Israel's accession to the OECD became a reality today. Several years ago, when the accession process began, it was clear that Israel sought to improve its status in the global economic community. The Israeli economy wanted approval for finally leaving behind galloping inflation, large deficits and economic uncertainty.
The irony of the matter is that the date of accession coincides with the EU's announcement of a rescue plan for the fiscal crisis, which to many is reminiscent of Israel in the 1980s.
In contrast, Israel joins the OECD with annual growth of close to 4%, a falling budgetary deficit, which may even be less than 4% of GDP per year, and a balance of payments current account structural surplus.
The accession itself is no surprise. The process accelerated over the past few months although there was the need to overcome the problem of defining Israel's borders for statistical needs. The OECD will mention that Israel includes East Jerusalem without this definition implying that the OECD agrees to this. On the matter of intellectual property, Israel was compelled to be creative in its use of wording to prevent its entry to the OECD being blocked at the last moment.
The significance is that the results of joining the OECD are already being felt in the market, which is adapting itself to the new situation. These matters are mainly being expressed regarding models for allocating resources by global institutional bodies, and regarding the status of Israeli companies in the international credit market.
The official announcement published today did not add anything about these processes that began several months ago. Israel has also adapted its laws and institutional infrastructure to what is required of OECD members although that process was completed some time ago, and its substantial fruits can already be seen.
So what will change from today? There is at least one notable area of change for the better against the backdrop of recent weeks. The Israeli citizen will know much more about their state and its behavior. The Israeli authorities that love to impose gag orders, keeping secrets and stopping the flow of information to civil society will have to mend its ways.
In contrast, the OECD loves statistics and comparative reports about virtually every area of life. Israelis will find it easier to learn about foreign workers, inequalities, education gaps, technological education, the health services, efforts to cope with air pollution, the strength of monopolies in the local market and many more topics.
In other words, beyond the strategic outcome which Israel has produced from the accession process, there are the repercussions of becoming part of the OECD routine. True, for a small number of government officials joining the OECD brings the possibility of flying to overseas conferences, awhile Israel can host more important conferences.
But beyond this we must look at what the rank and file Israeli citizen will get out of the country joining the OECD. The largest benefit is greater transparency of government activities. Of course there are also the economic benefits of accession itself but even without those, the greater transparency alone would have made all the effort worthwhile.
Published by Globes [online], Israel business news - www.globes-online.com - on May 10, 2010
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