the herzliya indices...dr. zalman shiffer –economic advisor team leader prof. rafi melnick - idc...
TRANSCRIPT
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 1
Herzliya Conference
2008
“The Herzliya Indices”National Security Balance
The Civilian Quantitative
Dimension
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 2
Team Members
Ms. Leah Achdut – Van Leer Jerusalem Institute; The
Ruppin Academic Center
Dr. Michel Strawczynski – Bank of Israel
Mr. Tommy Steiner – IDC Herzliya
Dr. Zalman Shiffer – Economic Advisor
Team Leader
Prof. Rafi Melnick - IDC Herzliya
With thanks to Michal Ophir and Refaela Cohen (National Insurance
Institute of Israel), Polina Dovman (Bank of Israel), and Gilad Skutelsky
(IDC Herzliya) for their assistance with research.
Herzliya Indices Team
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 3
45
47
49
51
53
55
57
59
61
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Development of the
Economic Dimension in Israel
1990-2007
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 4
92
93
94
95
96
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Development of the Social
Dimension in Israel
1990-2006
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 5
50
55
60
65
70
75
80
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Development of the
Governmental/Political Dimension
1996-2006in Israel
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 6
Dimensions of National Security
National
Security
Civilian
Dimension
Military
Dimension
SocialEconomicGovernmental/Political
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 7
Multiple Indicators Approach
National SecurityUnobservable Latent Variable
Indicator
N ObservableIndicator II
Observable
Indicator IObservable
...
• N indicators are measurable; they affect and are affected by national security, which is an
unobservable latent variable.
• The presence of multiple indicators allows (under defined assumptions) one to quantify national
security.
• A rise in each indicator means improvement in national security, in the corresponding
dimension.
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 8
Components of the
Economic Indicator(relative weight in parenthesis)
1. GDP Per Capita, PPP (16%)
2. GDP, PPP (15%)
3. Unemployment (15%)
4. High-Technology Exports – % of Manufactured Exports (11%)
5. General Government Gross Financial Liabilities (11%)
6. Inflation Rate (11%)
7. Current Account Balance (11%)
8. Foreign Currency Reserves (10%)
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 9
1. Poverty Incidence (14%)
2. Gini Inequality Coefficient (12%)
3. Human Development Index – Education (11%) *
4. Chronic Unemployment (10%)
5. Human Development Index – Life Expectancy (10%) *
6. Rate of Participation in Labor Force – Men (10%)
7. Rate of Participation in Labor Force – Women (10%)
8. Human Development Index – GDP (9%) *
9. Population Aged 65+ (7%)
10. Population Aged 15- (7%)
Components of the
Social Indicator(relative weight in parenthesis)
* Last updated in 2005
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 10
1. Political Stability and the Absence of Violence (11%)
2. Rule of Law (11%)
3. Democracy (10%) *
4. Political Rights (9%)
5. Civil Liberties (9%)
6. Control of Corruption (8%)
7. Quality of Regulation (8%)
8. Efficiency of Government (8%)
9. Voice and Accountability (8%)
10. Alliances (6%)
11. Membership in International Organizations (6%)
12. Hosted Embassies (6%) * Last updated in 2003
Components of the
Governmental/Political Indicator(relative weight in parenthesis)
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 11
The Model
• Construction of a panel data set of 31 countries
• The model includes:
– Israel
– 26 OECD countries
– 4 regional countries: Egypt, Iran, Jordan, and
Syria
• Data ranges from 1990 through 2006
• Israel’s economic data is through 2007
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 12
Economic Data Sources
Primary Sources
• World Bank
• IMF – World Economic Outlook
• OECD Economic Outlook
• Israel’s Central Bureau of Statistics
Secondary Sources
• IFS – International Financial Statistics (IMF)
• Economist Intelligence Unit-Iran
• Bank of Israel and various central banks
• Other sources
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 13
Social Data Sources
Primary Sources
• OECD
• Luxembourg Income Study
• Israel’s Central Bureau of Statistics
• UN Human Development Reports
Secondary Sources
• OECD, Labor Market Statistics Data LFS by sex
• CIA
• National Tobacco Information Online System
• Statistical, Economic and Social Research and Training Center
for Islamic Countries
• World Bank
• Eurostat Data, Indicators of the 20 NewCronos
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 14
Primary Sources• World Bank
• Freedom House
• Polity IV Project
• A.T. Kearny - Foreign Policy Magazine
• Europe Yearbook
• Treaties and Alliances of the World
Governmental/Political
Data Sources
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 15
Methodology
• A preliminary base is calibrated for each dimension
• Each variable is measured in percentage change or
percentage difference in the case that its basic
measurement is in percents
• An annual weighted average is calculated using the
weights obtained from a panel of experts
• The indices are formed, over time, by cumulating
annual weighted averages
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 16
Herzliya Indices 2008Results
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 17
0
10
20
30
40
50
60
70
80
90
100
Jo
rdan
Syri
an
Ara
b R
ep
ub
lic
Iran
, Is
lam
ic R
ep
.
Po
lan
d
Tu
rkey
Czech
Rep
ub
lic
Eg
yp
t, A
rab
Rep
.
Hu
ng
ary
Gre
ece
Po
rtu
gal
Isra
el
Irela
nd
Ko
rea
New
Zeala
nd
Sp
ain
Au
str
ali
a
Sw
ed
en
Den
mark
Fin
lan
d
Belg
ium
Au
str
ia
Neth
erl
an
ds
No
rway
Can
ad
a
Italy
Un
ited
Kin
gd
om
Fra
nce
Sw
itzerl
an
d
Germ
an
y
Jap
an
Un
ited
Sta
tes
Economic Base | 1990
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 18
0
20
40
60
80
100
120
Jo
rdan
Syri
an
Ara
b R
ep
ub
lic
Iran
, Is
lam
ic R
ep
.
Tu
rkey
Po
lan
d
Czech
Rep
ub
lic
Eg
yp
t, A
rab
Rep
.
Hu
ng
ary
Po
rtu
gal
Gre
ece
Isra
el
New
Zeala
nd
Sp
ain
Ko
rea
Irela
nd
Sw
ed
en
Fin
lan
d
Au
str
ali
a
Au
str
ia
Belg
ium
Den
mark
Italy
Neth
erl
an
ds
No
rway
Can
ad
a
Sw
itzerl
an
d
Fra
nce
Un
ited
Kin
gd
om
Germ
an
y
Jap
an
Un
ited
Sta
tes
Economic Base | 2006
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 19
Development of the Economic
DimensionIsrael and the Developed Countries
45
50
55
60
65
70
75
80
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Israel G7 Euroland OECD
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 20
25
30
35
40
45
50
55
60
65
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Israel Iran Jordan Egypt Syria
Development of the Economic
DimensionIsrael and Regional Countries
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 21
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
Isra
el
Jap
an
Fra
nce
Syri
a
Po
rtu
gal
Germ
an
y
US
A
No
rway
Neth
erl
an
ds
Sw
itzerl
an
d
Au
str
ia
Sw
ed
en
Can
ad
a
ltaly UK
Fin
lan
d
Belg
ium
lrela
nd
Den
mark
Eg
yp
t
Po
lan
d
Tu
rkey
Gre
ece
Ko
rea,
Rep
Au
str
ali
a
Hu
ng
ary
Iran
New
Zeala
nd
Czech
Rep
Sp
ain
Jo
rdan
Economic Change (percent) | 2000-2003
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 22
0
1
2
3
4
5
6
7
Po
rtu
gal
Jo
rdan
Jap
an
ltaly
Sw
itzerl
an
d
Germ
an
y
Fra
nce
Neth
erl
an
ds
Au
str
ia
UK
Au
str
ali
a
US
A
Belg
ium
New
Zeala
nd
Sp
ain
lrela
nd
Gre
ece
Ko
rea,
Rep
Hu
ng
ary
Sw
ed
en
Fin
lan
d
Can
ad
a
Czech
Rep
No
rway
Eg
yp
t
Syri
a
Den
mark
Po
lan
d
Isra
el
Tu
rkey
Iran
Economic Change (percent) | 2003-2006
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 23
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Po
rtu
gal
Jo
rdan
UK
Jap
an
ltaly
Germ
an
y
Au
str
ali
a
New
Zeala
nd
US
A
Sw
itzerl
an
d
Fra
nce
Au
str
ia
Tu
rkey
lrela
nd
Neth
erl
an
ds
Belg
ium
Can
ad
a
Sp
ain
Ko
rea,
Rep
Czech
Rep
Fin
lan
d
Den
mark
Sw
ed
en
Hu
ng
ary
Gre
ece
Syri
a
No
rway
Po
lan
d
Iran
Isra
el
Eg
yp
t
Economic Change (percent) | Marginal 2006
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 24
Economic Index 2006Ireland 61.9
Korea 61.4
Spain 61.2
New Zealand 59.8
Israel 59.2
Greece 53.6
Portugal 53.4
Hungary 52.1
Egypt, Arab Rep. 49.4
Czech Republic 43.9
Poland 43.5
Turkey 42.9
Iran, Islamic Rep. 40.6
Syrian Republic 31.7
Jordan 30.4
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
United States 110.0
Japan 77.6
Germany 71.1
United Kingdom 69.3
France 67.6
Switzerland 67.6
Canada 66.5
Norway 66.3
Netherlands 66.2
Italy 66.1
Denmark 64.5
Belgium 63.9
Austria 63.7
Australia 62.9
Finland 62.6
Sweden 62.4
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 25
0
20
40
60
80
100
120
Syri
a
Iran
Eg
yp
t
Jo
rdan
Tu
rkey
Gre
ece
lrela
nd
Ko
rea,
Rep
Sp
ain
Isra
el
Po
rtu
gal
ltaly
Po
lan
d
New
Zeala
nd
Hu
ng
ary
Belg
ium
Fra
nce
UK
Jap
an
Germ
an
y
Czech
Rep
US
A
Neth
erl
an
ds
Au
str
ali
a
Au
str
ia
Sw
itzerl
an
d
Can
ad
a
No
rway
Sw
ed
en
Fin
lan
d
Den
mark
Social Base | 1990
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 26
0
20
40
60
80
100
120
Iran
Syri
a
Eg
yp
t
Jo
rdan
Tu
rkey
Gre
ece
Po
lan
d
Ko
rea,
Rep
Isra
el
Sp
ain
ltaly
Po
rtu
gal
lrela
nd
Belg
ium
Hu
ng
ary
Czech
Rep
Jap
an
UK
New
Zeala
nd
Germ
an
y
US
A
Fra
nce
Au
str
ia
Au
str
ali
a
Can
ad
a
Sw
itzerl
an
d
Neth
erl
an
ds
No
rway
Sw
ed
en
Fin
lan
d
Den
mark
Social Base | 2006
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 27
94
95
96
97
98
99
100
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Israel G7 Euroland OECD
Development of the Social DimensionIsrael and the Developed Countries
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 28
60
65
70
75
80
85
90
95
100
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Israel Egypt Iran Jordan Syria
Development of the Social DimensionIsrael and Regional Countries
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 29
-0.5
-0.3
-0.1
0.1
0.3
0.5
0.7
0.9
1.1
Jap
an
US
A
Isra
el
Po
lan
d
Tu
rkey
Germ
an
y
Eg
yp
t
Den
mark
Belg
ium
Fin
lan
d
Sw
ed
en
No
rway
Au
str
ia
Neth
erl
an
ds
Au
str
ali
a
UK
Czech
Rep
Sp
ain
Iran
Fra
nce
Can
ad
a
Ko
rea,
Rep
lrela
nd
Po
rtu
gal
Hu
ng
ary
Gre
ece
Sw
itzerl
an
d
ltaly
New
Zeala
nd
Jo
rdan
Syri
a
Social Change | 2000-2003
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 30
-0.5
-0.3
-0.1
0.1
0.3
0.5
0.7
0.9
1.1
1.3
No
rway
Po
rtu
gal
Isra
el
Sw
itzerl
an
d
US
A
UK
Fra
nce
Can
ad
a
Neth
erl
an
ds
Belg
ium
Den
mark
Czech
Rep
Hu
ng
ary
Fin
lan
d
ltaly
Jap
an
Syri
a
Sw
ed
en
Tu
rkey
Po
lan
d
Au
str
ia
Gre
ece
Au
str
ali
a
Ko
rea,
Rep
Germ
an
y
Jo
rdan
lrela
nd
New
Zeala
nd
Iran
Sp
ain
Eg
yp
t
Social Change | 2003-2006
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 31
-0.2
-0.15
-0.1
-0.05
0
0.05
0.1
0.15
0.2
0.25
No
rway
Belg
ium
Tu
rkey
Czech
Rep
Fra
nce
Ko
rea,
Rep
Can
ad
a
Gre
ece
US
A
Po
lan
d
Sw
ed
en
Po
rtu
gal
Au
str
ali
a
UK
ltaly
Jo
rdan
Hu
ng
ary
Neth
erl
an
ds
Isra
el
Syri
a
Jap
an
Fin
lan
d
Sw
itzerl
an
d
Eg
yp
t
Den
mark
Iran
Au
str
ia
New
Zeala
nd
Germ
an
y
lrela
nd
Sp
ain
Social Change | Marginal 2006
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 32
Social Index 2006
Denmark 106.4
Finland 103.9
Sweden 103.6
Norway 103.6
Netherlands 103.1
Switzerland 102.8
Canada 102.7
Australia 101.8
Austria 101.8
France 100.5
USA 99.9
Germany 99.9
New Zealand 99.8
UK 99.8
Japan 99.4
Czech Rep. 99.4
Hungary 99.4
Belgium 98.3
lreland 97.1
Portugal 96.2
ltaly 95.5
Spain 95.5
Israel 95.2
Korea, Rep. 95.1
Poland 95.0
Greece 92.1
Turkey 84.9
Jordan 81.5
Egypt 78.5
Syria 74.5
Iran 72.6
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 33
0
20
40
60
80
100
120
Iran
, Is
lam
ic R
ep
.
Syri
an
Ara
b R
ep
ub
lic
Eg
yp
t, A
rab
Rep
.
Tu
rkey
Jo
rdan
Ko
rea,
Rep
ub
lic o
f
Isra
el
Po
lan
d
Gre
ece
Hu
ng
ary
Czech
Rep
ub
lic
Italy
Jap
an
Sp
ain
Po
rtu
gal
Irela
nd
Au
str
ali
a
Fra
nce
New
Zeala
nd
Fin
lan
d
Au
str
ia
Belg
ium
Germ
an
y
Sw
itzerl
an
d
Sw
ed
en
No
rway
Den
mark
Un
ited
Kin
gd
om
Neth
erl
an
ds
Can
ad
a
Un
ited
Sta
tes
Governmental/Political Base | 1996
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 34
0
20
40
60
80
100
120
Syri
an
Ara
b R
ep
ub
lic
Iran
, Is
lam
ic R
ep
.
Eg
yp
t, A
rab
Rep
.
Jo
rdan
Tu
rkey
Isra
el
Ko
rea,
Rep
ub
lic o
f
Po
lan
d
Gre
ece
Czech
Rep
ub
lic
Hu
ng
ary
Italy
Sp
ain
Po
rtu
gal
Jap
an
Irela
nd
Fra
nce
Au
str
ali
a
New
Zeala
nd
Au
str
ia
Belg
ium
Sw
ed
en
Sw
itzerl
an
d
Fin
lan
d
Germ
an
y
Un
ited
Kin
gd
om
No
rway
Neth
erl
an
ds
Den
mark
Un
ited
Sta
tes
Can
ad
a
Governmental/Political Base | 2006
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 35
65
70
75
80
85
90
95
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Israel G7 Euroland OECD
Development of the
Governmental/Political DimensionIsrael and the Developed Countries
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 36
25
35
45
55
65
75
85
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Israel Egypt Iran Jordan Syria
Development of the
Governmental/Political DimensionIsrael and Regional Countries
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 37
-3
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
ltaly
Po
rtu
gal
Sp
ain
Syri
a
Iran
Gre
ece
Sw
ed
en
Po
lan
d
Hu
ng
ary
Neth
erl
an
ds
Belg
ium
US
A
Fin
lan
d
Can
ad
a
Fra
nce
Den
mark
Germ
an
y
Au
str
ia
New
Zeala
nd
No
rway
UK
Czech
Rep
Sw
itzerl
an
d
lrela
nd
Eg
yp
t
Au
str
ali
a
Ko
rea,
Rep
Jo
rdan
Isra
el
Jap
an
Tu
rkey
Political Change | 2003-2006
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 38
-1.5
-1
-0.5
0
0.5
1
Sp
ain
Po
rtu
gal
Ko
rea,
Rep
ltaly
Po
lan
d
Iran
Hu
ng
ary
Fra
nce
lrela
nd
Jo
rdan
Gre
ece
Czech
Rep
Syri
a
Neth
erl
an
ds
Eg
yp
t
Germ
an
y
Fin
lan
d
Tu
rkey
US
A
Isra
el
Sw
ed
en
No
rway
Au
str
ali
a
Au
str
ia
New
Zeala
nd
Belg
ium
Can
ad
a
Sw
itzerl
an
d
Den
mark
Jap
an
UK
Political Change | Marginal 2006
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 39
Governmental/Political Index 2006
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Canada 100.5
United States 98.0
Denmark 96.1
Netherlands 94.9
Norway 94.7
United Kingdom 94.6
Germany 94.5
Finland 94.5
Switzerland 94.1
Sweden 93.9
Belgium 93.8
Austria 92.9
New Zealand 91.4
Australia 91.3
France 90.4
Ireland 88.6
Japan 87.0
Portugal 86.8
Spain 85.5
Italy 81.8
Hungary 81.1
Czech Republic 81.1
Greece 78.6
Poland 77.6
Korea, Republic of 73.9
Israel 71.6
Turkey 59.1
Jordan 55.6
Egypt, Arab Rep. 51.4
Iran, Islamic Rep. 30.6
Syrian Republic 29.1
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 40
Summary: Crisis and Recovery
-3
-2
-10123
2000-2003 2003-2006
The Herzliya Indices:
Crisis and Recovery
Economic Social Political
1. The Herzliya indices provide aquantification of the national crises thatIsraeli society experienced in the years2000-2003 and the recovery from themduring 2003-2006.
2. The recovery of the Economic Index in2003-2006, which continued in 2007, isstronger than its decline during 2000-2003.
3. No significant recovery is registered in theSocial Index. The Social Index does showthat the deterioration in this dimension,which started before 2000-2003 anddeepened during the crises, has stopped.
4. The Governmental/Political Index shows arecovery in 2003-2006 that is milder thanthe deep decline it suffered in 2000-2003.
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 41
Summary: Latest Developments
0
1
2
3
2006 2007
The Herzliya Indices:
Crisis and Recovery
Economic Social Political
1. The Herzliya Indices of National Security areall positive in 2006, despite the occurrence ofthe Second Lebanon War. The strongestimprovement is in the economic dimension,which continues to evolve in 2007. Theimprovements in the social andgovernmental/political dimensions are onlymarginal, although they show a change fromthe previous negative trends.
2. The economic dimension shows very strongimprovement, which generally also wasobserved in the other countries in oursample; therefore we do not see animprovement in the relative position of Israelvis-à-vis the other countries in our sample.
-
Prof. Rafi Melnick - IDC HerzliyaJanuary 2008 42
Summary: Latest Developments
0
1
2
3
2006 2007
The Herzliya Indices:
Crisis and Recovery
Economic Social Political
3. The improvement in the social dimension isvery slight, illustrating that the economicimprovement has not, so far, spilled over tothe social aspects of Israeli society.
4. In the governmental/political dimension, wealso record a very slight improvement andthe level of this index remains in the lowerpart of the distribution of our sample.