Project Director: Prof. Avraham Ben-Bassat
Research Assistant: Mr. Michael Yifrach

Economic reforms play a major role in sustainable economic growth, but there will almost always be those who oppose them – some due to skepticism towards the practicality of the reforms, and others as a result of conflicts with their own personal interests. Therefore, it is very important to study the conditions which lead to successful implementation of economic reforms.

The goal of this research project is to examine the motives for economic reforms which have been proposed since the year 1985, their acceptance in economic circles, and to measure the strength of the opposition to them, and the ability of the political echelon to implement them.

This research project will focus on reforms which fit into one of these two categories: 

1. Minimizing government intervention in business – in the stock market, in foreign currency, etc.
   Government intervention in the form of regulated prices or supply results in the distorted allocation of resources, inefficient manufacturing, and discrimination between manufacturers and consumers. All these add up to harm Israel's potential economic growth.
   
   
2. Encouraging competition in areas dominated by monopolies, and privatizing government-owned monopolies.
   Lack of competition leads directly to lower supply of any given product and increases economic inequality. 

The government was always quite involved in the Israeli market, and became much more involved during the economic crisis of the years 1974 – 1985. This crisis, which became known as "The Lost Decade" brought about a plan to stabilize the market, but also led to a change in the economic perception of policymakers – from considerable government involvement to market economy.
Despite the change in the policymakers' view, a process of liberalizing the Israeli economy has been dragging on for the past twenty years. Some economic reforms have been proposed but have yet to be implemented, and others have been implemented successfully only after consecutive failed attempts. Several attempts to implement the same reform offer us a chance to compare the conditions that existed in each case and to come to conclusions regarding the optimal setting for successful implementation of economic reforms and what needs to be avoided in order to circumvent more failed attempts in the future.

Parameters which will be examined:

1. The need for reform, especially in a globally-oriented market
   
   
2. Macro-economic background conditions
   
   
3. Consensus among professional officials
   
   
4. Strength of opposition from those with conflicting interests
   
   
5. The political capacity of decision-makers