Israeli Expert Urges Doubling Public Funding for Culture to Boost Economy and Exports
Itamar Shoshana, a former senior official at Israel's Ministry of Finance and current CEO of a technology company, has highlighted the economic underinvestment in Israel's cultural sector. Drawing on his 13 years of experience in public finance, Shoshana argues that the state budget should be viewed as an investment with measurable returns rather than a mere statement of intent. He recently authored an economic position paper analyzing Israel's cultural industry using standard fiscal metrics such as multipliers, employment, exports, and fiscal returns. This paper was adopted by the Culture and Creation Coalition as the economic foundation for the "Israeli Culture 2026-2036" framework.
Shoshana's analysis reveals that while Israeli citizens spend approximately 49.8 billion shekels annually on culture, representing about 2.5% of GDP, direct government investment is only around 1.2 billion shekels or 0.06% of GDP. This is significantly lower than the European Union average of 1.2% public spending on culture, leisure, and religion. The government acts mainly as a marginal investor, supporting infrastructure such as institutions, training, and peripheral activities, which underpin a private market forty times larger. This underinvestment creates a market failure, limiting the sector's growth potential.
International comparisons underscore the missed opportunities: in the UK, each unit of cultural value added generates over twice that in the wider economy; in the US, arts and culture contribute 4.2% of GDP and grow faster than the overall economy; South Korea has turned culture into a $12.4 billion export industry. Israel’s cultural exports, including internationally acclaimed TV series and music, occur with minimal government export policy support, indicating untapped potential.
The sector faces challenges including stagnant nominal budgets eroded by inflation, disruptions from recent conflicts that closed venues and damaged cultural tourism, and international boycotts reducing tours and content sales. Despite these setbacks, the cultural industry operates below capacity, suggesting that increased public investment would activate idle resources rather than crowd out private activity.
Shoshana warns of the silent cost of inaction, noting that Israel currently lacks national incentives to attract international productions, unlike countries offering tax rebates up to 40%. This results in lost productions, jobs, and global branding opportunities. His proposal calls for doubling the cultural budget from 1.2 billion to 2.5 billion shekels within two years, aiming to reach 1% of the state budget over a decade, aligning with UNESCO recommendations. He projects that every public shekel invested could return 2.5 to 3 shekels through economic activity, exports, and tourism, with an estimated cumulative benefit of 70 billion shekels over ten years against a 26 billion shekel investment, half of which would return to the treasury as taxes.
Shoshana advocates for formalizing this investment with public performance contracts and transparent metrics, similar to other national infrastructure projects. He concludes that the critical question is no longer how much it costs to invest in culture, but how much it costs not to.
Summary: Itamar Shoshana, former Israeli finance official, reveals Israel's cultural sector is severely underfunded despite its economic potential. He urges doubling public investment to boost GDP, exports, and jobs, proposing a decade-long plan backed by economic data and international comparisons.
Points: ["Israel’s public cultural spending is only 0.06% of GDP, far below the EU average of 1.2%.", "Israeli citizens spend nearly 50 billion shekels annually on culture, showing strong private demand.", "Underinvestment causes market failure, limiting growth and export potential in culture.", "Shoshana proposes doubling the cultural budget to 2.5 billion shekels within two years.", "Every public shekel invested could return 2.5-3 shekels in economic activity and taxes.", "Israel lacks tax incentives for international productions, losing jobs and global exposure.", "A decade-long plan aims to raise cultural spending to 1% of the state budget, per UNESCO guidelines.", "Formal public performance contracts would ensure accountability and measurable returns."]
