Prof. Rafi Melnick Provost, IDC Herzliya National Security Balance The Civilian Quantitative Dimension The Herzliya Indices Herzliya Conference 2014

Prof. Rafi MelnickProvost, IDC Herzliya

National Security BalanceThe Civilian Quantitative Dimension

The Herzliya Indices

Herzliya Conference 2014

Development of the Economic Dimension in Israel 1990-2013

June 2014 Prof. Rafi Melnick - IDC Herzliya

...

• 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.

Multiple Indicators Approach

June 2014 Prof. Rafi Melnick - IDC Herzliya

1. GDP Per Capita, PPP (16%)

2. GDP, PPP (15%)

3. Unemployment (15%)

4. General Government Gross Financial Liabilities (half weight 11%)

5. R&D Investment* - Percent of GDP (11%)

6. Current Account Balance (11%)

7. Inflation (11%)

8. Long Term interest rate** (5%)

9. Fiscal Deficit** (5%)

Prof. Rafi Melnick - IDC Herzliya

* Replacing High-Technology Exports % of Manufactured Exports General Government Gross)

** Replacing Foreign currency reserves (half weight of 10%)June 2014

Components of the Economic Indicator(Relative Weight in Parenthesis)

Construction of a panel data set of 27 countries

The model includes: Israel 26 OECD countries

Data ranges from 1990 through 2013

Prof. Rafi Melnick - IDC HerzliyaJune 2014

The Model

Primary Sources

OECD Statistics OECD Economic Outlook Israel’s National Insurance institute -

Research and Planning Administration Israel’s Central Bureau of Statistics

Secondary Sources

IFS – International Financial Statistics (IMF)

IMF – World Economic Outlook Bank of Israel and various central banks Other sources


Economic Data Resources

A preliminary base is calibrated.

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

Methodology


2014 RESULTS

The Herzliya Indices

Economic Base - 1990


Economic Base - 2013


Development of the Economic DimensionIsrael and the Developed Countries


Per Capita GDP Growth - 2013(percent)


Unemployment Rate - 2013(percent)


General Government Liabilities - 2013(percent of GDP)


Economic Dimension GapIsrael and the Developed Countries


Economic Index 2013

17

18

19

20

21

22

23

24

25

26

27

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

USA 103.54

Japan 74.26

Norway 73.29

Germany 73.08

Switzerland 72.48

Canada 69.49

Netherlands 69.33

Australia 68.67

UK 68.51

Denmark 68.21

Sweden 67.54

France 66.66

Austria 66.49

Korea, Rep 65.54

Belgium 64.23

New Zealand 63.37

lreland 63.16

Israel 62.56

Finland 62.25

ltaly 62.10

Spain 58.50

Czech Rep 58.01

Portugal 56.34

Poland 53.78

Hungary 51.02

Greece 50.18

Turkey 46.69


The Herzliya Composite

Economic Social Index

1. GDP Per Capita, PPP (11%)

2. GDP, PPP (10%)

3. Unemployment (10%)

4. Poverty Incidence (10%)

5. Inequality Gini (8%)

6. General Government Gross Financial Liabilities (8%)

7. R&D Investment - % of GDP (8%)

8. Current Account Balance (8%)

9. Long Term Unemployment (7%)

10. Employment Rate (7%)

11. Inflation (7%)

12. Long Term Interest Rate (3%)

13. Fiscal Deficit (3%)

Components of the Economic-Social Indicator(Relative Weight in Parenthesis, Social indicators in yellow)


Development of the Economic and Social Dimension in Israel


1990 - 2013

Poverty Incidence in Israel 1979 - 2012(Families, percent)


Poverty Incidence(Families, the latest available data point, percent)


Inequality in Israel 1979-2012(Families, Gini Coefficient)


Inequality(Families, the latest available data point, Gini coefficient)


Long Term Unemployment in Israel 1995-2013(percent)


Long Term Unemployment(Families, the latest available data point, percent)


Employment Rate Israel 1995 - 2013(percent)


Employment Rate (The latest available data point, Percent)


Economic Social Base - 1990


Economic Social Base - 2013


Development of the Economic Social Dimension


Israel and the Developed Countries

Economic Social Dimension Gap



Economic Social Index 2013

17

18

19

20

21

22

23

24

25

26

27

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

USA 101.76

Japan 75.15

Germany 72.34

Switzerland 72.00

Norway 71.71

Canada 68.22

UK 68.20

Netherlands 68.02

Australia 66.68

Denmark 66.67

France 66.29

Austria 65.87

Sweden 65.35

Belgium 63.66

Korea, Rep 63.52

lreland 61.92

ltaly 61.90

New Zealand 61.85

Finland 61.06

Israel 59.83

Spain 58.21

Czech Rep 56.92

Portugal 56.39

Poland 52.32

Greece 50.05

Hungary 49.96

Turkey 45.48


Development of the Economic and the Economic Social Dimension a Comparison



Economic and Economic Social Dimension Gap



Prof. Rafi Melnick - IDC Herzliya

Thank you

Documents

Prof. Rafi Melnick Provost, IDC Herzliya National Security Balance The Civilian Quantitative Dimension The Herzliya Indices Herzliya Conference 2014