability Plan 1950’s Immigrant Absorption 1990’s Immigrant Absorption Globalization of Israeli market The ‘Lost Decade’ 1965-1967 Recession

8. 8 Israel leapt between 1951-72 Since then, Israel has grown by 1.5% and has not closed the gap During this time, Singapore & South Korea both leapt Israel Singapore South Korea 0.2.4.6.8 Countries that have Leapt US = 1 Western Europe 195019601970198019902000 2007 Source : Professor Ricardo Hausmann GDP Rate Compared to the US (1950-2007) 30% of the US 60% of the US

9. 9 Growth, Accelerated Growth, Leapfrog Source: Prof. R. Hausmann et al., Growth Accelerations Only 13 “Economic Miracles ” Leapfrog Almost all countries experience Growth 0.2.4.6 8.8. Years X X+8X+25 Real GDP per Capita % Source:World Bank, Growth Report Only 1 in 4 experience Accelerated Growth

10. 10 Central Brain, Elite Task Forces Public Sphere A Shared Future Savings and Investment Dedicated Elite A pact Unique and Global The Public Sphere is Critical Vision Leadership and Politics Values Institutions Development Policy Labor Market

11. 11 Common Denominator for Countries that Leapt Values Future orientation A variety of market economies Pragmatism Inclusiveness Trust

12. 12 Central Brain Institutions A Pact Identifying Analyzing Relevancy Trends & Elite Task Forces Ability to Execute Decisions Flexibility in the Market

13. 13 New Deal in the Labor Market Employer s Workers Government Workers agree to flexible labor markets in return for improvement of Human Capital & safety net Employers flexible to hire and fire in return for a commitment to keep to employment laws Government provides a safety net & training in return for improvement in competitiveness Protect the Worker not the Job

14. 14 National Development Policy National asset: agricultural pioneering Global trend: water shortage Drip irrigation Unique & global development policy Israel’s regions have an unexploited global potential

15. 15 NorthSouthCenterTel-AvivNational Average Unemployment Rate Participation in Labor Force % of Poor Families Income GapsNumber of Jobs (thousands) Growth in Israel is not inclusive : The Periphery regions are Lagging Behind Source: CBS, "Social and economic indicators" by districts in percentages, 2008.

16. 16 The Result: Continuous Migration from the Periphery Source: Based on CBS providers, by district, 1984-2008 (in thousands. CenterNorthTel-AvivSouth

17. 17 Import high-quality human capital Israel is a small state: Uniform government policies encouraging any type of employment Distance is the main barrier Change from the outside Old strategy Israel includes a number of distinct regions focus on local population accessibility is one of the main barriers regional development policy based on unique assets Change from within New strategy Challenge: How to Develop Israel’s Periphery?

18. 18 Regional Leapfrog How do regional leapfrogs occur in a globalized world? Nature & LandscapeHistory & Heritage Local Expertise Human Capital Climate When regional assets meet human capital

19. Health food Western Galilee Unique Assets Compete with the Global Wellness Industry Wellness Scientists & Engineers Olive Oil Secrets Health Food B&B Industry Dance Theater Acre Walls Manufacturers Technologists and Researchers Artists Central Finland Austrian Tyrol Swiss Alps Medical Tourism Natural Therapy Technologies Creative Tourism

20. 20 Western Galilee Anchors The Regional Entrepreneurship Map Iskar Ort Brauda College Naharia’s Hospital Old Akko

21. 21 Unique and Global Development Policy Unique Global Development Policy Global Trends Policy Inputs Standardization, Legislation Regulation, Infrastructure International Agreements Not Just Money! The Holy Land Defense Industry Jewish World Greening the Desert Rise of China and India, Global Water Crisis, Renewable Energy, Aging Populations, Rise of Africa Unique Assets

22. 22 Unique Opportunity for Change Establishment of the Roundtable New Government: Stability for 2 yrs Crisis Breeds Willingness Why Now?

23. 23 Israel is Not Talking Leapfrog PolicyInstitutions Domestic Industrial Policy Labor Market: Pact for Growth Unique & Global Development Policy Local Government Ignored No Vision Local Government Necessary Vision Necessary GrowthLeapfrog EconomicsMultidisciplinary Labor Market: conflict

24. 24 Israel15: National Obsession Leapfrog Aliyah Making the Desert Bloom Redeeming the Land ישראל 15

25. 25 On the ISRAEL 15 Vision: “This is a very impressive document, based on clear thinking and a knowledge of the recent experience and writing about growth at various stages of development.” Professor Michael Spence, Economics Nobel Prize Laureate, and Head of the U.N Commission on Growth and Development