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9 - Aggregate Concentration in Israel, 1995–2015

from Part II - Reforms and Their Effects

Published online by Cambridge University Press:  04 February 2021

By
Konstantin Kosenko
Edited by
Avi Ben-Bassat ,
Reuben Gronau  and
Asaf Zussman
Avi Ben-Bassat
Affiliation:
Hebrew University of Jerusalem
Reuben Gronau
Affiliation:
Hebrew University of Jerusalem
Asaf Zussman
Affiliation:
Hebrew University of Jerusalem
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Summary

In this chapter, for the first time in Israel, I examine the main trends in aggregate concentration – the share of economic activity that is accounted for by the largest business entities (corporations, business groups, etc.) – from the mid-1990s to 2015, focusing on the developments in its main components – concentration of production, industrial concentration, and concentration of corporate control (means of production). Using the input–output framework, I find that the process of technological changes and adjustments in the economy, in recent decades, has been translated into increasing density of the production function, and the creation of a few key industries and industry clusters. The level of industrial concentration in these central industries remained high but relatively stable. The main conclusion, however, is that, during the reviewed period, aggregate concentration in Israel declined – due to decentralization of the control over firms and dismantling of complex ownership structures (business groups) – as a result of structural reforms instituted by the Israeli government. Against this background, with dismantling of the business groups, stand-alone mega-corporations became the main centers of economic power. As in other advanced economies, these corporations have a significant, increasing impact on the distribution and level of activity of the market, and hence on its present and future level of concentration.

Keywords

Market concentrationaggregate concentrationinput-output networkdiversificationmeans of productioncorporate ownershipbusiness groups
Type
Chapter
Information
The Israeli Economy, 1995–2017
Light and Shadow in a Market Economy
 , pp. 272 - 306
Publisher: Cambridge University Press
Print publication year: 2021

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