Israel's Plan to Develop the Negev Is a 7-year Flop

NIS 20 billion development plan was approved by the government in 2005 and targeted for completion by 2015. What impact has it had? None.

The first seven years of a 10-year plan to change the economic face of the Negev have gone by with barely anything to show for it.

Aiming to exploit the economic ripple effect coming from the transfer of military installations to the south, which would bring jobs as well as demand for homes and services, the NIS 20 billion development plan was approved by the government in 2005 and targeted for completion by 2015.

The goals, drawn up by the organization Daroma Idan Hanegev include improving educational and job opportunities in the region as well as boosting its population. They are still relevant but will presumably require the direct involvement of the director general of the Prime Minister's Office to see them through.

The single biggest budget in the project, some NIS 8.1 billion, was earmarked for infrastructure development, including the construction of a new airport. NIS 5.6 billion was budgeted for fostering industry and tourism, NIS 4.6 billion was set aside for education and NIS 1.2 billion for housing.

One reason the much-needed breakthrough remains so distant is that the government continues to view the Negev, in the south, and the Galilee, in the north, as if they constituted a single region, known as "the periphery," rather than treating them as two discrete areas that face very different challenges.

The Finance Ministry, together with the Industry, Trade and Labor Ministry, has been promoting high-tech-based growth in the Negev as reflected by the establishment of facilities in the Be'er Sheva area by companies such as ECI Telecom, EMC Corporation and Ness Technologies.

Over the past decade the U.S.-based semiconductor chip manufacturer Intel Corporation has established itself as a major employer in the region, but its position is hanging by a thread and conditional on plant upgrades requiring huge investments that might not pan out.

Israel Chemicals has traditionally been a major source of employment in the Negev. But economists are beginning to doubt its continuing central role in the area in the wake of the offer to buy control of it from Canada's Potash Corporation of Saskatchewan.

The regional development model based on clustering economic activity around complementary organizations is being implemented in the Negev only in Be'er Sheva. Attempts are being made to promote biotech industry around Ben-Gurion University, Soroka Medical Center and the technology incubator. The university attracts students from all over the country, but most leave the region after they graduate.

"The state needs to create conditions in which the private sector can attract investment and development," says Shlomit Nardia, the CEO of Pareto Strategies. The firm, part of the Pareto consulting group, has been working for several years with a number of local governments in the region to take advantage of the opportunity offered by the influx of military personnel and facilities.

"The population should be increased by 70% to about 900,000 residents to reduce unemployment and cut the gap in average wages by 60%," according to Nardia. For this to happen, she adds, government investment of about NIS 20 billion is needed, NIS 2 billion each year over a decade. This, she claims, can be expected to lead to fourfold this amount of private-sector investment.

Daniel Bar-On
Eliyahu Hershkovitz