When the first three countries – Israel, the United Arab Emirates and Bahrain – signed the Abraham Accords last year, there was a sense of something new and exciting. Of a new paradigm emerging that holds the promise of a new peace and prosperity in the Middle East, a region with a long history of strife.
It is not by chance that these first signatories of the Abraham Accords are the most economically free nations in the Middle East.
Using the annual Economic Freedom of the World Report published annually by the Fraser Institute in Vancouver, Canada, of 162 nations ranked according to economic freedom, Israel ranks 39, Bahrain 70, and the UAE 74.
If we look at the bottom of the list, we see the failed nations in the region that cause the world so much grief - Syria 151 and Iran 158.
Taking a closer look at what the Fraser Institute measures provides insight into why this matters.
Five components in each nation arrive at that nation’s economic freedom score: size of government; legal system and property rights; sound money; freedom to trade internationally; and regulation.
We’re talking about creating conditions in which human initiative and creativity is unleashed, but in a secure, reliable, predictable legal environment. The pretense of political control and capriciousness must be displaced with respect for the human spirit.
Nations with the best economic freedom scores grow the fastest, have the highest per capita income, highest life expectancy, lowest income mortality rates, and the lowest poverty rates.
The average per capita income in nations in the top quartile of economic freedom is $44,198. The average in the bottom quartile is $5,754.
Israel has received a lot of attention for its economic success of recent years. Per the World Bank, Israel, with a per capital GDP of $43,589 in 2019, has surpassed the UK-$42,329, France - $40,496, and Italy - $33,225.
But Israel is a recent entrant on the world scene in economic achievement. And much of this can be attributed to a dramatic change in economic freedom.
In 1980 it ranked 96th in the world, 1990 – 83, 2000 – 64, and in 2018 – 39.
Despite the compelling case for economic freedom, it gets not much attention in university programs in economics and business.
We established the Friedberg Economics Institute in Israel in 2013 to provide seminars and learning opportunities for Israeli university students to gain exposure to these important ideas.
We bring top economists and policy makers to Israel to lecture and the program has been received with great enthusiasm.
Talented Israeli students are graduating and seeing lower incomes and a substantially higher cost of living than their counterparts in the United States. As result, too many of the best emigrate. The answer is to keep priming the pump of economic freedom in Israel, to drive up growth and income and lower the cost of living.
We are now in the process of launching a new seminar, building on the Abraham Accords, to spread understanding and appreciation throughout the Middle East that economic freedom can lay the groundwork for a new peace and prosperity.
The Friedberg Economics Institute has forged a new working relationship with New York University Abu Dhabi to bring their students to Israel to study the nature and benefits of economic freedom, alongside students from Israel’s best universities. We are now in the process of raising the resources that will make this new program possible.
Last month, one of our lectures in Tel Aviv was interrupted half-way through by sirens, provoked by rocket attacks from Gaza. We were forced to evacuate to hallways in the inner recesses of the building and we continued the lecture.
It’s time for a failed paradigm that refuses to die, that has produced nothing but war and human suffering, to be replaced by a new paradigm of promise, trust, hope, and opportunity.
Economic freedom will pave the way for a new peace and prosperity in the Middle East. Light will again shine forth to the world from the cradle of civilization where it all started.
Bob Borens is director of the Friedberg Economics Institute in Jerusalem
