On May 10th 2011, Israel will celebrate its 63rd Independence Day. Positive growth figures are everywhere. Over the past year, the population increased a further 2% to nearly 7.75 million and the economy moved forward by around 4%.

The economy has come a long way in 6 decades. Back in the 1960s, the country was still securing barter deals with the Soviet Bear, using Jaffa oranges as currency. In the 1970s, the defence budget amounted to a massive third of the GDP. By 1986, Shimon Peres, then Prime Minister and now President, had to freeze wages and prices. An economy that had cowered behind tariffs was about to be exposed to the world.

Leap forward a generation to today, and Israel is an economic success:

• In 2010, the country was accepted into the OCED and the top rank of stock exchanges
• It is a leading force in cleantech, particularly solar and biomass techniques
• For years, Intel computers have been powered by the success of its 3 r&d centres in Israel.
• The industrial revolution, as driven by the communications industry, continues to feature a massive effort from the Holy Land.

Put it another way, there are not many OECD countries that have emerged from the credit crunch so proficiently. Unemployment is at a near record low and falling.

For international investors, there are large positives to be found. It is not just about VCs or choosing the right share. Large public utilities are being sold off. The Port of Eilat is looking for a new owner form overseas. And a tender has been issued for the new metro in Tel Aviv. The Electricity Corporation could be next.

True. Not everything is perfect. The OECD has yet again warned about the increasing gap between rich and poor. The Bank of Israel has actively warned that the continuous rise in housing prices could threaten the economic stability. There again, of the near 200  countries on the globe, I am not aware of one state without some financial concerns.

And is there a lesson in this for others, especially neighbours in the region? Israel has learnt to forge success, despite on-going threats to its existence. Decision makers in Jerusalem long ago came to realise that an economy based on crying and requiring international loans is not a recipe for success.  

The way to build a better society for all is by creating the conditions to let the nation use its natural skills.