Assignment Question Discuss The Ways Business Essays - Free Essay Example

Sample details Pages: 6 Words: 1695 Downloads: 2 Date added: 2017/06/26 Category Business Essay Type Narrative essay Did you like this example? Culture denotes the way people lead their lives. Corrado (1996) says that culture has an impact on a persons life which can be seen in his consumption behavior also. For example Indians eat their food with their hands and some of them may lick their fingers too, whereas Chinese use chopsticks to ear noodles. Don’t waste time! Our writers will create an original "Assignment Question Discuss The Ways Business Essays" essay for you Create order An Englishman on the other hand may not relish his food until and fork and knife are given to him. All this forms a part of the culture which pervades all forms of living standards. As far as the definition of culture is concerned, culture is defined differently by different thinkers. For example, Hofstede (1980, P.21) defines culture as the collective programming of the mind that distinguishes the members of one human group from another. Tylor (1871) defined culture as that complex whole that includes knowledge, beliefs, art, laws, custom, and any other capabilities and habits acquired by man as a member of society. Ronen (1986, p.18) sees culture as the frame of reference of individuals, and Harris and Moran (1987, p.102) discuss the mental frameworks which groups, organizations and nations develop. Kluckhohn (1951, p. 86) provides that the fundamental webs of culture constitute a patterned way of thinking, acting, feeling and interpreting. Hofstede (2001) defines culture as software of the mind which provides a guide for humans on how to think and behave Hill (2009) asserts that culture has an influence on conduct of international business and a marketer cannot succeed unless and until he understands the various cross cultural influences which have an influence on demand of consumers in the market. Impact of culture on International business and implications for Multinational enterprises Hollensen (2004) describe culture as the learned ways in which a society understands, decides and communicates. Daniel and Malhotra (1993), contends that culture differs among different countries and without keeping in mind the cross cultural characteristics which may have an impact on consumption pattern of consumers, an international marketer cannot succeed in the market. Thus culture has an important meaning for the international marketer and its implications for multinational enterprises can be understood through a number of examples which highlight the importance of understanding culture for an international marketer. Hill (2009) asserted that culture of a country influences the cost of doing business in a country. Prince and Hoppe (2004) say that a company incurs heavy cost of doing business in a foreign country if it enters the country without understanding the culture of the host country. Hill (2009) demonstrates that a multinational corporation should know that there are d ifferences in work related practices in different countries. For example, there are some cultures which observe more holidays than others. A company entering such a cultural backdrop must adjust the scheduling of labor accordingly even if this involves extra costs. Hofstede (1980) in his study at International business machines (IBM) have identified that an international marketer needs to understand four dimensions before entering into a new territory. These four dimensions include power distance, individualism versus collectivism, uncertainty avoidance and masculinity versus femininity. Hofstede (1980) argued that different countries have different scores on the above four variables. In his study, Hofstede (1980) rated twenty countries on a scale of 0 to 100. Hofstede (1980) showed that an international marketer before targeting a country should keep the scores in mind and accordingly formulate marketing strategy to target the market. Hill (2009) asserts that modification of str ategies by an international marketer will result in his success in the market. For example two different economies which consist of Pakistan and Arab countries represent more masculine and collective countries compared with feminine and individual North Europe, and as a result there are also some systematic differences in their values. An international marketer cannot target the countries in Pakistan and Arab economies with the same products as is done in case of North Europe. Hofstede (1980) further contends that culture includes values, norms, religion, language and social class in the society. All these cross cultural characteristics have to be kept in mind by the international marketer before targeting these countries. Hofstede five dimension model is shown below: (Source: https://www.provenmodels.com/files/d616c20f1759b51f1e57bf17ee4cafcc/five_dimensions_of_culture.gif) In 2001, Hofstede expanded his concept of culture by including a fifth dimension to the above four dime nsions. This dimension was termed as Confucian Dynamism or Long term Orientation by Hofstede. Hofstede (2001) contended that the dimension of Confucian Dynamism deals with the aspect of individual countries towards time, persistence, respect for traditions and reciprocation of gifts and favors among the individuals in the country. Hofstede in his initial study has highlighted the fundamental building blocks of culture. Hofstede (1980) contended that culture includes values and norms. Values are concerned with ideas as to what society believes to be good, right and desirable (Hofstede 1980) According to Hofstede; values include the attitude of individuals towards their freedom, loyalty, justice, responsibility and personal relations. On the other hand norms are the rules and regulations which prescribe the behaviors which should be followed by individuals in certain situations. Hofstede (1980) has contended that by understanding the cultural dimensions a company can target the consum ers by providing products which suit to the culture of respective country. There are many examples of companies which have gained success in the market by understanding the culture of the country. Cross cultural issues have an impact on multinational enterprises because they influence the cost of doing business in the country. These examples highlight the importance of considering cross cultural issues which need to be understood by the marketers before framing adequate marketing strategies for targeting the company. For example, Shoji (1991) discussed the case of DeBeers which is a raw diamond supplier in many countries. Shoji (1991) showed how by understanding the cross cultural differences the company gained success in a situation which was deemed as failure. The company ran its advertisement of diamonds in Japan that showed western couples in evening dress which shows the standard mentality that equates diamond with grandeur. The company analyzed that its advertisement is not re sulting in addition of its sales. The company through a thorough analysis of Japanese culture learnt that Japanese woman do not smile and kiss their husbands when they receive diamonds as presents. Instead they shed a few tears and pretend they are angry at their husband for spending so much money. This presented the need for chaining advertisement by DeBeers to suit to the culture of the Japan. The company changed its Christmas campaign and showed a tired wage earner and his hard working wife in their tiny apartment. Upon receiving the sparkling present, she snaps at her extravagant spouse by saying Oh, You stupid! This advertisement was a marketing success, boosting the popularity of diamonds in Japan and showed the importance of understanding cross cultural issues by a multinational enterprise. Another example of not understanding cross cultural issues can be analyzed in the case of Ford (Kwintessential article 2008). The company introduced its new car Pinto in Brazil. The com pany observed that it has very good features but still its sale is not increasing. The company analyzed the reasons and find that its sales does not pick up because Brazilians did not want to be seen driving a car meaning tiny male genitals which was the meaning of Pinto in language of Brazil. The company changed the name of the car and observed that the car gained popularity in Brazil. Cassie (2007) in his article highlighted that even small products like a curling iron are inhibited by language. For example, Clairols Mist Stick forgot that Mist is a German slang word for manure. This resulted in failure of products. The thorough analysis of culture which includes language, religion, rituals and values and norms influences the cost of doing business in the country. Kwintessential article (2008) highlight that culture is the reason why many hotels in the USA or UK do not have a room number 13. Another example is of Nippon Airways which is operating in Japan and it do not have seat n umber 4 or 9 not considered auspicious Kwintessential article (2008). The article shows that apart from language, a company needs to be careful in using images also for the various advertisement campaigns. For example at one place the image may appear to be very attractive but the same image may result in retaliation in another country. It is very common to see the pictures of women wearing bikinis in advertisement posters in UK and US but such images would result in outrage and retaliation in Middle East. Another example of a mismatch between culture and product of a country can be seen in Africa where majority of food products sellers often show the pictures of food in the package because majority of people cannot read English. In this scenario, Gerber introduced its baby food with the picture of a cute little baby on the carton. This created horror in Africa among the consumers. The company has to change the carton to suit to the market. All these examples shows the need of under standing culture before introducing new products, new marketing or advertisement campaigns in a country and the inability of the company to follow this will result in failure of products as well as rise in cost of doing business in the country. An international marketer needs to understand the cross cultural issues apart from just understanding the economic environment of the host country. Culture has an influence on cost of doing business in a country and the failure or inability to understand cultural differences between countries has been the cause of many of the business and product failures. There are many examples of companies which have gained success or failure as a result of understanding or failure to understand cross cultural issues in international marketing arena. Hofstede (1980, 2001) in his model has identified the importance of understanding the various dimensions of culture by a marketer who is entering into a foreign market. In his studies of 40 countries, he has r ated various countries on the different dimensions of culture and has shown that before targeting a new country, an international marketer should ensure that culture of the country should be understood otherwise it would result in failure of product and loss of investment for the company.

Parenthood Is A Health Care Provider - 1730 Words

Planned Parenthood is a health care provider that focuses on supplying women and men of all ages and backgrounds with health care and sex education. This includes, but is not limited to, contraception, testing and treatment for sexually transmitted diseases, screenings for cancers, sexual education courses, and, most notably, abortions. Planned Parenthood finds itself at the center of much controversy specifically for its role in terminating pregnancies, as well as providing students with sex education instead of abstinence only programs. This controversy has led to debates over whether Planned Parenthood should receive federal and state funding, and whether its clinics should be closed altogether. There are two opposing claims in the debate over Planned Parenthood. A claim is an appeal that a specific issue needs to be addressed. In this case, one claim is that Planned Parenthood provides its patients with essential health care and sexual education and for that reason should receive full funding and recognition as a legitimate health care provider. The opposing claim is that Planned Parenthood should not receive federal or state funding and would preferably be shut down altogether because it commits murder when it aborts a baby and corrupts the minds of the youth by encouraging casual, even dangerous sex. Each of these claims is made by a claimsmaker, or a person who works to convince others that his or her issue needs to be paid attention to. In this case, each of theShow MoreRelatedParenthood : A Middle Ground1483 Words   |  6 Pagestransmitted infections, fertility, pregnancy care, and breast and cervical cancer no matter if they perform abortions. This has been reversed by President Trump. Trump has signed legislation to cut federal funding to Planned Parenthood and other groups that perform abortion. This was a move defended by conservatives that have demanded to impose curbs on reproductive rights. â€Å"Trump has showed ambivalence about planned parenthood, voicing support for its health- related services other than abortion, andRead MoreParenthood, A Non Profit Healthcare Group1574 Words   |  7 PagesThe History of Planned Parenthood and the Constitutional Right to Abortions Planned Parenthood, a non-profit healthcare group has been under fire with the public hoping to defund the clinics. Planned Parenthood is a health care provider that was funded 100 years ago. In 1916 a Birth control organization was created by Margaret Sanger . When it was first created, it didn’t consider the health or rights of women as a motive. Instead it was founded in order to stop child labor and infant mortality (PrimroseRead MoreA Social Problem That Is Currently Occurring Is Rather1748 Words   |  7 Pagesrather federal funding should continue to keep Planned Parenthood open. Donald Trump has recently joined other Republicans in their vow to end federal funding for Planned Parenthood, solely based on the idea that Planned Parenthood health care services provide for patients to receive an abortion. The percentage of abortions that Planned Parenthood actually does are less than 3% (Planned Parenthood Statistics). Taking funds away from Planned Parenthood creates a pr oblem not only in America but internationallyRead MorePlanned Parenthood Is A Widely Known Nonprofit Organization.1046 Words   |  5 PagesPlanned Parenthood is a widely known nonprofit organization. They are the health care provider for millions of people within our nation. When people hear the words Planned Parenthood they automatically assume abortion. Yes, abortion is a service that they offer yet, they deliver much more than that. They deliver and educate us about birth control, cancer, men and women’s sexual health, pregnancy, sexual orientation and offer the Morning-After Pill (emergency contraception) and sexually transmittedRead MoreHealth At Stake . There Has Been A Recent Event Where The1441 Words   |  6 PagesHealth at Stake There has been a recent event where the House of Republicans defunded an organization for one whole year, which can save many lives. People rely heavily on Planned Parenthood, being the nation’s health care provider, as it provides them with reproductive health benefits. These benefits include, but are not limited to, access to contraception, cancer screenings, and basic preventative care. However, there are numerous amounts of people who concur with the decision to defund thisRead MoreAbortion : The Pro Life Action League873 Words   |  4 Pagesparticipate in marches, pickets, prayer vigils, and also raise awareness by holding large abortion pictures on busy streets to show what the end result of abortion is on an unborn child. They also hold a monthly protest at Planned Parenthood in Aurora, one of the busiest Planned Parenthood clinics, and protest pro-abortion politicians and other public figures that oppose the rights of unborn babies. Some of the other objectives of t his group are to confront abortionists, abortion promoters, infiltrate pro-choiceRead MoreThe Importance Of Planned Parenthood1459 Words   |  6 PagesThe responsibility and the care of a child are often decisions people face when they find out about the announcement of the pregnancy. Fear of growing up fast and the responsibility of a child are often not something people can handle. For millions of men and women across the country, they turn to Planned Parenthood who not only deals with pregnancy but also is resource in birth control, informative about sexual health but STD testing, screenings (â€Å"Sexual Health Topic†). April 14th of 2017, PresidentRead MoreShould Planned Parenthood Be Federally Funded?846 Words   |  4 PagesShould Planned Parenthood Be Federally Funded? Planned Parenthood is a nonprofit organization that does research into and gives advice on contraception, family planning, and reproductive problems. Recently Planned Parenthood has had controversy for many pro-life members creating videos that pro-life members have altered to making many believe Planned Parenthood organizations harvest and sell fetal body parts, and give abortions when they women are too late during their pregnancy. While Planned ParenthoodRead MoreParenthood Should Have More Government Restrictions1228 Words   |  5 PagesDefunding Planned Parenthood Although my view is consistent with a capitalistic micro government, Planned Parenthood should have more government restrictions. Most people would beg to differ for several reasons. This issue has a two sided debate and there is no wrong or right answer. The only way to come down to a fair conclusion is by making a pros and cons list, so one can see each side instead of being close-minded. Planned Parenthood has been controversial due to the services it provides to womenRead MorePlanned Parenthood : A Controversial Topic Sweeping The Nation Of America With Political And Moral Issues1379 Words   |  6 PagesPlanned Parenthood is a controversial topic sweeping the nation of America with political and moral issues. Every day one could come across a new article on it, stubble upon a news article in their local paper or even on their local news station. Planned Parenthood directly provides reproductive health services, is involved in teach young students about sexual education, contrib utes to research in reproductive technology, and interacts with legal and political efforts aimed at protecting and developing

Gross Domestic Product GDP Free Essays

The Gross Domestic Product (GDP) of a country is commonly defined as the total market value of all final goods and services produced in a country in a given year. The fact that it is measured regularly and quite consistently in practically all countries of the world allows a direct comparison of the standard of living in individual countries. The frequent measuring also makes it possible to quickly recognize changing trends. We will write a custom essay sample on Gross Domestic Product GDP or any similar topic only for you Order Now For example, it is used to determine whether an economy is growing faster or slower than in the previously measured period and to compare it with other economies in the world. When GDP is calculated in relation to the population of a country, one speaks of the average GDP per capita. This is often used as an indicator of a country’s standard of living. However, as a measure of the standard of living in a country, GDP has its limitations and shortcomings. ? It does not differentiate between economic output that actually benefits the population and economic bads in a country, such as, for example, expenses for warfare, pollution-producing industries, etc. It does not include unreported activities such as illegal trading or black-market labour. ? It does not reflect non-market activities such as unpaid housework, childcare, and care for the elderly at home, community services or similar activities. The distribution of wealth within a country can be very uneven. When there is a high concentration of enormous wealth in a very small group, and the vast majority of a population is very poor, the average income may be relatively high, although the standard of living of the majority population is low. GDP can only measure the material standard of living, without taking into account the quality of life as perceived by each individual, which cannot be standardized across a population or countries. ? Economic output can increase due to technological advances requiring less employment, thereby decreasing the employment ratio. ? The age distribution within a country may be such that a relatively small group of working-age people have to support a large group of old people, resulting in a lower employment rate and consequently a lower standard of living. How to cite Gross Domestic Product GDP, Papers

Comparative Progress Global Business Systems

Question: Discuss about the Comparative Progress Global Business Systems. Answer: Introduction Modern Israel was established in the year 1948 with a very small population. In just a period of two years, the population of the country doubles. This lead to an increase in the gross domestic product per capita income. Various economic factors and conditions led to the transformation of the state. The assignment analyzes the economic factors such as interest rate, Gross domestic product, interest rate, technology, population and other factors. The country has the second largest start up companies in the world with the GDP of US$37,032. It is a developed nation and was ranked in seventeenth position in the world in the year 2010 (Aharoni, 2014). It is technically advanced economy. The economy plays a leading role in the supply of solar energy industry. The industries that are established in the country are metallurgical industries, chemicals, food, metal products, transport equipments and diamond cutting industries. The economy of Israel is relatively poor in natural resources and h ence depends on imports of natural resources from other countries such as petroleum, raw materials, wheats and other natural gas reserves (Bental et al., 2016). The industrial sector of the economy is advanced and technologically upgraded. The nation has established a free trade agreement with European Union, United States, Turkey, Mexico and other countries of European free trade association. Economy of Israel is also a tourist place with 3.54 million foreign tourists visiting the nation in the year 2013. The export goods of the nation include telecommunication equipments, machinery equipments, agricultural products, textiles, metals, and chemicals. Its main export partners are United Sates, United Kingdom, Hong Kong and China. The import goods and materials that are imported by Israel are raw materials, natural resources, petrol and petroleum products, fuels, consumer goods and investment goods. The importing partners of the country are United Sates, Italy, Germany, China and Switzerland (Yaron et al., 2013). The condition of statehood had put the economy of Israel in crisis. The unemployment rate was high and the foreign currency reserves were scarce in the period 1949 to 1959. An agreement was signed with West Germany where Germany agreed to pay money to Israel for the development of the nation. This was done to compensate the Jewish property that was stolen by Nazis. Israel is nation that is religious in nature. The state mainly comprises of Muslims, Jews, and Christians. The priority was given for the development of industries. The policies of the nation concentrated on industrialization (Blinder, 2013). Development of two policies has helped the economy of Israel develop. The first policy was Jewish immigration and the second policy was peace process. In the early 2000, the economy of Israel went again into crisis due to the crashing of dot com bubble. It hampered the startups of many new industries that put the economy at stake. The economy of Israel was able to sustain the crisis o f 2000. A growth in GDP was encountered in 2009 along with capturing low rate of unemployment (Bakalyar Galil, 2014). Economic policies that led to economic transformation Economic policies Israel gained independence in the year 1948. Economic policies are the policy that is set by the government of nation to transform the economy and form strategy that will benefit the economy. The economic policies included attributes such as interest rates, government spending, money supply, inflation rate, cash rate, taxes and various monetary and fiscal policies. Changes in any one of the economic policies affect the entire nation (Benchimol, 2016). For example, increase in money supply in the economy increases the demands, investment and the inflation rate. The population of Israel was very low during the time of its establishment. In two years, the population of Israel almost doubled due to rise in the migration of people. The political, social and economical structure of the country was developed in the year 1948. The two main factors that led to the development and growth of the economy of nation was immigration and capital inflows. The population of the country doubled from 56 ,000 to 630,000 due to huge immigration of population (Balassa, 2014). These mainly included the refugees, from Central and Eastern Europe. Immigration of large amount of population led to increase in capital inflows and funds. There was rise in the national funding and private funding. The two developments Since the early 1990s two developments has led to the transformation of the economy of Israel. The first development was the immigration of Jewish people. This led to an increase in the citizens of Israel especially from the people of former USSR. The population increased by one million Jewish people due to immigration of people. The benefit was that people who immigrated were highly educated people, which now comprises of sixteen percent of population. Rise in the population has both the advantages and disadvantages on the economy (Ben-Elia, 2016). Rise in the population in Israel led the country to establish new start up industries and create demand for products. The establishment of startup industries led to an increase in investments. Rise in aggregate demand and investments leads to economic growth. The above diagram shows that rise in the investment leads to the outward shift of both the aggregate demand and aggregates supply. This is due to the rise in the capital stock. The outward shift of the curves leads to a rise in the GDP and hence encourages economic growth. Rise in immigration and population The growth in the population has negative impact as well. Israel was successful in sustaining the rise in the population. The housing and employment needs of the people were fulfilled by the policies used by the economy. A new economic policy came into enforcement in the year 1952. The policy concentrated on curbing of monetary policies such as interest rate and money supply, relaxation of price controls and rationing, relaxation on restraints and exchange rate devaluation. The encouragement of immigration was curtailed to sustain and absorb the masses from previous immigration (Breznitz Ornston, 2013). Peace treaty The second development that led to the transformation of the economy is the signing of peace treaty between Israel and Jordan at peace conference held at the Madrid conference (Budge Laver, 2016). Technologically advance economy: Israel is technologically advance economy that attracts large amount of foreign investment. It is an industrialized economy where the concentration is on industries and service sector. The transformation of the economy of Israel led the economy become globalized with high tech industry, multinational labor and increase in consumer culture. It also led the gap between the rich and the poor to increase (Horowitz Lissak, 2012). Increase in foreign investments Increase in the capital inflow from foreign countries was one of the reasons for the economic growth. Real Gross National Product increased by rate of eleven percent and annual gross national product increased at a rate of six percent. The capital inflows was in the form of unilateral transfers, loans from the United States aids, inflow from Germany in the form of reparations, and transfers of loans and unilateral transfers from other agencies such as that of Jewish institutes (Carmon, 2016). The availability of resources for consumption in domestic nation increased both the private and national consumption in the economy. Import substitution was promoted for the development of new industries by adopting protectionists measured through the government budget. Government also enabled subsidies that were involved in export of goods. This was done to increase exports and the revenue collected from these exports (Checherita-Westphal Rother, 2012). Changes in the economic fluctuations in the economy of Israel were mainly due to flow of immigration. The economy encountered high rates of growth in income and GDP till the year 1973 after which the rate of growth was not as high as those of previous years did. The economy of Israel fell into recession in the period from 2001 to 2003. The income of the nation has said to rise in the end of twentieth century that was similar to many developed and industrialized nations (Khattab et al., 2016). The contribution of industrial sector towards the GDP growth is maximum. The change in structure of economy increased the importance of industrial sector and declined the contribution of agricultural sector. The other reason for the economic transformation was development of technology and industrialization. From the traditional industries, the industry transformed itself into high tech sophisticated industry. This was a major step from the transformation of economy of Israel (Kirzner, 2015). The capital inflow in Israel after the global crisis. In 2013, the foreign capital recorded a hit high of 7022 billion dollar. Increase in the capital inflow of the economy is the reason why the economy of Israel is able to maintain the deficit in current account. Rise in capital inflow also led to an increase in the currency of Israel strengthening the currency of Israel that is twenty-three percent (Konnikov Raijman, 2016). Liberalization of economic policies The economic policies of the economy were changed from government control to a more free policy. The government released its control over the economy to help it develop and grow. A policy of economic liberalization was followed by the nation. A free trade treaty was signed by Israel with many countries to encourage export. The restriction of imports was changed from quantitative protection to tariff protection. The economy encouraged both import and export by flexible exchange rates (Maddison, 2013). The economy transferred itself from fixed exchange rate to floating exchange rate system where the exchange rate was fixed through the system of exports and imports. The floating exchange rate system can be depicted in a following diagram: Trade and open market of Israel After the independence of the economy of Israel, the economy followed trade restriction by imposing import substitution and quantitative restrictions on imports. This was done to encourage domestic production and reduce the imports if the economy. A new economic policy was generated in the year 1952 that concentrated more on liberalization of the economy. A free trade agreement was signed between the countries where the economy encouraged export and quantity restriction on imports were replaced by tariff protection. This helped the economy encourage exports and imports that led to industrialization in the economy (Martin, 2014). The foreign exchange currency was changed from fixed exchange rate system to floating exchange rate system where the government had less control on the economy. The state driven economic policy transformed the economy of Israel. The economy of Israel transformed from a central economy to a mixed economy where both the public and the private sector thrived and the government had less control on the economy. Liberalization of the economy led to an increase in the exports and strengthened the economy (Metzer, 2014). The GDP per capita of the economy rose and the purchasing power. The economy of Israel transformed itself into more competitive market structure, that was market oriented and pen in nature. The average tariff rate in Israel is 0.9 percent (Webber Smith, 2014). The economy and the government puts several restrictions on the import of agricultural products to encourage the local farmers and help them increase and improve the standard of living. This can be analyzed from the following diagram of tariff restriction. Tariff restriction reduces the amount of goods that a country can import but also helps the government earn revenue in form of tariff rates. Tariff rates are the taxes that are imposed by the government on the economy (Morata Sandoval, 2012). Change in the role of government The role of the government changed in the economy. The control of the government on exports, imports, process and others were controlled. The role of the government shifted to other programs such as health care centers, infrastructure, and other social welfare benefit. The policy of social welfare payment such as unemployment benefits, transfer payment, pensions, insurance, helped the economy reduce the inequality gap of income (Magazzino, 2015). Due to the increase in transfer payments by the government, Israel was on e of the developed nations with the least income inequality gap. Occupation settlement enterprise Israel was one of the nations to have encountered the largest economic growth for the period of six years. The main factor for encountering largest economic growth in a period of six years apart from industrialization and liberalization was establishment of occupation settlement enterprise. The major reasons for the growth of the economy of Israel were trade liberalization, industrialization, less control of the government over the economy, global and new economic policies, encouragement of imports and exports and free functioning of the economy. Apart from these, the other reason for the transformation of the economy of Israel was use of high and sophisticated technology in the agricultural and industrial sector (O'Connor, 2013). This occurred in a period from 1967-1973 where the rate of economic growth or the GDP growth arte almost doubled. The major reason for this was establishment of occupation settlement enterprises. The major transformation took from 1948 to 1956. The economic policies have made the economy of Israel a lender and not a borrower, which is mainly due to the macroeconomic policies that the economy follows (Perez, 2013). Decline in the interest rate The interest of the economy was declined to encourage the economy towards the path of growth. Decline in the interest rates led to an increase in the money supply. Rise in money supply in turn led to an increase in demand and investment. Taking loans from the banks became more interesting and lucrative that led to an increase in the investment. Increase in investment led to an increase in the start up of industries that helped in employment generation. Decrease in the interest rate will reduce the price for loan able funds and increase the demand. This will lead to an increase in aggregate demand and investment. Economic Miracle The unemployment rate is low in Israel as compared to other nations. This is mainly due to two factors. One is the refusal of the government of Israel to aid the public money at the time of crisis. This helped in curtailing the risk that was involved with the policy. The second was the adoption of the policies set by Bachar commission that helped in management of finance of the economy. The economy of Israel is said to have gone through the phase of Economic miracle. Israels tremendous growth in the economy was remarkable (Plessner, 2012). The GDP growth rate was ten percent annually. Along with this, the economy was also successful in absorbing immigration, maintain security, fight the wars, maintain, and establish infrastructure. This was termed as economic miracle of the nation. The optimal utilization of the available resources and capital was one of the reasons for economic growth and development of the nation (Ram, 2013). The countries successful policies managed the immigrants successfully which contributed towards the growth of the economy. The economy was also successful in sustaining the global economic crisis. The economic growth of the nation was relatively high in 2006 as compared to other developing nations. Israel was one of the few nations to have encountered a positive economic growth in 2009 after the period of global recession (Richardson, 2014). GDP growth rate Table: Economic growth rate of Israel Year GDP growth rate (annual %) 2001 0.2 2002 -0.1 2003 1.2 2004 5.1 2005 4.4 2006 5.8 2007 6.1 2008 3.1 2009 1.3 2010 5.5 2011 5.0 2012 2.9 2013 3.4 2014 2.6 2015 2.5 (Source: Data | The World Bank. 2016). The growth rate is fluctuating in the economy. Initially the growth rate was rising. It declined in 2009 due to global recession and crisis. The economic growth rate was positive even at the time of recession. The other developing countries experienced negative economic growth rate but Israel experienced positive economic growth though it was low. Economic challenges Though the economy has experienced high rate of economic growth in past there are several economic challenges that an economy face. This includes both short term and long term challenges. The short term challenges that Israel economy face is the problem in developing the telecommunication industry that changes the economic outlook and perspective of the economy. The economy is also not being successful in promoting large multinational companies that controls the employment of large number of peoples. The rise in dependency of labor force participation of orthodox Jews with less knowledge hampers the economy in long run (Cingano, 2014). Due to the high dependency ratio the poverty among the orthodox Jews rise that is harmful for the economy of Israel. The two main challenges faced by the Israel economy are that of terrorism and work force participation. Terrorism: Rise in terrorism is very harmful for the economy. It affects the functioning of the economy in a negative way. The resources of the economy deplete and it leads to rise in the pollution. The number of tourists visiting the economy also declined due to which the revenue that the economy earns from tourists also declined (Rudnitzky, 2014). The rise in the terrorism hurt the exports and the foreign investments too as foreign companies were apprehensive too invest in the nation. Israels economy began to grow after the war ended. The strong point of Israels economy was that it was able to sustain the risks of terrorism (Sadeh, 2014). Work force participation: lower level of workface participation is harmful for the economy as it reduces the wealth generation and production of products in the economy (Scully, 2014). Inflation: The prices are rising with the advancement in technology and economy. The problem of income inequality between the rich and the poor is increasing. Israel is a mixed economy where both the government and private sector work together in the economy. The challenges and economic problems faced by the economy of Israel are same as that of an industrial country. This includes problems and challenges associated with reconciling innovation in industrial products and methods. The industries face problems in transition stage when replacing the traditional activities with high tech sophisticated machines (Stiglitz, 2014). It is essential for the economy of Israel to figure the ways of fitting in the global economy that is marked by two major markets of European Union and United States. The economy also faces challenges due to the relationship that it holds with other Arab countries. The economy is always under the threat of war and terrorism due to which the major part of capital is wasted in maintaining the security and army. Peace can lead to productive utilization of products. Political security also helps the economy attract foreign i nvestments that is beneficial for the economy. The educational qualification of the economy is high in Israel (Thrisdttir Karlnudttir, 2014). Conclusion Israel gained independence in the year 1948 after which the economy captured a tremendous growth in the economy. The population size of the economy doubled and the gross domestic product. The economic growth almost doubled in the economy. The economy of Israel transformed from a central economy to a mixed economy. Various economic factors led to the transformation of economy of Israel. These factors include economic liberalization policies, free trade, decline in interest rate, occupation settlement enterprise, economic liberalization, and less control of the government. Industrialization and rise in immigration are some of the other factors that led to the transformation of the economy. The economy experienced the growth in the GDP per capita income by forty percent. The economic growth doubled in the economy. Privatization of the economy and increase in capital inflow led to an increase in the economic growth. The foreign investment led to an increase on demand and start up industr ies. High tech technologies led to an increase in startup industries. The economy has low inflation rate, low unemployment rate and interest rate that led to an increase in foreign debt. Economy of Israel was able to survive the recession of 2009 and encountered a positive economic growth. References Aharoni, Y. 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