ENDNOTES
      1. This figure was reported in Yedioth Ahronoth, April 27, 1993. Bank Hapoalim is controlled by Histadrut and Bank Leumi is controlled by the Jewish Agency. These are the two dominant quasi-government institutions of Israel.
      2. For the history and statistical growth of the TASE, see Saul Bronfeld, Foreign Investment in Israel Via the Tel Aviv Stock Exchange, Discussion Paper 2-11-90 (Tel Aviv: Israeli International Institute for Applied Economic Policy Review, November 1990).
      3. The history of the bank shares crisis has been discussed in a number of publications. See, for example, Yair Aharoni, The Israeli Economy: Dreams and Realities (London and New York: Routledge, 1991), pp. 232-236. The bank arrangement shares were fully redeemed by October 1991. The collapse in bank shares reduced market capitalization of equities on the TASE from $16 billion in December 1982 to just over $4 billion in December 1983. Through 1987, bank arrangement shares constituted about half of market capitalization. By the end of 1989, the growth in new issues and additional placements of existing firms sharply reduced the importance of bank arrangement shares as a fraction of equity market capitalization.
      4. During Israel's pre-state, or Mandatory period, more than three-fourths of all capital imports were private. The British emphasized the development of a free market economy, and rejected requests for protection from local manufacturers. Taxes and spending were held to very low levels. After independence in 1948, the share of private capital in total investment fell to a meager 15 percent. The shift from private to public investment was directly attributable to the Government's use of $850 million in German reparation payments granted in September 1952. The Government created a state-owned enterprise to spend the money, having rejected a plan prepared by an economic expert to use the funds for infrastructure and relying on private enterprises to take the lead in economic development. The Government used these funds to direct virtually each and every project and firm in the economy. See Aharoni, The Israeli Economy, pp. 65-71.
      5. Ha'aretz, June 25, 1993.
      6. The Jerusalem Post, January 6, 1993.
      7. The Jerusalem Post, September 26, 1993.
      8. The Jerusalem Post, January 28, 1993.
      9. The Jerusalem Post, January 28, 1993.
      10. Yedioth Ahronoth, February 11, 1993.
      11. The Jerusalem Post, March 5, 1993.
      12. The Jerusalem Post, May 13, 1993.
      13. The substance of his lecture was reported in Globes, June 9, 1993.
      14. The Jerusalem Post, June 16, 1993.
      15. The Jerusalem Post, June 20, 1993.
      16. The Jerusalem Post, June 22, 1993.
      17. The Jerusalem Post, June 29, 1993.
      18. The Jerusalem Post, June 30, 1993.
      19. Ha'aretz, July 13, 1993.
      20. The Jerusalem Post, August 5, 1993.
      21. The Jerusalem Post, March 19, 1993.
      22. The Jerusalem Post, June 8, 1993.
      23. Globes, June 10, 1993.
      24. The Jerusalem Post, July 5, 1993.
      25. The Jerusalem Post, October 1, 1993.
      26. The Jerusalem Post, October 20, 1993.
      27. Reported in Globes, November 1, 1993.
      28. The Jerusalem Post, January 28, 1993.
      29. The Jerusalem Post, April 28, 1993.
      30. The Jerusalem Post, May 21, 1993.
      31. The Jerusalem Post, May 17, 1993.
      32. The Jerusalem Post, August 30, 1993.
      33. Frenkel criticized the maximum price approach at a meeting of the Jerusalem Economic Forum. The Jerusalem Post, August 31, 1993.
      34. The Jerusalem Post, September 2, 1993.
      35. The Jerusalem Post, October 14, 1993.
      36. The Jerusalem Post, January 5, 1993.
      37. Reported in The Jerusalem Post, February 9, 1993.
      38. Ha'aretz, February 12, 1993.
      39. The Jerusalem Post, March 10, 1993.
      40. The Jerusalem Post, July 21, 1993.
      41. The Jerusalem Post, September 21, 1993.
      42. These facts are set forth in The Jerusalem Post, January 11, 1993.
      43. The Jerusalem Post, January 20, 1993.
      44. The Jerusalem Post, March 3, 1993.
      45. The details of the plan appeared in The Jerusalem Post, February 1, 1993.
      46. The Jerusalem Post, August 5, 1993.
      47. Ha'aretz, August 18, 1993.
      48. Ha'aretz, July 12, 1993.
      49. Reported in Ha'aretz, July 29, 1993.
      50. The most recent example of an egregious misrepresentation of Israel as a free-market economy is found in Assaf Razin and Efraim Sadka, The Economy of Modern Israel (Chicago and London: University of Chicago Press, 1993).
      51. In November, I had a lengthy conversation with a young Knesset Member who had decided to focus solely on economic policy, in marked contrast with the vast majority of his colleagues who concentrate on security and territorial issues. Now, after 16 months in office, he was reconsidering his position, having observed that even those politicians who had reached the pinnacle of power in attaining the portfolio of the Minister of Finance, later lapsed into obscurity. Economic issues may dominate public debate in most Western democracies, but they continue to pale against security and territorial issues in Israel. This bodes ill for the future of economic reform.

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