The OECD and Israel: An Invitation for Israel’s Future

On May 10, 2010, Israel became one of three nations invited, unanimously, to become a member of the Organization for Economic Co-operation and Development (OECD). On May 27, Prime Minister Netanyahu and a delegation of high-ranking officials traveled to Paris to attend an OECD session welcoming the three new members.

When Israel gains full-fledged membership in the coming months, it will become part of an important organization dedicated to improving economic, social and environmental policymaking in the interests of citizens of OECD countries and of other countries around the world. The OECD is - alongside the World Bank and International Monetary Fund - one of the three leaders in designing the architecture of the world’s economy.

Israel’s journey to joining the OECD commenced in 1994, as it began increasing its participation in the activities of the organization, reaching a record by becoming observers in 58 committees. The accession process started in earnest in May 2007, and over the past three years, Israel’s economy has undergone an extremely thorough investigation by the OECD, including in-depth reviews by 18 OECD Committees.

Israel underwent the accession process with one clear goal in mind - to upgrade the country so that it could be counted among the world’s 34 leading economies.
Moreover, the process forced Israel to “look in the mirror” and address those areas that needed improvement. But despite the difficulties, Israel saw this as an opportunity to enhance its economy, environment and society, an opportunity to fully reach its great potential.

The OECD’s stamp of approval will have a positive influence on Israel’s credit-rating and make Israel more attractive to international investors. One example of how a new horizon has been opened up to Israel can be found in investment funds. As fund managers in some countries must invest a certain percentage of their fund in OECD countries, Israel was excluded from this source. Today, it is open to Israel.

OECD membership means that Israel is adjusting to the standards and norms of the world’s most advanced economies. The OECD has surveyed each and every field in Israel, including social policies and government procurement, and made important constructive comments. These suggestions, alongside Israel’s strong desire to reach “best practice” (the policy that must be implemented in central fields), have helped stabilize Israel’s national consensus regarding actions and reforms through international consensus. Examples of where OECD norms will assist Israel in its efforts at self-improvement include the environment and the fight against corruption. Israel’s strong desire to see its economy and environment meet the world’s highest standards will guarantee Israel’s standing in the organization.
Over the years, the OECD has accumulated large databases of information and experience that states around the world can use in formulating their policy. Access to that information will also help Israel coalesce social and economic reforms and changes.

OECD has also noted that Israel accounts for the third-highest number of scientific articles per million population and has demonstrated impressive patenting performance in science and technology. According to the OECD, Israel’s performance in certain high technology sectors, notably biotechnology, is also “particularly strong.” Israel hopes to contribute in all these areas and more. According to OECD Secretary-General Angel Gurria, this will create a triple-win situation, benefiting Israel, the OECD as an organization, and other OECD member states.

As Bank of Israel Governor Stanley Fischer stated: “The OECD decision to invite Israel to become a member of the organization is an important step towards Israel’s integration into the global economy, and is an expression of Israel’s commitment to meet the highest international standards.”
The unanimous decision - taken by the 31 member-states - to invite Israel to join the OECD, constituted international recognition of Israel’s achievements, economic strength and ability to contribute to the organization and to the world’s economy.