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Economic Concentration in the Start-Up Nation: Is Privatisation to Blame?

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Listed:
  • Yarden Gazit
  • Robert M. Sauer

Abstract

In this paper we examine the underlying sources of economic concentration in Israel, which is unusually high for a developed and innovative economy. After a brief review of Israel's economic history since the start of the British Mandate, we describe the level of economic concentration, privatisation policy and other public policies that potentially contributed to the creation and persistence of the concentration problem. We argue that privatisation is not likely to be a causal factor, mainly because concentration was present and substantial at least two decades before modern privatisation policies were adopted. It is more plausible to argue that other economic policies, such as R&D subsidies, tax breaks for capital investment, export subsidies, tariffs, stringent regulations and barriers to competition played a major role in the emergence and persistence of economic concentration.

Suggested Citation

  • Yarden Gazit & Robert M. Sauer, 2014. "Economic Concentration in the Start-Up Nation: Is Privatisation to Blame?," Economic Affairs, Wiley Blackwell, vol. 34(2), pages 213-222, June.
    • Handle: RePEc:bla:ecaffa:v:34:y:2014:i:2:p:213-222
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    References listed on IDEAS

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    1. Konstantin Kosenko, 2007. "Evolution of Business Groups in Israel: Their Impact at the Level of the Firm and the Economy," Israel Economic Review, Bank of Israel, vol. 5(2), pages 55-93.
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    3. J. David Brown & John S. Earle & Almos Telegdy, "undated". "The Productivity Effects of Privatization: Longitudnal Estimates for Hungary, romania, Russia, and Ukraine," Upjohn Working Papers jse20063, W.E. Upjohn Institute for Employment Research.
    4. J. David Brown & John S. Earle & Almos Telegdy, 2006. "The Productivity Effects of Privatization: Longitudinal Estimates from Hungary, Romania, Russia, and Ukraine," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 61-99, February.
    5. Michael W. Klein, 2005. "Studying Texts: A Gemara of the Israeli Economy," NBER Working Papers 11352, National Bureau of Economic Research, Inc.
    6. Sergei Guriev & Andrei Rachinsky, 2005. "The Role of Oligarchs in Russian Capitalism," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 131-150, Winter.
    7. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
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