Shoresh Study Warns Political Deadlock Endangers Arab Economic Growth

A new economic analysis argues that Israeli politicians are overlooking a major shift in the productivity of the country’s Arab citizens. Professor Dan Ben-David, president of the Shoresh Institution for Socioeconomic Research, released the findings on Wednesday. He contends that the current government formation crisis creates a risk of wasting expanding economic potential. The study suggests that ignoring the socioeconomic changes in Arab society amounts to economic shortsightedness.

The political context for this warning is the ongoing effort to replace Prime Minister Benjamin Netanyahu. The October 27 election results left no single bloc with a majority. Netanyahu’s outgoing coalition holds 53 seats, while Gadi Eisenkot’s opposition bloc won 48. The remaining seats belong to Ra’am and the Joint List, which together hold 19 seats. Opposition leaders are currently determining how to build a new cabinet.

The central dispute involves whether to invite Arab parties into the governing structure. Many opposition figures have resisted this idea. Avigdor Liberman, chair of Yisrael Beytenu, endorsed Eisenkot for prime minister but ruled out a minority government that depends on Arab support. On Tuesday, opposition leaders agreed to pursue a Zionist government. Yair Golan, chair of the Democrats, met with Joint List leaders to coordinate strategies for removing Netanyahu from power.

Eisenkot has proposed specific conditions for any partnership. These include affirming Israel’s Jewish and democratic character. He also demands the elimination of Hamas’s military and governing capabilities. Arab parties seek greater influence over policing, housing, and public investment. These divergent goals complicate the arithmetic of forming a stable coalition.

Ben-David’s data points to a rising educational profile within Arab communities. The share of Muslim women aged 35 to 54 holding an academic degree jumped from 4.7% in 2004 to 22.9% in 2024. This represents a nearly fivefold increase over two decades. Similar growth occurred among Christian Arab women, whose degree attainment rose from 16.3% to 50.3%. For Druze women, the figure increased from 6.7% to 23.8%. Degree attainment among men also grew, though the institute noted the increase was more moderate.

Household spending reflects this prioritization of education. Education accounted for 3.7% of Arab household expenditure between 2011 and 2013. By the 2021 to 2023 period, this share had grown to 4.8%. This marks an approximate 30% increase in the budgetary share for education. Ben-David explained that families are compensating for perceived shortcomings in public education. They are utilizing private schools, Jewish schools in mixed cities, and private tutoring.

These efforts coexist with persistent gaps in academic performance. The 2025 PISA international assessment showed that Arabic-speaking students in Israel scored lower than students in six of the seven participating Arab countries. Despite these challenges, Arabic speakers constitute 23% of Israel’s first-grade pupils. Their educational outcomes and future employment are therefore important to the productivity of the wider economy.

Demographic changes further support the argument for integration. The fertility rate among Muslim women stood at 2.8 children per woman in 2022 to 2024. This is a drop of approximately 40% over the last two decades. The corresponding rates were 1.8 for Druze women and 1.6 for Christian Arab women. Ben-David views these trends as part of a broader socioeconomic transformation, even as infrastructure gaps and crime continue to obstruct advancement.

Ben-David criticized the political establishment for treating Arab representatives as illegitimate during the current government formation process. He described this stance as political blindness. He warned that the cost of the decisions made now will affect all citizens long after the next government is formed.