"The Dutch Disease" and the Norwegian Answer: The Countries That Fell Due to a Strong Currency and Those That Cracked the System
The strengthening of the shekel presents the economy with an increasingly severe structural challenge, as an overly strong currency may harm exports and burden local industry. However, Israel is not the first country to face…
Assessment
Israel faces a structural economic challenge as a strong shekel threatens export competitiveness and local industry. The Dutch disease pattern shows how resource wealth can inflate a currency and hollow out manufacturing. Norway offers a countermodel with its sovereign wealth fund, while Saudi Arabia uses a dollar peg to control appreciation. The question is whether Israel can adopt institutional mechanisms to manage currency strength without sacrificing economic dynamism.