Transcript Kipnis - RSA Israel

The Impact of Globalization
on Israel's Economy,
Society and Space
Israel Regional Science Association meeting
Beer Sheva, 15.4.2008
Prof. Baruch A. Kipnis
The University of Haifa
OUTLINES
Attributes of a globalized world
Israel’s affiliation with the global economy
The impact of globalization:
 Socio-Economic influences
 Spatial impact – a polarized spatial role of Greater Tel
Aviv
Do we have a solution?
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Prof. Baruch A. Kipnis
What is Globalization?
Globalization is
the most used,
the most misused,
and the most confused word…..
(Dicken 2007)
 The contemporary globalized world emerged during the mid 20th century, but it roots date
back to late 19th century and even before
 Globalization was made possible by the world’s sophisticated communication networks
 Globalization reveals a polarized geography of production, distribution, Investment and
consumption
 Globalization encompasses many aspects of our lives: economy, social, culture, politics
and other
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Prof. Baruch A. Kipnis
The “Global Triad” - - the “Mega Markets” of the Global Economy
Source: Dicken, 2007
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Prof. Baruch A. Kipnis
A polarized economy of the “Global Triad”
 The Global Triad controls global production - - Industry, Producers’
services and FIRE
In 2004 the Triad produced 86% of the global GDP
 The Global Triad controls the global commerce and distribution
In 2004 the Triad commanded over close to 86% of the global exports
 The Global Triad assemble most of the ‘crisscrossing’ FDI
In 2004 the Triad pulled 87% of the world’s FDI; it was the origin of 99%
of the global FDI
Source: Dicken, 2007
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Prof. Baruch A. Kipnis
Israel’s Involvement with the Global conomy?
Israel entered the Post Industrial age in late 1980s Early 1990s .
The post-industrial employs specialized producer services that help
integrate the global centralized management , primarily of its global
economic ventures.
Those who manage the global economy are:
The ‘qinary’ sector - - Decision making and Control
The ‘quaternary’ sector - - APS
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Prof. Baruch A. Kipnis
The following factors have helped post industrial Israel
to associate with the Global economy:
Israel’s human resources:



its high educational capital
the absorption, in the 1990s of over one million immigrants
its high-tech IDF, and its defense industries and R&D facilities
Israel’s education, basic research and applied R&D infrastructure
and institutions:



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Seven Universities and a few public and private colleges
hundreds of R&D laboratories and start-up firms
High level of investment in R&D - - in 2004 Israel invested 4.4% of its GDP in
R&D, and between 1995-2005 some $13.3 billions spent on new projects, one
third is foreign capital
Prof. Baruch A. Kipnis
The following factors have helped post-industrial
Israel to associate with the Global economy / Cont.
Israel’s advanced physical infrastructure systems:



modern communication
air and sea ports
advanced surface transport systems (rail system)
Geo-political and Geo-economic factors:


the abolishment, since early 1990s, of the Arab boycott
Israel as a ‘bridge country’ between EC and NAFTA
Israel’s spatial planning doctrine:

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since early 1990 a doctrine of ‘controlled concentration’, aiming at large
urban agglomerations, was adopted (National Plan 31)
Prof. Baruch A. Kipnis
The Impact of
Globalization on the
Economy and
Society
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Prof. Baruch A. Kipnis
Annual Growth of GDP 1988-2007
(percentages)
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
-2.0
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
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The Impact of Globalization on Israel’s - - National Accounts
 Israel’s foreign trade:

Israel balance of payments between 1990 – 2006: imports increased by 212% and
exports by 292%. In 1990 Import minus Exports was $3.4 Billions; in 2006 it was $1.1
Billions.

In 2006 Imports from the ‘Global Triad’ was 66% of Israel’s total. Exports amounted to
84%. Yet, trade with neighboring countries, the Palestinians included, was minimal. Its
future potential is very small.
Increase in GDP

Between 1990 – 2006 Israel’s GDP increased by 183% reaching $199 Billion.
GDP per/capita increased from $14,500 in 1990 to $27,950 in 2006.

According to IMD index, Israel’s competitive position in 2006 was 21 with 74.3 points
out of 100, an improvement of three places compared to 2005.
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Prof. Baruch A. Kipnis
Structural Changes in the GDP, in Employment
and in Occupation
Structural Changes in the GDP, in Employment and in Occupation
 Between 1995 and 2006 the contribution of Israel’s business sector to the GDP
increased by 58%. The most important contribution was that of the FIRE and APS
 A recent Economic report informed that a committee headed by the Director General of
the Ministry of Finance plans to initiate a policy aimed at making Israel’ a Global
Financial Center, and a mediator between the US and Europe and between them to
the Far East.
 A significant increase also took place in the Communication industry, in commerce and
hospitality services. The latter reflect the accelerating demand for leisure by of the
“post-industrial” Israeli society
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Prof. Baruch A. Kipnis
Structural Changes in Employment 1990-2005
The structural changes in employment and occupation are essential for the
functioning of a globally oriented post industrial society.
%
Industry
All employed
Change
67.1
Growing industries
Occupations
All employed
Change
67.1
Growing occupations
Finance and business services
180.8
Commerce and food and hospitality
services
108.9
Public and Community services
%
Unskilled labor
367.6
178.8
Academicians
84
Transport, storage and communication
77.9
Construction and public works
67.1
Declining industries
Managers
86.1
Declining occupations
Electricity and water
36.6
Clarks
Manufacturing
21.7
Sales and services
57
Agriculture
-20.0
Free and technical
55.2
Personal services
-59.3
Skilled in manufacturing
29.6
Skilled in Agriculture
-33.2
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61.1
Globalization and Inequality
 Income disparities --
between 1990 and 2006 the income of the upper deciles increased by 50%.
Income of lower and middle deciles declined.
 Percentages of households below poverty line in Tel Aviv, Ramat Gan and Rishon Le Zion are below
the national average; Net disposable income per standard person was higher than Israel’s average
by 17% in Rishon Lezion and by 38% in Tel Aviv.
60.0
Income Distribution Between Deciles and
Percent Change 1990-2006 (Percentages)
50.0
40.0
30.0
20.0
10.0
0.0
Upper
deciles
14
2
3
4
5
1990
2006
6
% Change
Prof. Baruch A. Kipnis
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8
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Lower
deciles
Globalization and Inequality / Cont.
Industry and Occupational Inequality
 Hi-tech industry VS traditional industry: The first increased its output and
most of its production is for exports; the latter is declining and its product is
for the domestic market.
 Structural modifications in occupation resulted in increase of the ‘quinary’
and ‘quaternary‘ sectors as well as of ‘unskilled workers’, many are
structurally unemployed, young persons and students, women, and new
immigrants…
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Prof. Baruch A. Kipnis
Globalization and Inequality / Cont.
Spatial Polarization

Israel experiences strong ‘polarization’. The Nation’s ‘hard core’ has upgraded its economy’
society and cultural assets. Slow ‘spread’ has extended the spatial stretch of the ‘core area ‘from Hadera to Gedera’ it is now ‘from Zichron [Yaakov] to Asquelon’ .
Early spread processes have been observed in Haifa, mostly in hi-tech.

The trigger is the accelerated development of Israel’s rail network.

Commuters flows -- settlements along the rail line are major suppliers of labor, primarily of
‘white collar’ to the ‘hard core’.

Urban settlements next to train stations evolved into migrants’ preference nodes. The most
attractive ones are those located at rail connecting points between ‘direct’ and metropolitan
lines, prominent are those in Tel Aviv (the hard core) and Binyamina.

The remote peripheries - - the Galilee and the Negev, evolved into the Nation leisure regions
- -Israel’s “tzimer land”
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Prof. Baruch A. Kipnis
Tel Aviv – A ‘World City’
Israel’s Anchor at the Global Economy
The Hard Core of Israel’s National Territory
“Big Head of a Country with a Shrinking Periphery”
 Strong restructuring of economic function, employment and occupations
 Strong internal spatial adjustments
 Changing Urban Skyline
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Prof. Baruch A. Kipnis
Activity Nodes in Tel
Aviv
CBD nuclei
CCD nuclei
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Prof. Baruch A. Kipnis
The Ayalon
CBD nuclei
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Tel Aviv
2000
TLA LOOP
Prof. Baruch A. Kipnis
Tel Aviv Center of Culture – a CCD in Postmodern style
Golda Meir Center of Art
The Opera of Tel Aviv
Hakamerie Theater of Tel Aviv
Tel Aviv central Library
Tel Aviv Museum of Art
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Prof. Baruch A. Kipnis
Tel Aviv Skyline
Ayalon and the Bursha
The coastal hotels
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Prof. Baruch A. Kipnis
Greater Tel Aviv’s Control over
Israel’s Economy, Society and
Culture
Tel Aviv-Yaffo 5.5% of Israel’s population
The rest of Tel Aviv Metropolis is 38.5% of Israel’s
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Prof. Baruch A. Kipnis
Activity / Attribute
In Tel
AvivYaffo
(%)
In the rest of
the
metropolis
(%)
In the
rest of
Israel
(%)
Head quarters of FIRE
Lawyers’ offices
Lawyers servicing the Global economy
Accountanting offices
Advertizing offices
Specialized physicians
70
37
69
29
32
53
14
33
16
44
37
16
16
30
15
27
31
31
410
12,501
293
2,769
615
380
Hi-tech firms (total)
Software houses
Communication
16
22
24
54
57
65
30
21
11
630
358
140
Four and Five Star hotels
53
16
31
42
58
34
59
22
38
28
33
27
60
50
14
33
14
8
4
110
50
50
131
131
24
11
4,200
1,134
42
32
47
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Persons influencing in the economy
Women influencing in the economy
Israel wealthy people $100 millions +
(W)
(R)
(W)
(R)
(B)
Painters and sculptors
(H)
Stage artists and other linked to theater (H)
Art galleries
Repertoire theaters
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48
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Prof. Baruch A. Kipnis
76
89
1
15
N
Distribution of VC by Origin and Region in $000 (1995-2005)
Region
in $000 VC
between
1995 - 2005
Foreign VC
Tel Aviv
4,824,977
3,190,561
1,634,416
1.952
Rest of Metro Tel Aviv
5,142,043
3,294,038
1,848,005
1.782
Jerusalem
994,314
594,996
399,318
1.490
Haifa
405,951
336,302
69,648
4.829
Rest of Metro Haifa
1,186,013
698,474
487,539
1.433
Inter Metro regions
456,363
344,925
111,437
3.095
The Remote Peripheries
256,704
163,840
92,865
1.764
13,266,365
8,623,137
4,643,228
1.857
Total
Source: Schwartz and Bar-El, 2007
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Israeli VC
Israeli/
foreign
ratio
From polarized ‘Compact City’ Policy to a
Spread ‘Polycentric City Network’ System
How could one get there???
The Impact of Israel’s
Railroad Development
Number of Train Passengers 1995 - 2007
in million
34.0
28.7
30.0
22.9
12.7
15.1
17.5
25.0
19.9
20.0
15.0
9.2
5.1
4.8
5.6
35.0
10.0
6.4
5.0
0.0
1995
1996
1997
1998
1999
2000
2001
Year
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Prof. Baruch A. Kipnis
2002
2003
2004
2005
2006
2007
Millions
26.8
40.0
Rail Lines Development - - their Likely Catchments Areas
and Their Latent Potential of Creating a Polycentric Region
Or a ‘City Dyads’ Along the Israeli Coast
Fan-shaped Catchments areas around Haifa and Tel
Aviv the contemporary intensifying hard core of
Israel’s ‘labor shed’.
Jerusalem would intensify its role as complementary city
with Tel Aviv when the new railroad line is operational.
Beer Sheva, at present part of Tel Aviv ‘labor shed’ will
emerge as an independent core upon the completion of
the Ashqelon-Beer Sheva line.
The region having the most promising potential to
develop into a ‘City Dyads’ with Tel Aviv is Haifa. In this
case Israel would have a ‘two anchors’ World City.
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Thanks for
your kind
attention
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Prof. Baruch A. Kipnis