Israel’s rate of sustained economic growth now exceeds even that of West Germany and Japan, the U. S. Agency for International Development today reported to Congress.
A report submitted by Administrator David E. Bell said Israel has had “one of the highest rates of sustained economic growth on record, averaging 10 percent yearly and exceeding even Japan (9.0 percent) and West Germany (7,5 percent).
The A.I.D. report said the major economic problem now facing Israel is how to finance a high rate of growth from its own resources. It was pointed out that “the relatively high level of per capita income and the rapid growth of income in the future should make it possible to increase the rate of domestic saving rapidly. At the same time, a continued flow of private contributions and growing access to world capital markets as Israel develops should help eliminate the need for further A. I. D. loans in the next few years.”
The A.I.D. report noted that Israel imported both large amounts of capital and much of its population. “Many of the immigrants to Israel were well educated and highly skilled,” said the report. The total inflow of foreign capital and donations ($3, 800, 000, 000) exceeded gross investment ($3, 500, 000, 000) for the decade.
With these assets, Israel managed to achieve phenomenal growth despite meager natural resources, the problems of absorbing mass immigration and facing Arab hostility, Congress was told.
United States aid to Israel totaled nearly $700, 000, 000 between 1950 and 1961. During the first five years American assistance was chiefly directed to maintaining financial stability and protecting the balance of payments position. After that, emphasis shifted to general support of Israel’s economic development.
About a third of U. S. assistance to Israel was in the form of agricultural commodities made available on a loan basis. Other loans accounted for another third. Technical assistance and other forms of grant aid accounted for the balance.
Total U.S. assistance has accounted for about 20 percent of Israel’s gross investment. American aid has accounted for 18 percent of the total capital flow to Israel; much larger amounts have come from West Germany as reparations and restitution on private claims, and as loans and grants from Jewish philanthropic organizations and individuals.
Grant aid to Israel from the United States has been ended and technical assistance to Israel was terminated in 1962. Israel is now supplying technicians of its own to developing countries in Asia and Africa, the report said.
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