Promoting competition to enhance productivity at the firm level and resulting income and growth
improvement and a lower cost of living is an important economic and social challenge in Israel. Consistent
evidence shows multiple deficiencies leading to a dual functioning of the economy between exposed and
sheltered sectors. Product markets are hampered by regulations that are far from best practice. Because of
its geographical and geopolitical situation, Israel is less open to foreign trade than other small OECD
countries. Moreover, its product markets feature monopolies in many sectors. Addressing these issues have
been high on the policy agenda since the 2011 “tent protests”, and the authorities have adopted or launched
reforms in many domains since then. However, further increases in foreign trade exposure by lowering
non-tariff barriers, making regulation more competition-friendly in network industries, especially
electricity, and reducing the oligopolistic structure of the food and banking sectors would still have
considerable economic payoffs.This Working Paper relates to the 2016 OECD Economic Review of Israel www.oecd.org/eco/surveys/economic-survey-israel.htm
