During May 1948, during the Arab War, the immidiate economic problems started to effect Israel, such as financing and waging a war, to take in as many immigrants as possible, to create a government to cope with these challenges, and to provide the basics for the population of Israel. In early 1952, A New Economic Policy was introduced, which consisted of devaluation of the exchange rate, the gradual relaxation of price controls and rationing, and curbing of monetary expansion, which primarily happened by budgetary restraint. Immigration encouragement was cut short. From 1950 to 1965, Israel had a high growth rate, with a GNP (gross national product) increase of over 11%. This was because Israel received large sums of capital inflows from America in the form of transfers and loans. Also, German reparations, and the sale of Israeli bonds helped the economy.
Now, Israel had resources available for domestic use, which led to the government intervention in the economy. During the Six Day war, Israel was responsible for the economic burden of the newly acquired Arab lands. The economies of the occupied territories and Israel were partially integrated. Trade of goods and services started, and Palestinians began working in Israel. In the 1990’s, the Palestinian economy and Israeli economy formed an agreement, which extended the trade policy. Today, Israel is considered one of the most advanced economic and industrial countries in SouthWest Asia. It has the 49th highest gross domestic product, and is ranked 17th of the world’s most economically developed nations.