Economy Of Palestine

The economy of Palestine encompasses the full range of economic activities carried out within the Palestinian territories, including the West Bank and the Gaza Strip. These activities span various sectors such as agriculture, manufacturing, services, and trade, each contributing to the overall economic framework of the region. The Palestinian economy operates under complex political and logistical constraints, influenced heavily by the ongoing Israeli-Palestinian conflict, which affects trade, movement, and access to resources. Despite these challenges, the economy remains a vital component of Palestinian society, providing employment and livelihoods for millions of people. A significant aspect of the Palestinian economy is its reliance on substantial financial aid from a diverse array of international donors. These donors include foreign governments, multilateral institutions, and international organizations, all of which play a crucial role in supporting the Palestinian Authority (PA). The financial assistance provided is essential for funding public services such as education, healthcare, and infrastructure development, as well as for sustaining ongoing development projects aimed at economic growth and social welfare. This international support helps bridge fiscal gaps caused by limited domestic revenue generation and economic restrictions imposed by the political situation. In 2020, the Palestinian economy faced considerable difficulties, reflected in key economic indicators. The inflation rate stood at -0.7%, indicating a slight deflationary trend during that year. Concurrently, the unemployment rate remained alarmingly high at 25.9%, underscoring persistent challenges in job creation and economic stability. These figures highlight the fragile nature of the Palestinian labor market and the broader economic environment, which is influenced by both internal structural issues and external constraints such as movement restrictions and limited access to international markets. Trade dynamics within Palestine in 2020 demonstrated a significant imbalance between exports and imports. The total value of exports was recorded at approximately US$1 billion, a figure that reflects the limited scale and scope of Palestinian export activities. In contrast, imports reached a much higher value of US$6 billion, indicating a heavy dependence on foreign goods and services to meet domestic demand. This trade deficit underscores the challenges faced by Palestinian producers in competing internationally and the economy’s reliance on imported commodities, which further strains fiscal resources and foreign currency reserves. The composition of the Palestinian national economy reveals a predominance of the service sector, which accounted for about 47% of economic activity. This sector includes a wide range of services such as education, healthcare, retail, and public administration, serving as the backbone of employment and income generation. Following services, wholesale and repair activities constituted 19% of the economy, reflecting the importance of trade and maintenance services in daily economic life. Manufacturing contributed 12%, encompassing industries such as food processing, textiles, and construction materials. Agriculture, though smaller in relative size at 7%, remains a vital sector for both subsistence and commercial purposes. Other notable sectors include finance and banking (3%), construction (5%), information technology (5%), and transportation (2%), each playing a role in diversifying the economic base and providing employment opportunities. Remittances sent by Palestinians working abroad represent a significant source of income for many households and serve as a critical component of the Palestinian economy. These financial transfers help sustain family livelihoods, support consumption, and contribute to local investment. The diaspora’s economic engagement thus provides a vital lifeline, compensating for the limited domestic economic opportunities and fluctuating aid flows. Remittances also bolster foreign currency reserves and help stabilize the economy amid ongoing political and economic uncertainties. International aid and donations to Palestine come from multiple sources, reflecting a broad international commitment to supporting the Palestinian people. Key contributors include the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), which provides essential humanitarian assistance and social services. Additionally, countries such as Qatar and Turkey have been significant donors, offering financial and developmental support. The European Union also plays a prominent role, channeling funds through various programs aimed at economic development, governance, and infrastructure. Numerous non-governmental organizations (NGOs) operate within Palestine, delivering humanitarian aid, development assistance, and capacity-building initiatives that complement official aid efforts. The Palestinian economy’s heavy dependence on remittances and international aid underscores its vulnerability to external shocks and political developments. These financial inflows are crucial for maintaining fiscal stability, funding public sector salaries, and enabling development projects that would otherwise be unaffordable. However, this dependence also highlights the structural weaknesses of the economy, which struggles to generate sufficient domestic revenue and investment to achieve sustainable growth without external support. The Gaza Strip faces particularly severe economic challenges due to an Israeli-imposed siege that controls the movement of people and goods. This blockade has drastically limited business opportunities, restricted access to raw materials and export markets, and impeded the reconstruction of infrastructure damaged by recurrent conflicts. The siege has led to high unemployment rates, widespread poverty, and a humanitarian crisis, severely constraining economic development and the ability of local enterprises to operate effectively. The economic isolation of Gaza has created a stark contrast with conditions in the West Bank. In contrast, the West Bank offers relatively more diverse economic opportunities, partly due to less restrictive movement and trade conditions compared to Gaza. Some Palestinians in the West Bank own businesses in tourism-centric areas such as Bethlehem and Jerusalem, where tourism constitutes a significant source of income. These cities attract visitors drawn by their historical and religious significance, supporting hotels, restaurants, souvenir shops, and cultural enterprises. The tourism sector thus plays a key role in generating employment and foreign currency revenue in the West Bank. Other economic activities in West Bank cities like Ramallah and Hebron include trading, construction, and information technology services. Ramallah, serving as the administrative capital of the Palestinian Authority, hosts numerous businesses, government offices, and international organizations, fostering a dynamic urban economy. Hebron, known for its traditional industries such as glass and ceramics production, also engages in trade and construction, contributing to local economic vitality. The information technology sector, though still developing, has shown growth potential, offering services such as software development, telecommunications, and digital marketing. Approximately 100,000 Palestinians are employed by Israeli companies as low-cost labor, reflecting a significant labor market linkage between the two economies. These workers typically earn wages that are substantially lower than those of average Israeli workers, highlighting disparities in income and labor conditions. Employment in Israeli companies provides many Palestinians with vital income, though it is often characterized by job insecurity and limited labor rights. This labor relationship underscores the complex interdependence and economic asymmetry between Israel and the Palestinian territories. Despite political restrictions on trade imposed by the Israeli occupation, Palestine continues to engage in export activities, particularly in agricultural products and traditional crafts. Palestinian farmers cultivate olives, citrus fruits, and vegetables, which are exported to regional and international markets. Traditional crafts such as embroidery, ceramics, and glassware also find markets abroad, often sold through fair trade networks and diaspora communities. These exports contribute to foreign currency earnings and help sustain small-scale producers and artisans. Tourism remains an important contributor to the Palestinian economy by attracting visitors to historically and culturally significant sites such as Bethlehem, the birthplace of Jesus Christ, and Jerusalem, a city sacred to Judaism, Christianity, and Islam. Religious pilgrimages, cultural tourism, and heritage visits generate income for local businesses and create employment opportunities in hospitality, guiding services, and retail. The tourism sector’s development is, however, sensitive to political instability and security concerns, which can affect visitor numbers and investment. Agriculture continues to be a vital sector within the Palestinian economy, with many Palestinians engaged in cultivating crops, producing olive oil, and raising livestock. Olive cultivation, in particular, holds economic and cultural significance, with olive oil production serving both domestic consumption and export markets. Livestock farming provides meat, dairy products, and employment, especially in rural areas. Despite challenges such as land access restrictions and water scarcity, agriculture remains a cornerstone of Palestinian rural livelihoods and food security. Many Palestinians are employed in service industries such as education, healthcare, and technology, sectors that have expanded in recent years due to population growth and increased demand for social services. Educational institutions, including universities and vocational training centers, provide employment for teachers and administrators while contributing to human capital development. Healthcare services employ medical professionals and support staff, playing a critical role in public health. The technology sector, though nascent, offers opportunities for innovation and entrepreneurship, particularly in urban centers with better infrastructure. Numerous international NGOs and humanitarian agencies operate within Palestine, significantly contributing to the local economy and providing employment opportunities. These organizations deliver a wide range of services, including humanitarian relief, development assistance, capacity building, and advocacy. Their presence not only supports vulnerable populations but also injects financial resources into the economy through salaries, procurement, and community projects. The activities of these NGOs complement government efforts and help mitigate the socio-economic impacts of political instability and conflict.

Between 1968 and 1980, the Palestinian territories experienced a notable period of economic growth, with the gross domestic product (GDP) per capita increasing at an average annual rate of 7%. This robust expansion reflected a phase of relative economic dynamism, driven by various factors including increased labor mobility and integration with the Israeli economy. However, this growth momentum decelerated during the 1980s, as regional and political challenges began to constrain economic performance. The slowdown was influenced by a combination of internal and external pressures, including the evolving political landscape and restrictions on economic activities. During the period from 1970 to 1991, the Palestinian territories witnessed significant improvements in key social indicators, signaling progress in public health and living standards. Life expectancy at birth rose from 56 years in 1970 to 66 years by 1991, reflecting advances in healthcare access, disease control, and overall living conditions. Concurrently, infant mortality rates experienced a dramatic decline, falling from 95 deaths per 1,000 live births to 42 per 1,000 over the same period. These improvements were indicative of enhanced medical services, better maternal care, and increased public health awareness, which collectively contributed to a healthier population despite ongoing political and economic challenges. Household access to basic amenities also improved markedly between 1970 and 1991, highlighting strides made in infrastructure development and quality of life. The availability of electricity in Palestinian homes increased substantially, from 30% in 1970 to 85% by 1991, enabling greater access to modern conveniences and improving daily living standards. Access to safe drinking water saw a dramatic rise from a mere 15% of households to 90%, reflecting investments in water supply systems and sanitation. Ownership of household appliances, which serve as proxies for economic well-being, also grew significantly during this period. Refrigerator ownership surged from 11% to 85%, while washing machine ownership increased from 23% in 1980 to 61% in 1991. These changes underscored the gradual modernization of Palestinian households and the expansion of consumer goods availability. The economic activity in the West Bank and Gaza Strip (WBGS) was formally regulated under the Paris Economic Protocol of April 1994, an agreement established between Israel and the newly formed Palestinian Authority. This protocol was part of the broader Oslo Accords framework and sought to define the economic relationship between the two entities. It established mechanisms for customs, taxation, trade, and labor movement, effectively integrating the Palestinian economy with Israel’s while granting the Palestinian Authority limited fiscal autonomy. The protocol outlined arrangements for the transfer of tax revenues collected by Israel on behalf of the Palestinian Authority and set the terms for economic cooperation and coordination, although it also imposed certain constraints on Palestinian economic sovereignty. Despite the formalization of economic relations under the Paris Protocol, the WBGS economy experienced significant deterioration in the early 1990s. Between 1992 and 1996, real GDP per capita declined sharply by 36.1%, reflecting a combination of falling aggregate incomes and rapid population growth. This economic contraction was unprecedented and reversed much of the progress achieved in previous decades. The decline was attributable to a range of factors, including political instability, restrictions on movement, and disruptions to traditional economic linkages with Israel. The population growth further exacerbated the situation by increasing demand for limited resources and employment opportunities, thereby intensifying economic pressures. The primary cause of this economic downturn was the implementation of Israeli closure policies, which were introduced in response to a series of terrorist attacks within Israel. These policies entailed the imposition of physical barriers, checkpoints, curfews, and restrictions on the movement of goods and people between Israel and the Palestinian territories. As a result, established labor and commodity market linkages that had previously facilitated economic interaction were severely disrupted. Palestinian workers faced difficulties accessing employment opportunities in Israel, which had been a major source of income, while the flow of goods necessary for production and consumption was hindered, leading to supply shortages and increased costs. One of the most critical consequences of the closure policies was the dramatic rise in chronic unemployment within the WBGS. During the 1980s, average unemployment rates had remained relatively low, below 5%, reflecting a labor market that, while constrained, was still functional. However, by the mid-1990s, unemployment rates surged to over 20%, indicating widespread joblessness and economic hardship. This sharp increase in unemployment had profound social and economic implications, contributing to poverty, decreased household incomes, and heightened social tensions. The labor market disruptions also undermined the capacity of the Palestinian economy to generate sustainable growth and improve living standards. Following 1997, Israel began to reduce the use of comprehensive closure measures and introduced new policies aimed at easing restrictions on movement and economic activity. These policy adjustments were part of broader efforts to stabilize the region and improve economic conditions, recognizing the detrimental impact that closures had on both Palestinian livelihoods and Israeli security interests. The relaxation of closures allowed for increased movement of people and goods, facilitating greater economic interaction and providing some relief to the struggling Palestinian economy. In October 1999, Israel authorized the opening of a safe passage route between the West Bank and Gaza Strip, as stipulated in the 1995 Interim Agreement. This corridor was designed to facilitate the movement of Palestinian people and goods between the two geographically separated territories, which had previously been hindered by Israeli security concerns and logistical challenges. The establishment of the safe passage represented a significant step toward improving connectivity and economic integration within the Palestinian territories, enabling better access to markets, employment, and social services. These policy changes contributed to a moderate economic recovery in the WBGS during the years 1998 and 1999. The easing of movement restrictions and the opening of the safe passage helped restore some of the disrupted economic linkages, allowing for increased trade, labor mobility, and investment. While the recovery was limited and uneven, it marked a reversal of the severe economic contraction experienced earlier in the decade. The improvements provided a foundation for further economic development, although persistent political uncertainties and structural challenges continued to constrain growth. Despite these efforts, the Israeli blockade imposed on the Palestinian territories had a devastating impact on industrial activity. Approximately 85% of factories in the Palestinian territories were either shut down entirely or operated at less than 20% of their production capacity. This widespread industrial paralysis reflected the severe restrictions on the import of raw materials, export of finished goods, and movement of workers, which collectively undermined the viability of manufacturing enterprises. The blockade not only stifled economic output but also led to job losses and reduced income generation, exacerbating economic hardship for Palestinian families. The economic consequences of the closures and blockade were substantial for both Israeli and Palestinian economies. Israeli businesses reportedly incurred losses estimated at approximately $2 million per day due to the disruptions in trade and labor flows. Meanwhile, Gaza’s economy suffered losses of about $1 million per day, reflecting the direct impact of restricted access to markets, inputs, and employment opportunities. These figures underscore the mutual economic costs of the conflict and the restrictive policies, highlighting how security measures intended to protect one side also inflicted significant economic damage on both. According to World Bank estimates, the nominal GDP of the Palestinian territories stood at approximately US$4,007,000, a figure that starkly contrasted with Israel’s nominal GDP of US$161,822,000. This vast disparity illustrated the relatively small scale and limited capacity of the Palestinian economy in comparison to Israel’s more developed and diversified economic system. On a per capita basis, the nominal GDP in the Palestinian territories was estimated at US$1,036 per year, markedly lower than Israel’s per capita nominal GDP of US$22,563 per year. These figures highlighted the pronounced economic gap between the two economies and underscored the challenges faced by the Palestinian territories in achieving sustainable economic development and improving living standards amid ongoing political and security constraints.

During the worldwide recession of the 1930s, Palestine, including its Arab population, endured severe economic hardships that were largely a consequence of the global economic downturn. The Great Depression, which originated in the United States and rapidly spread across the globe, led to a significant contraction in international trade and investment, severely impacting Palestine’s economy. Agricultural prices plummeted, and industrial output declined, resulting in widespread unemployment and economic stagnation. Both Arab and Jewish communities faced increased economic difficulties, with many workers losing their jobs and incomes shrinking, thereby exacerbating social tensions within the region. By the end of World War II, however, Palestine had achieved a remarkable level of prosperity and was widely regarded as one of the most economically advanced countries in the Middle East. This transformation was largely driven by the wartime economy, which stimulated various sectors and integrated Palestine more deeply into global economic networks. The British Mandate authorities, recognizing Palestine’s strategic importance, invested heavily in infrastructure and military-related industries, which in turn generated employment and fostered economic growth. The wartime boom reversed many of the economic setbacks experienced during the 1930s, positioning Palestine as a regional economic hub by the mid-1940s. A significant factor contributing to this wartime prosperity was Palestine’s role as a center of British communications and military logistics in the Middle East. The British military and administrative presence required extensive support services, including transport, construction, and supply chains, which created numerous economic opportunities. Contracts awarded for the construction of military installations, roads, and railways injected capital into the local economy and provided jobs for both Arab and Jewish workers. This influx of government spending acted as a catalyst for economic activity, fostering the growth of local businesses and industries that supplied the British forces. One of the most notable industrial developments during this period was the establishment of a large oil refinery in Haifa. Constructed to meet the wartime demand for refined petroleum products, the refinery became a major employer and a driver of economic growth in the northern region of Palestine. The facility not only provided direct employment to thousands of workers but also stimulated ancillary industries such as transportation, maintenance, and services. The refinery’s presence underscored Palestine’s strategic economic importance within the British war effort and contributed to the modernization of the local industrial base. Agricultural exports, particularly citrus fruit, experienced a marked increase during World War II, benefiting from disruptions in supply from other Mediterranean regions caused by German military actions. The conflict severely curtailed the export capacity of traditional citrus-producing countries such as Egypt, Italy, and Spain, creating a gap in the global market that Palestinian producers were able to fill. Citrus fruits, especially oranges, became a highly sought-after commodity, and their export generated substantial foreign exchange earnings. This surge in demand provided a significant boost to the agricultural sector, which had long been a cornerstone of Palestine’s economy. Both Arab and Jewish citrus producers capitalized on the increased demand for citrus exports, contributing significantly to Palestine’s economic growth during the war years. Jewish agricultural settlements, known as kibbutzim and moshavim, expanded their citrus orchards and improved production techniques, while Arab farmers also intensified cultivation and export efforts. The shared prosperity in the citrus sector demonstrated a complex economic interdependence between the two communities, even amid rising political tensions. The increased export revenues from citrus helped finance further investments in agriculture and infrastructure, thereby enhancing overall economic resilience. Although many British Mandatory government contracts were awarded to new Jewish immigrants, Arab Palestinians also benefited economically by providing cheaper labor and securing employment in various sectors. Arab workers found jobs on railroads, military construction projects, and in government departments such as the police force, which expanded during the wartime period. This employment provided a steady source of income for many Arab families, helping to mitigate some of the economic hardships caused by earlier recessions. The participation of Arab labor in these projects highlighted the multifaceted nature of the wartime economy, wherein both communities were intertwined in the economic processes driven by British administration and military needs. The wartime economic prosperity coincided with new forms of investment and trade that connected Palestinian entrepreneurs to the global market. Profits generated from agriculture, industry, and government contracts were increasingly invested in financial instruments such as shares, government bonds, and commodity stocks. This diversification of investment portfolios reflected a growing sophistication in the Palestinian economy and an awareness of international financial markets. Entrepreneurs and investors sought to preserve and grow their wealth by engaging in these financial markets, which also provided a degree of insulation against local political and economic uncertainties. Following the 1948 dispersion of people, known as the Nakba, some individuals were able to recover portions of their wealth through these financial investments. Despite the mass displacement and loss of physical assets, Palestinian exiles who held shares, bonds, or other financial instruments in foreign or regional markets could, in some cases, reclaim or access these assets. This financial dimension of Palestinian wealth recovery underscored the importance of diversified asset holdings beyond land and physical property. It also highlighted the complex economic aftermath of the 1948 conflict, where financial assets played a role in the survival and rebuilding efforts of displaced Palestinians. Data collected by the British Mandatory government estimated that total capital ownership in Palestine in 1945 amounted to 281 million Palestinian pounds. This figure encompassed all forms of capital, including land, industrial assets, financial holdings, and bank deposits. The substantial size of this capital stock reflected Palestine’s relatively advanced economic status in the region at the time. The distribution of this capital among different communities and asset types provides insight into the economic structures and disparities present in pre-1948 Palestine. Of the total capital ownership in 1945, approximately 47 percent, equivalent to 132.6 million Palestinian pounds, was owned by the Arab community. This significant share of capital ownership indicated that Arab Palestinians retained substantial economic power and wealth despite the growing economic activity of Jewish immigrants and institutions. The Arab community’s capital was primarily concentrated in agricultural land, businesses, and financial assets, reflecting their traditional economic bases as well as their participation in the evolving Palestinian economy. The majority of Arab-owned wealth, amounting to 74.8 million Palestinian pounds, was invested in rural landholdings, which were non-transferable abroad. This concentration in land reflected the historical and cultural importance of agriculture and landownership within the Arab community. However, the non-transferability of these land assets outside Palestine limited their liquidity and potential for recovery in the event of displacement. Land ownership was thus both a source of wealth and a vulnerability, as physical possession was required to maintain control and benefit from these assets. Arab Palestinians also held other assets in recoverable forms, such as foreign stocks and shares, amounting to just over 39 million Palestinian pounds. These financial assets could be reclaimed by exiles, providing a means for displaced Palestinians to access some portion of their wealth despite losing physical property. The existence of such recoverable assets demonstrated the degree to which Palestinian investors had engaged with international financial markets, diversifying their holdings beyond land and local businesses. This financial capital played a crucial role in the economic resilience of Palestinians following the upheavals of 1948. Arab banks in Palestine held 7 million Palestinian pounds in bank deposits, with an additional 3 million pounds deposited in the Ottoman Bank or the local branch of Barclays Bank. Some of these funds were recovered through international litigation in the early 1950s, reflecting the efforts of Palestinian exiles and their representatives to reclaim financial assets held in institutional accounts. The presence of these deposits in both local Arab banks and international financial institutions underscored the interconnectedness of the Palestinian economy with regional and global banking networks. Approximately 10 million Palestinian pounds in bank deposits held by Arab banks were transferred to Jordan as a result of the mass displacement of Palestinians during the 1948-1949 Arab-Israeli war. Many Palestinian refugees sought shelter in Jordan, bringing with them financial assets that were deposited in Jordanian banks or transferred through informal channels. This significant movement of capital reflected the demographic shifts caused by the conflict and the reorientation of Palestinian economic activity towards neighboring Arab countries. The transfer of these deposits also influenced the economic relations between Jordan and the Palestinian refugee population. At least 1.5 million Palestinian pounds in the form of physical banknotes were brought into Palestine prior to the abolition of the Palestinian currency. This indicated that individuals who left Palestine took physical cash with them, preserving a portion of their liquid assets. The movement of physical currency was a critical factor in the economic survival of refugees and migrants, enabling them to finance their immediate needs and resettle in new locations. The circulation of these banknotes also reflected the persistence of the Palestinian pound as a medium of exchange even amidst political upheaval. Similar transfers of physical banknotes occurred to Syria, with at least 1.5 million Palestinian pounds moved there, alongside smaller amounts sent to Egypt and Iraq. These transfers mirrored the patterns of Palestinian refugee migration and the dispersal of financial resources across the region. The presence of Palestinian currency in these countries facilitated economic transactions among the diaspora and underscored the transnational nature of Palestinian economic networks. The movement of cash assets to multiple neighboring states highlighted the widespread displacement and the economic challenges faced by Palestinians in exile.

During the 1970s and the subsequent decades, a substantial number of Palestinians sought employment opportunities within Israel, integrating themselves into its labor market and thereby generating income and remittances that had a positive influence on the Palestinian economy. This labor migration became a critical economic lifeline for many Palestinian families, as wages earned in Israel were often significantly higher than those available within the occupied Palestinian territories. The influx of Palestinian workers into Israel not only provided individual households with financial stability but also contributed to the broader Palestinian economy through the transfer of earnings and increased consumption capacity. Palestinian laborers contributed significantly to various sectors of the Israeli economy, including construction, agriculture, and manufacturing. In construction, many Palestinians were employed in physically demanding roles, participating in building projects that ranged from residential housing to infrastructure development. In agriculture, Palestinian workers played an essential role in harvesting and maintaining crops, particularly in seasonal work that required intensive labor. Manufacturing industries also relied on Palestinian employees for assembly line and factory work, where their labor helped sustain production levels. Despite these contributions, economic disparities between Israel and the occupied Palestinian territories remained stark and persistent. The Palestinian economy was characterized by limited industrial development, constrained access to resources, and a heavy dependence on employment opportunities within Israel, which underscored the asymmetrical nature of economic relations in the region. Although integration into the Israeli labor market offered some economic benefits, Palestinians faced significant restrictions that impeded their broader economic development. Access to essential resources such as land, water, and capital was tightly controlled, limiting the capacity for local economic growth and diversification. Markets for Palestinian goods were often constrained by Israeli regulations and restrictions on movement, which inhibited trade and investment. The lack of access to sufficient capital and credit further restricted entrepreneurial activities and industrial expansion within Palestinian territories. These structural limitations created an environment in which economic progress was heavily dependent on external factors, particularly the availability of employment in Israel, rather than on endogenous growth within Palestine itself. Employment opportunities for Palestinians in Israel spanned multiple sectors beyond construction, agriculture, and manufacturing, including various service industries. These jobs helped to reduce unemployment rates among Palestinians and provided vital income that supported workers and their families. Service sector employment included roles in domestic work, hospitality, and retail, which, although often low-paid and precarious, nonetheless contributed to household earnings. The diversification of employment sectors allowed some Palestinians to gain skills and experience that could be transferred to the local economy, although such opportunities remained limited by the overarching political and economic constraints. The steady flow of wages from these sectors was a crucial factor in sustaining Palestinian livelihoods during this period. In response to the growing presence of Palestinian workers in Israel and the need to advocate for their rights and interests, the General Federation of Trade Unions was established. This organization aimed to represent Palestinian laborers, providing a collective voice in negotiations and labor disputes. The Federation sought to improve working conditions, secure fair wages, and protect workers from exploitation and discrimination within the Israeli labor market. It also played a role in organizing labor actions and advocating for broader social and economic rights, thereby contributing to the development of a nascent Palestinian labor movement. The establishment of this Federation marked an important step toward institutionalizing Palestinian labor representation during a period of complex economic and political challenges. Palestinian exports reached their peak in 1981, marking a high point in the region’s economic activity. However, throughout the 1990s, exports declined steadily, reflecting the deteriorating economic conditions and increasing restrictions on trade. Meanwhile, imports nearly doubled during the same period, exacerbating the trade imbalance. This widening trade deficit grew from 35% of GDP in 1981 to 45% of GDP in 1996, indicating a growing dependence on imported goods and a weakening export sector. The imbalance was symptomatic of broader structural weaknesses in the Palestinian economy, including limited industrial capacity, restricted market access, and the impact of political instability. The growing trade deficit placed additional pressure on the Palestinian economy, constraining fiscal resources and increasing vulnerability to external shocks. The First Intifada, which lasted from 1987 to 1993, was a significant Palestinian uprising against Israeli occupation that severely disrupted the Palestinian economy. The widespread civil unrest led to frequent closures of businesses, markets, and transportation routes, severely hampering economic activities. Israeli authorities imposed stringent restrictions on movement and access, which further constrained trade, labor mobility, and the delivery of goods and services. The Intifada’s economic impact was profound, resulting in reduced incomes, increased unemployment, and deteriorating living standards for many Palestinians. The disruption extended to public services and infrastructure, compounding the economic hardships faced by the population and highlighting the interconnection between political conflict and economic stability. The 1991 invasion of Kuwait by Iraq and the subsequent Gulf War had a notable impact on the Palestinian economy, primarily through the displacement of Palestinian workers who had been employed in the Gulf states. Many Palestinians lost their jobs and remittances, which had been a significant source of income for families and the Palestinian economy at large. The war also affected the political landscape, as the Gulf countries’ relations with the Palestine Liberation Organization (PLO) became strained due to the PLO’s perceived support for Iraq. Concurrently, the Madrid Conference held in 1991 fostered improved economic collaboration between Arab countries and Israel, marking a diplomatic effort to address longstanding conflicts and open avenues for economic cooperation. This conference set the stage for subsequent peace negotiations and economic agreements that would influence the region’s economic dynamics in the following years. The Oslo Accords of the 1990s represented a pivotal development, resulting in the creation of the Palestinian Authority (PA) and granting limited self-governance in parts of the West Bank and Gaza Strip. The PA assumed responsibilities in areas such as trade, investment, and public services, marking a shift toward Palestinian administrative control over certain economic functions. This transition allowed for the establishment of institutions aimed at managing economic development and fostering private sector growth within the territories under PA jurisdiction. However, the overall economic impact of the Oslo Accords was mixed, as ongoing setbacks in the peace process and the continued Israeli occupation limited the scope of economic autonomy and growth. The persistence of security concerns, movement restrictions, and political uncertainty continued to hinder comprehensive economic progress. In 1994, the Paris Protocol was signed, establishing the framework for economic relations between Israel and the Palestinian Authority. This agreement outlined regulations concerning labor movement, taxation, trade, and employment, effectively integrating the Palestinian economy with that of Israel to a significant extent. The Protocol stipulated that Israel would collect taxes on behalf of the PA and transfer them monthly, creating a financial linkage that was both a source of revenue and a point of vulnerability for the Palestinian economy. It also addressed the movement and employment of Palestinian workers in Israel, setting conditions under which labor could flow between the two economies. While the Protocol aimed to facilitate economic cooperation, it also entrenched the dependency of the Palestinian economy on Israeli policies and decisions. In 1995, the Israeli government imposed restrictions on the movement of Palestinian workers within Israel, citing security concerns amid rising tensions and violence. These restrictions limited the number of Palestinians allowed to work inside Israel and curtailed their freedom of movement, impacting their ability to earn income and support their families. Concurrently, the Palestinian Authority gained control over certain economic sectors such as tourism, trade, and investment, which provided opportunities for localized economic development and governance. The PA sought to promote economic initiatives within these sectors to stimulate growth and reduce reliance on employment in Israel. However, the restrictions imposed by Israel and the fragmented control over economic activities continued to pose significant challenges to the overall economic advancement of the Palestinian territories. Between 1995 and 1999, the Palestinian economy experienced a period of relative growth and stability, supported in part by increased international aid and improved economic indicators. During this time, donor countries and international organizations provided substantial financial assistance aimed at rebuilding infrastructure, supporting public services, and fostering private sector development. Economic indicators such as GDP growth, employment rates, and investment levels showed positive trends, reflecting cautious optimism about the prospects for economic recovery and development. Nevertheless, underlying political uncertainties and the fragility of the peace process meant that this period of growth was vulnerable to disruption, and the gains achieved were unevenly distributed across different sectors and regions. For approximately three decades, Israel permitted thousands of Palestinians to enter daily for work in sectors such as construction, agriculture, and other blue-collar jobs. This labor arrangement was a cornerstone of the Palestinian economy, which during this period was significantly larger than that of most Arab states in terms of per capita income and economic activity. The availability of employment in Israel provided Palestinian workers with access to higher wages and more stable job opportunities than those available locally. This dynamic contributed to a relatively robust economic environment within the Palestinian territories, despite the ongoing political and territorial constraints imposed by the occupation. Until the mid-1990s, up to 150,000 Palestinians—approximately 20% of the Palestinian labor force—entered Israel each day for employment. This substantial labor flow underscored the deep economic interdependence between Israel and the Palestinian territories. The daily movement of such a large segment of the workforce was facilitated by a system of permits and checkpoints, which, while enabling employment, also subjected workers to frequent delays and uncertainties. The reliance on employment in Israel was a defining characteristic of the Palestinian labor market during this era, shaping household incomes and economic patterns across the territories. Following a wave of Palestinian suicide bombings in the mid-1990s, Israeli public opinion shifted markedly toward policies favoring separation from the Palestinian population. In response to security concerns and labor shortages, Israel gradually began replacing Palestinian laborers with migrant workers from countries such as Thailand and Romania. This shift was motivated by a desire to reduce security risks associated with Palestinian workers while maintaining the necessary labor supply for sectors like construction and agriculture. The replacement of Palestinian workers with foreign laborers had significant economic and social implications, including reduced employment opportunities for Palestinians and increased economic isolation. This change marked a turning point in the labor dynamics between Israel and the Palestinian territories, contributing to a decline in Palestinian access to Israeli employment and altering the trajectory of the Palestinian economy.

In 2005, the Palestinian National Authority (PNA) Ministry of Finance identified the Israeli West Bank barrier as a significant factor contributing to the depressed state of Palestinian economic activity. The construction of this barrier had begun in the latter half of 2002 and was intended by Israel to enhance security by preventing the movement of militants. However, its physical presence and the associated restrictions on movement severely disrupted the flow of goods, labor, and services within the West Bank and between the West Bank and Israel. The barrier’s route, which often deviated from the Green Line into Palestinian territory, effectively isolated Palestinian communities, agricultural lands, and commercial centers, thereby constraining economic development and access to markets. During the early years of the Second Intifada, the Palestinian economy experienced a sharp downturn. Real gross domestic product (GDP) growth in the West Bank declined substantially in 2000, 2001, and 2002, reflecting the combined effects of increased violence, Israeli military operations, closures, curfews, and the beginning of the barrier’s construction. These years were marked by widespread instability and uncertainty that severely hindered economic activity, investment, and employment. Following this period of decline, the economy saw modest increases in real GDP growth in 2003 and 2004, as some stabilization occurred and the intensity of conflict diminished. Although these gains were limited, they signaled a tentative recovery amid ongoing challenges. The World Bank attributed the modest economic growth observed since 2003 to several interrelated factors. Key among these were diminished levels of violence, which reduced disruptions to daily life and commerce, and fewer curfews imposed by Israeli authorities, allowing for greater freedom of movement within the West Bank. Additionally, while Israeli closures and checkpoints remained frequent and intense, their predictability improved, enabling Palestinian businesses to adapt their operations accordingly. Palestinian entrepreneurs and workers developed strategies to navigate the constraints imposed by the occupation, such as adjusting supply chains and labor arrangements, which contributed to the resilience of the West Bank economy despite persistent obstacles. In its economic forecasts, the World Bank outlined a “disengagement scenario” to project the Palestinian economy’s trajectory in the mid-2000s. Under this scenario, which assumed continued Israeli disengagement measures and the prevailing political and security conditions, the World Bank projected a real GDP growth rate of −0.2% in 2006 and −0.6% in 2007. These negative growth rates reflected the ongoing economic challenges faced by the Palestinian territories, including restrictions on movement, limited access to resources, political instability, and the broader impact of the Israeli-Palestinian conflict. The projections underscored the fragile nature of the Palestinian economy and the difficulties in achieving sustainable growth under the prevailing circumstances. Following Israel’s unilateral disengagement from the Gaza Strip in 2005, which involved the withdrawal of Israeli settlers and military forces, the Palestinian economy in Gaza faced immediate challenges. One of the most pressing issues was the shortage of bread and basic supplies, which arose due to the closure of the al Mentar/Karni border crossing into Israel. This crossing had been a critical conduit for the import and export of goods, and its closure disrupted supply chains, leading to shortages and increased prices for essential commodities. The economic impact was exacerbated by the limited capacity of alternative crossings and the ongoing restrictions imposed by Israel on the movement of goods and people into and out of Gaza. In response to the shortages following the Gaza disengagement, Israel offered to open alternative border crossings to facilitate the flow of goods and alleviate the humanitarian situation. However, the Hamas-led Palestinian Authority declined these offers, citing political and security concerns. The refusal to accept these alternative crossings contributed to the persistence of supply shortages and heightened tensions between the Palestinian factions and Israel. The situation highlighted the complex interplay between political considerations and economic realities in the context of the Israeli-Palestinian conflict. The political landscape shifted dramatically after the January 2006 Palestinian legislative elections, in which Hamas won a decisive victory. This outcome led to significant changes in the international community’s approach to the Palestinian Authority (PA). The Quartet on the Middle East, comprising the United States, European Union, United Nations, and Russia—although Russia did not participate in the sanctions—responded by cutting all funds to the PA government led by Prime Minister Ismail Haniyah of Hamas. This decision was motivated by concerns over Hamas’s refusal to recognize Israel, renounce violence, and accept previous agreements. The cessation of international aid and financial support had profound implications for the PA’s fiscal stability and its ability to provide public services. In the aftermath of the funding cuts, the Palestinian Authority faced a severe financial crisis characterized by a monthly cash deficit estimated between $60 million and $70 million. This shortfall persisted despite the PA receiving between $50 million and $55 million monthly from Israel, representing taxes and customs duties collected at the borders and transferred to the PA. These funds, which constituted a significant portion of the PA’s budget, were critical for financing government operations, including the payment of salaries to civil servants. The gap between revenues and expenditures underscored the deepening fiscal challenges confronting the PA under the new political and economic conditions. The financial crisis following the 2006 elections also had a pronounced impact on the Palestinian stock market and banking sector. The Palestinian stock market experienced a decline of approximately 20%, reflecting investor uncertainty and diminished confidence in the PA’s economic prospects. Concurrently, the Palestinian Authority exhausted its borrowing capacity with local banks, limiting its ability to finance operations through debt. This combination of declining market confidence and constrained access to credit further exacerbated the PA’s fiscal difficulties and hindered economic activity. Compounding the PA’s financial woes, Israel ceased transferring $55 million in tax receipts to the Palestinian Authority. These funds accounted for roughly one-third of the PA’s budget and were instrumental in financing the salaries of approximately 160,000 Palestinian civil servants. Among these employees were about 60,000 security and police officers, whose remuneration was essential for maintaining public order and governance. The withholding of these tax revenues by Israel significantly undermined the PA’s capacity to fulfill its administrative and security responsibilities, contributing to institutional instability. In addition to Israel’s withholding of tax revenues, the United States and the European Union halted direct aid to the Palestinian Authority following Hamas’s electoral victory. The United States further imposed a financial blockade on PA banks, obstructing the transfer of funds from Arab League countries such as Saudi Arabia and Qatar. These measures aimed to pressure the Hamas-led government to meet international demands but also deepened the PA’s financial crisis. The blockade restricted the PA’s access to external financial resources, limiting its ability to pay salaries, fund public services, and support economic development. The economic squeeze on the Palestinian Authority led to widespread public discontent, culminating in protests by hundreds of Palestinians in Gaza and the West Bank in May 2006. Demonstrators demanded the payment of their wages amid the financial crisis, highlighting the human impact of the fiscal constraints imposed on the PA. The protests underscored the growing frustration among Palestinian workers and civil servants who faced delayed or withheld salaries, which in turn affected their livelihoods and social stability. The intensification of the economic crisis also exacerbated tensions between the two main Palestinian political factions, Hamas and Fatah. The financial hardships and political divisions contributed to a deterioration of relations, undermining efforts at unity and cooperation. The rivalry between Hamas, which controlled Gaza, and Fatah, dominant in the West Bank, became increasingly pronounced, complicating governance and the delivery of public services. These internal conflicts further hindered economic recovery and development in the Palestinian territories. In 2009, as part of a series of security measure reductions, the Israeli military removed its checkpoint at the entrance of Jenin, a major city in the northern West Bank. This removal was seen as a positive step toward easing restrictions on movement and facilitating economic activity in the area. The checkpoint had previously been a significant barrier to the free flow of people and goods, and its removal was expected to contribute to improved economic conditions and greater integration of Jenin with the broader West Bank economy. By September 2012, European Union activists reported alarming statistics regarding the impact of Israeli occupation and settlement construction on the Palestinian economy and environment. They indicated that the Palestinian economy had lost access to 40% of the West Bank territory, severely limiting land available for agriculture, development, and habitation. Furthermore, Palestinians had lost control over 82% of the West Bank’s groundwater resources, a critical factor for agriculture and domestic use. Additionally, more than two-thirds of the West Bank’s grazing land had been rendered inaccessible due to Israeli settlements and associated restrictions. These losses had profound implications for the sustainability of Palestinian livelihoods and economic development. Amid these challenges, efforts to foster economic growth and development continued, exemplified by the construction of Rawabi, the first planned Palestinian city. Located north of Ramallah, Rawabi represented a significant initiative aimed at providing modern housing and infrastructure for Palestinians. The project received financial assistance from Qatar, reflecting regional support for Palestinian development. Rawabi was envisioned as a model for urban planning and economic revitalization, offering opportunities for employment, commerce, and improved living standards despite the broader constraints imposed by the occupation. In 2013, commercial trade between Israel and the Palestinian territories was valued at approximately US$20 billion annually, highlighting the deep economic interdependence between the two economies. This trade volume reflected the extensive movement of goods, services, and labor across the borders, despite the political conflict and security restrictions. The figure underscored the complexity of the Palestinian economy, which remained closely linked to Israel’s market and infrastructure, even as it sought to develop greater autonomy and resilience.

Agriculture has historically constituted a fundamental component of the Palestinian economy, playing a crucial role in sustaining the population and contributing significantly to the region’s export revenues. The sector’s importance extends beyond mere subsistence, as it supports livelihoods and underpins rural communities throughout the Palestinian territories. According to the Council for European Palestinian Relations, formal employment within the agricultural sector accounts for approximately 13.4% of the Palestinian workforce. However, when informal employment—comprising seasonal labor, family work, and unregistered agricultural activities—is taken into account, this figure rises dramatically to as high as 90%, underscoring the sector’s pervasive role in providing employment and economic stability for a substantial portion of the population. The Palestinian territories encompass around 183,000 hectares of cultivated land, a significant portion of which is dedicated to olive cultivation. Approximately half of this cultivated area is devoted to olive trees, reflecting the crop’s cultural, economic, and historical significance. Olive production has long been intertwined with Palestinian identity and agricultural tradition, with olive groves often passed down through generations. The prominence of olive cultivation is further emphasized by the fact that olive products constitute the highest-earning agricultural export crop for Palestine. These products generate more export income than any other agricultural commodity, highlighting the sector’s reliance on olives not only for domestic consumption but also as a critical source of foreign exchange and economic resilience. Despite its importance, the agricultural sector in Palestine has faced mounting challenges over the past decade, particularly as unemployment rates have risen sharply across the region. This increase in unemployment has rendered agriculture the most impoverished economic sector within Palestine, intensifying poverty among rural populations who depend heavily on farming for their livelihoods. The sector’s vulnerability is compounded by a range of structural and political obstacles that hinder productivity and growth. Among the most significant challenges are the blockades imposed on the Palestinian territories, which restrict both the export of agricultural produce and the import of essential agricultural inputs such as fertilizers, seeds, and machinery. These restrictions disrupt supply chains, limit market access, and reduce the competitiveness of Palestinian agricultural products in regional and international markets. Land confiscation represents another critical impediment to Palestinian agriculture. Large tracts of agricultural land have been seized and repurposed for various uses, including the establishment of nature reserves, military installations, and Israeli settler activities. This widespread confiscation severely limits the availability of arable land for Palestinian farmers, constraining their ability to expand or even maintain existing agricultural operations. The loss of land not only diminishes agricultural output but also undermines the social and economic fabric of rural communities, as land ownership is closely linked to family heritage and economic security. Water scarcity, a persistent challenge in the region, has been exacerbated by the destruction and confiscation of wells, which are vital for irrigation and livestock. The reduction in accessible water resources directly impacts agricultural productivity, forcing farmers to rely on less efficient or more expensive water sources. This scarcity hampers the cultivation of water-intensive crops and limits the potential for agricultural diversification and intensification. Furthermore, the construction of physical barriers within the West Bank, including the separation wall and checkpoints, restricts farmers’ access to their farmland. These barriers disrupt daily agricultural activities, delay the transportation of goods, and increase production costs, thereby diminishing the overall viability of farming enterprises. The difficulties faced by Palestinian agriculture cannot be fully understood without considering the broader context of the Israeli-Palestinian conflict. Disputes over land ownership and control are deeply intertwined with the challenges confronting the agricultural sector. The ongoing conflict has resulted in a complex and fragmented landscape of land tenure, access rights, and administrative jurisdictions, which complicates agricultural planning and investment. Restrictions imposed by Israeli authorities, coupled with settler encroachments and military operations, create an environment of uncertainty and instability for Palestinian farmers. This environment not only affects current agricultural productivity but also hampers long-term development prospects, as farmers and investors face significant risks and obstacles in cultivating the land and accessing markets. In sum, Palestinian agriculture remains a vital yet vulnerable component of the economy, shaped by historical traditions and contemporary political realities. The sector’s reliance on olive cultivation underscores its cultural and economic significance, while the high levels of formal and informal employment highlight its role in sustaining livelihoods. However, the combined effects of unemployment, land confiscation, water scarcity, export restrictions, and physical barriers have placed severe constraints on agricultural development. These challenges reflect the broader dynamics of the Israeli-Palestinian conflict, illustrating how political disputes over land and resources directly impact the ability of Palestinian farmers to maintain and grow their agricultural activities.

During the 2000s, the Palestinian territories witnessed the emergence of a high-tech sector that capitalized on its geographical and economic proximity to Israel. This nascent industry primarily focused on software outsourcing, telecommunication development, and the manufacturing of technological equipment. The strategic location of the Palestinian territories, adjacent to one of the world’s leading technology hubs, enabled Palestinian entrepreneurs and skilled professionals to engage closely with Israeli firms, thereby gaining access to advanced markets and expertise. This proximity facilitated the growth of a sector that, despite political and economic challenges, began to carve out a distinctive niche within the regional technology landscape. By 2013, the information technology (IT) sector in Palestine had grown to employ approximately 4,500 Palestinians. A significant portion of this workforce specialized in outsourced projects from Israeli companies, reflecting a symbiotic relationship between the two economies. Palestinian IT professionals often provided software development, technical support, and other services remotely, leveraging cost advantages and a skilled labor pool. This outsourcing trend not only generated employment opportunities but also helped Palestinian IT firms build capacity, improve service quality, and establish credibility in competitive markets. The contribution of the Palestinian IT sector to the national gross domestic product (GDP) experienced a remarkable increase during this period. In 2008, the sector accounted for a modest 0.8% of GDP, but by 2010, this figure had risen sharply to 5%. This rapid growth underscored the sector’s expanding role in the Palestinian economy, driven by increased demand for IT services, greater foreign investment, and the maturation of local enterprises. The sector’s expansion also reflected broader economic diversification efforts aimed at reducing reliance on traditional industries and enhancing the knowledge economy. Foreign business engagement with the Palestinian IT industry saw a substantial rise since 2009, with a 64% increase in foreign contracts and collaborations. This surge was indicative of growing international confidence in the capabilities of Palestinian IT firms and the attractiveness of the Palestinian market as a source of innovative and cost-effective technology solutions. The influx of foreign business contributed to improved revenues, technology transfer, and the integration of Palestinian companies into global supply chains. The city of Ramallah emerged as the epicenter of Palestinian IT activity, hosting the majority of IT companies within the territories. Located north of Jerusalem, Ramallah’s relatively stable infrastructure, concentration of educated professionals, and status as an administrative and economic hub made it an ideal location for technology firms. The city developed into a vibrant center for innovation, entrepreneurship, and business services, attracting both local talent and foreign investors. From 2010 onwards, Israeli high-tech companies increasingly employed Palestinian engineers, primarily as outsourced workers. This trend reflected a growing recognition of Palestinian technical expertise and the economic advantages of cross-border collaboration. Palestinian engineers contributed to a range of projects, including software development, hardware design, and systems integration, often working remotely or in joint teams with Israeli counterparts. Such employment arrangements provided valuable income and professional experience for Palestinian workers while fostering interdependence between the two sectors. A notable development in this collaborative dynamic was the plan by Mellanox Technologies, a prominent computer hardware firm, to hire 15 to 20 Palestinian engineers as regular employees rather than as outsourced contractors. This shift marked a significant evolution in the employment relationship, moving towards direct hiring and integration within the company’s organizational structure. By offering permanent positions, Mellanox aimed to enhance workforce stability, foster deeper engagement, and tap into the long-term potential of Palestinian talent. This initiative also signaled a broader trend of Israeli high-tech firms seeking to establish more formal ties with Palestinian professionals. Economic cooperation between Israeli and Palestinian officials in the high-tech sector expanded in recent years, reflecting a growing recognition of the mutual benefits of collaboration. Joint initiatives and dialogues facilitated knowledge exchange, investment promotion, and the creation of shared infrastructure to support technology development. These cooperative efforts aimed to overcome political and logistical barriers, encourage entrepreneurship, and stimulate economic growth in both communities. The collaborative environment helped nurture a regional ecosystem conducive to innovation and competitiveness. Beginning in 2008, Cisco Systems launched a comprehensive initiative to develop the Palestinian IT sector through a holistic ecosystem approach. This strategy encompassed multiple components, including venture capital investment, private equity funding, capacity building programs, and direct outsourcing contracts awarded to Palestinian companies. Cisco’s approach sought to create a sustainable technology ecosystem by addressing various facets of industry development, from financing and talent cultivation to market access and operational support. This multifaceted effort aimed to accelerate the growth of Palestinian IT firms and integrate them into global technology networks. Cisco Systems invested approximately $15 million in this initiative, demonstrating a substantial commitment to the Palestinian IT sector’s advancement. The company’s involvement attracted additional major international investors and donors, including Microsoft, Hewlett-Packard (HP), and Google. These global technology leaders contributed resources, expertise, and market opportunities, further bolstering the sector’s development. The participation of such prominent corporations underscored the potential seen in the Palestinian IT market and helped elevate its profile on the international stage. The combined effect of these investments and collaborations contributed significantly to the Palestinian IT sector’s GDP contribution growth, which rose from 0.8% in 2008 to 5% in 2010. This increase reflected not only the direct economic impact of new projects and companies but also the broader multiplier effects associated with technology-driven growth. Enhanced productivity, job creation, and export revenues stemming from the sector’s expansion played key roles in this economic transformation. In May 2018, the World Bank published a detailed report titled “Tech startup ecosystem in West Bank and Gaza,” which provided an in-depth analysis of the Palestinian technology sector. The report offered valuable insights into the structure, challenges, and opportunities within the local startup ecosystem, serving as a resource for policymakers, investors, and entrepreneurs. It highlighted the sector’s growth trajectory, key players, and the enabling environment necessary for sustained innovation. According to the World Bank report, as of early 2017, there were 241 active tech startups operating within the Palestinian Territories, collectively generating 1,247 jobs. This level of entrepreneurial activity demonstrated the sector’s vibrancy and its capacity to contribute to employment and economic diversification. The startups spanned various technology domains, including software development, mobile applications, e-commerce, and digital services, reflecting a broad base of innovation. The report identified 51 active investors supporting Palestinian tech companies, with approximately 75% classified as angel investors and the remaining 25% as venture capital firms. This distribution indicated a strong presence of early-stage, individual investors willing to provide seed funding and mentorship, alongside more structured institutional investment. The mix of investor types helped address different financing needs across the startup lifecycle, fostering a dynamic funding environment. Among the major venture capital firms investing in Palestinian tech companies were Sadara Ventures, Ibtikar Fund, and Oasis500. These firms played pivotal roles in scaling promising startups by providing capital, strategic guidance, and access to regional and international networks. Their involvement signaled growing confidence in the Palestinian technology sector’s potential and contributed to the professionalization and expansion of local enterprises. By 2017, venture capital firms had invested just under US$150 million in over 40 Palestinian tech companies. This substantial infusion of capital reflected the sector’s maturation and attractiveness to investors seeking opportunities in emerging markets. The funding supported product development, market entry, and organizational growth, enabling startups to compete more effectively on a regional and global scale. The World Bank report also documented the presence of 20 startup accelerator programs designed to nurture early-stage companies. Of these, 19 were located in the West Bank, while one, Gaza Sky Geeks, operated in the Gaza Strip. These accelerators provided critical resources such as mentorship, training, workspace, and networking opportunities, helping startups refine their business models and accelerate growth. Gaza Sky Geeks, in particular, gained recognition for fostering innovation in a challenging environment, contributing to the resilience and creativity of the local tech community. Palestine’s growing reputation as a hub for technology startups led to it being nicknamed the “Silicon Valley of the NGOs.” This moniker reflected the unique ecosystem in which numerous non-governmental organizations (NGOs) actively supported the development of the tech sector through funding, capacity building, and advocacy. The involvement of NGOs helped bridge gaps in infrastructure and resources, enabling Palestinian entrepreneurs to overcome obstacles and access international markets. This distinctive characteristic underscored the sector’s role not only as an economic driver but also as a catalyst for social and community development.

Palestinian handicrafts represent a rich and diverse tradition of artisanal production that has been cultivated by Arab communities in Palestine for several centuries and continues to thrive in contemporary times. These crafts encompass a broad spectrum of products, each reflecting the cultural heritage, artistic expression, and practical needs of the Palestinian people. Among the most prominent forms of Palestinian handicrafts are intricate embroidery work, which often features elaborate geometric and floral patterns symbolizing regional identities and social status. Pottery-making remains a vital craft, with artisans shaping clay into functional and decorative vessels using techniques passed down through generations. Soap-making, particularly the production of olive oil-based soap, has a long-standing history rooted in the abundant olive groves of the region, combining natural ingredients with traditional methods to create a product renowned for its quality and fragrance. Glass-making also holds a significant place in Palestinian artisanal practices, where skilled craftsmen produce delicate glassware and decorative items. Weaving, another time-honored craft, involves the creation of textiles and rugs using hand-operated looms, often incorporating motifs that convey cultural narratives. Additionally, carving from olive wood and Mother of Pearl showcases the Palestinians’ ability to transform natural materials into intricate ornamental objects, religious artifacts, and souvenirs that are both aesthetically pleasing and emblematic of local heritage. Several cities within the West Bank have gained particular recognition for their specialization in distinct types of handicrafts, each contributing uniquely to the preservation and development of these traditional industries. Bethlehem, for example, is internationally known for its olive wood carvings and Mother of Pearl inlay work, which attract both local buyers and tourists seeking authentic cultural souvenirs. The city’s artisans meticulously craft religious figurines, nativity scenes, and decorative boxes, maintaining a legacy that intertwines with Bethlehem’s historical and spiritual significance. Hebron, on the other hand, has established a reputation for its glass-making industry, where generations of glassblowers have refined their skills to produce colorful glass lamps, beads, and vessels. This craft not only serves local demand but also caters to export markets, highlighting Hebron’s role as a center of artisanal excellence. Nablus is distinguished by its soap-making tradition, particularly the manufacture of Nabulsi soap, which is made from pure olive oil and is highly prized for its natural qualities and therapeutic benefits. The soap factories of Nablus have sustained this craft through centuries, combining traditional recipes with modern production techniques to meet contemporary market needs. These cities exemplify how specialized handicraft production is deeply embedded in the social and economic fabric of Palestinian urban centers. The economic impact of these specialized handicrafts extends beyond cultural preservation, constituting a significant component of the local economies in Bethlehem, Hebron, and Nablus. The production processes involve skilled labor, often within family-run workshops or small enterprises, which provide employment opportunities and contribute to income generation for many Palestinian households. The sale of handicrafts, both within domestic markets and through export channels, supports local merchants and artisans, fostering economic resilience amid broader challenges faced by the Palestinian economy. Export activities, in particular, have enabled these traditional industries to reach international consumers, thereby enhancing the visibility of Palestinian cultural products on the global stage. The handicraft sector’s integration into tourism also plays a crucial role, as visitors to the West Bank frequently seek out authentic artisanal goods, thereby stimulating demand and encouraging the continuation of these crafts. Collectively, the handicraft industries in these cities serve as vital economic engines, sustaining livelihoods and reinforcing cultural identity through tangible expressions of Palestinian heritage. Stonecutting has historically represented another traditional and economically important source of income within the Palestinian economy. The craft of extracting and shaping stone has been practiced for centuries, reflecting the region’s abundant natural stone resources and the cultural significance of stone in Palestinian architecture and construction. Stonecutting not only provides raw materials for building but also supports a network of skilled workers who engage in quarrying, cutting, finishing, and transporting stone products. This sector has maintained its relevance despite economic and political challenges, underscoring its foundational role in Palestinian industry and employment. Among all economic sectors in Palestine, the stone industry boasts the highest annual average output per worker, indicating a level of productivity and economic contribution that surpasses other areas of the economy. This high output reflects the efficiency of stone production methods, the demand for Palestinian stone both domestically and internationally, and the sector’s capacity to generate significant revenue relative to the labor input. The prominence of the stone industry in terms of output per worker highlights its strategic importance as a source of economic vitality and export potential within the Palestinian territories. Within the West Bank, there are approximately 650 stone production outlets currently operating, illustrating the extensive scale of this industry. These outlets encompass a range of facilities, from small quarries and workshops to larger processing plants, all engaged in various stages of stone extraction and fabrication. Notably, the town of Beit Fajjar is home to 138 of these stone production outlets, making it a central hub for the stone industry in the region. Beit Fajjar’s concentration of stone businesses reflects the town’s access to high-quality stone deposits and its established infrastructure for quarrying and processing activities. The clustering of stone production enterprises in Beit Fajjar has fostered a specialized local economy, providing employment and supporting ancillary services related to transportation, equipment maintenance, and trade. The quarried stone material extracted in the West Bank is processed into a diverse array of bricks and tiles, which are distinguished by their characteristic colors and textures. These products include hues such as pink, sand, golden, and off-white, collectively referred to as Jerusalem stone. Jerusalem stone holds both aesthetic and cultural significance, as it has been traditionally used in the construction of buildings throughout Jerusalem and the surrounding areas, symbolizing a connection to the land and its historical architecture. The processing of this stone involves cutting, polishing, and shaping to produce building materials that meet both functional and decorative requirements. The versatility and durability of Jerusalem stone have made it a preferred choice for construction projects within Palestine and for export to international markets seeking authentic Middle Eastern stone products. The stone industry’s ability to supply such distinctive materials underscores its integral role in preserving architectural heritage while contributing to contemporary economic development.

In 2010, the Palestinian territories experienced a notable surge in tourism, receiving approximately 4.6 million visitors, which marked a substantial increase from the 2.6 million visitors recorded in 2009. Of the total visitors in 2010, around 2.2 million were identified as foreign tourists, while the remaining 2.7 million were domestic visitors traveling within the territories. This growth reflected a renewed interest in the region’s historical, religious, and cultural sites, despite ongoing political and security challenges. However, the reported figures for international visits require careful interpretation, as a significant proportion of these tourists engaged primarily in short visits or day trips rather than extended stays. Many international visitors arrived for brief periods, often participating in itineraries that lasted only a few hours, which somewhat inflated the apparent volume of tourism activity without corresponding to long-term economic benefits typically associated with overnight stays. During the last quarter of 2012, the hospitality sector in the West Bank demonstrated continued activity, with over 150,000 guests recorded as staying in hotels throughout the region. Of these guests, approximately 40% originated from European countries, highlighting Europe’s role as a major source of international tourists to the Palestinian territories. Additionally, visitors from the United States and Canada accounted for about 9% of the hotel guests, indicating North America’s significant, albeit smaller, contribution to the tourism market. These figures underscored the West Bank’s appeal to international travelers seeking to explore its religious landmarks, historical sites, and cultural heritage, despite the logistical and political complexities involved in traveling there. Major travel guides and international tourism commentators have recently acknowledged that while traveling in the West Bank presents considerable challenges, including security concerns, movement restrictions, and infrastructural limitations, the effort required to navigate these difficulties is richly rewarded by the unique and authentic experiences available. Visitors often find that the region’s historical significance, vibrant local culture, and scenic landscapes offer a compelling alternative to more conventional tourist destinations. The West Bank’s diverse attractions, ranging from ancient cities such as Bethlehem and Hebron to religious sites of global importance, continue to draw travelers motivated by cultural, religious, and historical interests, even in the face of the region’s complex political environment. Efforts to promote tourism in the Palestinian territories have involved attempts at cooperation between the Palestinian Authority and the Israeli tourism ministries. A Joint Committee was established with the goal of fostering collaboration to enhance tourism development and marketing strategies for the region. Despite these initiatives, cooperation has largely been unsuccessful, primarily due to the broader context of the Israeli occupation and the political tensions that it engenders. The occupation imposes significant constraints on the movement of people and goods, complicating joint efforts to develop a coherent and accessible tourism sector. These political and security challenges have hindered the potential for coordinated tourism promotion and infrastructure development, limiting the growth of the industry. Israel retains control over the movement of tourists entering the West Bank, exercising authority over border crossings and access points. Following the indefinite closure of the Rafah crossing between Egypt and the Hamas-controlled Gaza Strip in August 2013, foreign tourism has been largely restricted to East Jerusalem and the West Bank. The closure of Rafah, which had served as a critical gateway for international visitors to Gaza, effectively curtailed tourism flow to the Gaza Strip. Consequently, Israel’s control over entry points has concentrated tourist arrivals in areas under its administrative control or influence, limiting the geographical scope of tourism within the Palestinian territories. This control is part of broader security and political measures that affect the accessibility and development of the tourism sector. Since 2005, the Gaza Strip has experienced an almost complete cessation of tourist arrivals due to the ongoing Israeli military blockade imposed by land, air, and sea. This blockade has severely restricted the movement of people and goods, effectively isolating Gaza from international tourism markets. The blockade has not only prevented tourists from entering Gaza but has also contributed to deteriorating economic conditions and infrastructure, further diminishing the region’s appeal as a tourist destination. The absence of tourism in Gaza contrasts sharply with the relative activity in the West Bank, underscoring the divergent realities faced by the two territories under Palestinian administration. In 2013, Rula Ma’ay’a, the Palestinian Authority Tourism Minister, emphasized the government’s commitment to encouraging international tourism as a vital component of economic development. However, she highlighted that the Israeli occupation remained the principal obstacle preventing tourism from becoming a major source of income for Palestinians. The occupation’s constraints on movement, access, and security create significant barriers to the growth of the tourism sector, limiting investment opportunities and deterring potential visitors. Ma’ay’a’s statements underscored the complex interplay between political realities and economic aspirations within the Palestinian tourism industry. Regarding entry requirements, there are no specific visa conditions imposed solely by the Palestinian authorities on foreign nationals entering the Palestinian territories beyond those required by Israeli visa policy. Access to East Jerusalem and the West Bank is controlled by Israel, which administers border crossings and security checks, while access to the Gaza Strip is controlled by Hamas, the de facto governing authority in that territory. This division of control results in a fragmented and complex system of entry regulations that tourists must navigate. Entry to the occupied Palestinian territories requires a valid international passport; however, entry to Israel itself may be denied to Palestinians or individuals perceived to be Arabic visitors, reflecting the broader security and political considerations that influence border policies. In October 2009, a new initiative was launched to promote tourism and travel between the West Bank and Israel, aiming to foster greater economic cooperation and cultural exchange. This project included the development of new business ventures and tourist attractions in the city of Jenin, located in the northern West Bank. The initiative sought to capitalize on Jenin’s historical and cultural assets, as well as to create opportunities for joint tourism enterprises that could benefit both Palestinian and Israeli stakeholders. This project represented one of the few attempts to bridge the divide between the two territories through tourism-related economic activities, although its long-term impact remained limited by prevailing political tensions. Several international hotel brands have established a presence within the Palestinian territories, contributing to the development of the hospitality sector. Notable examples include the Intercontinental Jacir Palace and the Seven Arches Hotel Intercontinental, both located in Bethlehem, which cater to international tourists visiting the city’s religious and historical sites. In Gaza, the Marriott Gaza hotel, later renamed Al-Mashtal, served as a prominent accommodation option before the decline of tourism in the region. Additionally, the Millennium Palestine Ramallah Hotel operates in Ramallah, the administrative capital of the Palestinian Authority, providing services to business travelers and tourists alike. These international hotel brands have played a significant role in elevating the standards of hospitality and attracting foreign visitors, despite the challenges posed by the political environment. In 1995, Marriott International proposed a project to construct a business center combined with a luxury hotel in Gaza, reflecting early optimism about the potential for tourism and business development in the city. This ambitious project was later modified to focus on a different hotel within Gaza, adapting to changing circumstances and the evolving political context. The initial proposal indicated a recognition by major international investors of the opportunities present in the Palestinian territories, although subsequent developments and the intensification of the Israeli blockade ultimately constrained the realization of such projects. The Marriott initiative remains a notable example of early efforts to integrate the Palestinian territories into global tourism and business networks.

The presence of oil and gas reserves within the territories of Palestine has been a subject of considerable contention and debate, with some advocates asserting that these fossil fuel resources play a significant role in influencing Israel’s military actions in the region. The strategic importance of these energy reserves is frequently cited as a factor underlying the ongoing conflict, with claims that control over these resources contributes to the geopolitical tensions and violence affecting Palestinian lands. A 2019 report issued by the United Nations estimated that over three billion barrels of oil exist both off the coast and beneath the occupied territories of Palestine, underscoring the substantial energy potential that remains largely untapped due to political and security constraints. Within the broader Levant Basin of the Mediterranean Sea, approximately 1.7 billion barrels of oil are believed to be present, while an additional 1.5 billion barrels are estimated to lie beneath the occupied West Bank area, highlighting the extensive hydrocarbon deposits in these contested regions. Despite the significant presence of these fossil fuel resources, Palestinians living under Israeli occupation face strict prohibitions against drilling for oil and gas or developing independent energy systems, including renewable sources such as solar energy. These restrictions have effectively prevented the Palestinian Authority and local enterprises from exploiting their own natural resources to foster economic growth and energy self-sufficiency. Meanwhile, the State of Israel has actively pursued claims over these resources, granting exploration licenses to various companies for offshore gas fields and advancing plans to construct pipelines aimed at exporting natural gas to European countries. This development aligns with Europe’s intensified search for alternative energy sources following the disruption of Russian gas supplies due to the Russia-Ukraine conflict, thereby increasing the geopolitical significance of Mediterranean gas reserves. Many advocates argue that the involvement of foreign interests in extracting Palestinian fossil fuel resources exacerbates the humanitarian crisis faced by Palestinians, with some framing this exploitation as contributing to the potential genocide and systemic oppression within the occupied territories. The historical context of the Middle East’s foreign policy has long been intertwined with the control and extraction of fossil fuels, and the Israel-Palestine conflict is deeply enmeshed within this broader regional dynamic. The discovery of oil in the Middle East introduced a complex layer to the conflict, as global powers sought access to this vital commodity, thereby complicating efforts to resolve regional disputes independently of energy considerations. The ongoing hostilities between Israel and Palestine encompass disputes not only over territorial sovereignty but also over the rightful ownership and exploitation of oil and gas reserves. In 1999, a significant gas field was discovered approximately 20 miles off the coast of Gaza, known as the Gaza Marine gas field; however, negotiations aimed at equitably dividing these resources were disrupted by the outbreak of the Second Intifada in 2000, which led to a protracted period of violence and political instability. International law, as articulated in various conventions and treaties, stipulates that oil and gas resources located in occupied territories legally belong to the sovereign populations of those territories rather than the occupying powers. Nevertheless, Israel has benefited from reserves situated beneath Palestinian lands and waters, effectively controlling access to these resources in contravention of international norms. This situation has resulted in a substantial economic loss for Palestine, with estimates indicating that the inability to access and develop these fossil fuel reserves has deprived the Palestinian economy of billions of dollars in potential revenue. In response to the environmental risks associated with fossil fuel extraction, Palestinian activists have increasingly advocated for a strategic shift toward renewable energy sources, emphasizing the development of solar power and other sustainable alternatives as a means to achieve energy independence and reduce ecological harm. Critics of the international community’s response to the Israeli occupation and the Gaza conflict argue that complicity in these dynamics is closely linked to capitalist interests and profit motives, suggesting that economic incentives tied to fossil fuel extraction have influenced diplomatic and policy decisions. The history of colonialism and oil exploitation in the Middle East provides an essential backdrop to understanding the Israel-Palestine conflict, as patterns of foreign intervention and resource extraction have long shaped the political and economic landscape of the region. While opinions vary regarding the primary drivers of the conflict, with some emphasizing religious ideology, geopolitical strategies, and control of critical trade routes as more significant factors, the role of fossil fuels remains a critical element in the complex interplay of interests that sustain the ongoing dispute. Palestine holds massive potential reserves of oil and gas, with estimates consistently indicating over three billion barrels (approximately 480 million cubic meters) located off the coast and beneath the occupied lands. The Levant Basin alone contains around 1.7 billion barrels (270 million cubic meters) of oil, while approximately 1.5 billion barrels (240 million cubic meters) are believed to lie beneath the occupied West Bank. In addition, around two billion barrels (320 million cubic meters) of oil reserves are thought to exist onshore in the Gaza Strip, further underscoring the region’s significant hydrocarbon potential. A report by the United Nations Conference on Trade and Development (UNCTAD) estimated about 1,250 billion barrels (1.99×10¹¹ cubic meters) of oil reserves in the occupied West Bank, a figure likely referring to the Meged oil field, which is considered one of the most promising sites for future development. According to the Palestinian Authority, approximately 80% of the Meged oil field lies under Palestinian-owned lands, making it a critical asset for potential economic development and energy production. The Palestine Investment Fund’s subsidiary, Masadder, is actively engaged in developing the oilfield in the West Bank, reflecting efforts by Palestinian institutions to harness these natural resources despite the challenging political environment. The Block-1 field, which spans an area of 432 square kilometers (167 square miles) from northwest Ramallah to Qalqilya, has been identified as having significant potential for recoverable hydrocarbons. Estimates indicate that Block-1 contains a P90 recoverable oil volume of 0.03 billion barrels (4.8 million cubic meters) and 6 billion cubic feet (170 million cubic meters) of natural gas, highlighting its viability as a resource for future extraction and energy production. The estimated development cost for Block-1 stands at approximately $390 million, with plans to proceed under a production sharing agreement with the Government of Palestine. To facilitate this development, an initial pre-exploration work program is currently underway to prepare a comprehensive exploration plan, which must receive official approval before full-scale development can commence. This phased approach reflects the complexities involved in resource extraction within occupied territories, where political, legal, and security considerations must be carefully navigated. Natural gas resources in Palestine are primarily concentrated in the Gaza Strip, with the Gaza Marine gas field being the most notable deposit. Located about 32 kilometers (20 miles) off the Mediterranean coast, Gaza Marine holds gas reserves estimated between 28 billion cubic meters (990 billion cubic feet) and 32 billion cubic meters (1.1 trillion cubic feet), quantities that exceed the current and projected energy needs of the Palestinian population. The gas field was discovered by the British Gas Group in 1999, marking a significant milestone in the region’s energy landscape. Yasser Arafat, then President of the Palestinian Authority, famously hailed the discovery as a “Gift from God,” reflecting the hope that the field could provide a foundation for economic development and energy independence. Following the discovery, a regional cooperation agreement was signed involving the Palestinian Authority, Israel, and Egypt, aiming to facilitate the development and equitable sharing of the Gaza Marine gas field. Hamas, the governing authority in Gaza, also approved the Palestinian Authority’s role in the project, indicating a rare moment of political alignment on this critical economic issue. However, despite these agreements, the development of Gaza Marine has been significantly delayed due to the ongoing conflict and periodic wars in Gaza, which have hindered infrastructure development, investment, and stable governance necessary for resource exploitation. The continued instability has prevented the realization of the field’s potential benefits, leaving a valuable energy resource largely untapped amidst persistent political and security challenges.

In 2016, the World Bank conducted an analysis revealing that the development of Palestinian telecommunications networks in the West Bank had been significantly hindered by restrictive measures imposed by Israel. These constraints were identified as a major obstacle to the growth and modernization of the Palestinian telecommunications sector, directly affecting its capacity to expand infrastructure, improve service quality, and integrate advanced technologies. The World Bank’s findings highlighted the extent to which these limitations had stifled the sector’s potential, emphasizing the broader economic implications for the Palestinian territories. The report underscored that such restrictions not only impeded technical progress but also contributed to a challenging operational environment for Palestinian telecommunication companies. Financially, the Palestinian telecommunications sector suffered substantial losses as a result of these imposed restrictions. The World Bank estimated that the cumulative financial impact amounted to approximately $1 billion in lost revenues and investment opportunities. This figure reflected the combined effects of limited market access, higher operational costs, and constrained infrastructure development. The inability to fully exploit the telecommunications market potential curtailed job creation, innovation, and economic growth within the sector. Consequently, the Palestinian economy faced broader repercussions, given the critical role that telecommunications play in modern economic activities and digital connectivity. A particularly significant restriction involved the denial of operation rights in approximately 60% of the West Bank, specifically in Area C, which falls under Israeli military administration. Area C comprises a substantial portion of the West Bank and includes key areas for infrastructure development and expansion. The Israeli military’s control over this region meant that Palestinian telecommunication operators were effectively barred from establishing or upgrading networks in these zones. This limitation severely restricted the geographic reach of Palestinian telecommunications services and prevented the comprehensive coverage necessary for a cohesive and functional network. The lack of access to Area C created a fragmented telecommunications landscape, undermining efforts to provide consistent and reliable services throughout the West Bank. Palestinian information and communications technology (ICT) companies also faced significant challenges related to the importation of technology. Israeli-imposed restrictions limited the ability of these companies to bring in essential equipment and advanced technologies required for the development and expansion of telecommunications infrastructure. These import limitations delayed the deployment of new technologies, hindered network upgrades, and constrained the introduction of innovative services. The restrictions on technology imports not only affected the pace of infrastructure development but also placed Palestinian ICT firms at a competitive disadvantage compared to regional counterparts who enjoyed fewer barriers to technological acquisition. Further compounding these challenges was the requirement that Palestinian telecommunication operators access international telecommunication links exclusively through companies registered in Israel. This arrangement restricted the autonomy of Palestinian operators by forcing them to rely on Israeli firms for international connectivity, which is a critical component for global communication and internet access. The dependence on Israeli companies increased operational costs for Palestinian operators, as they had limited bargaining power and faced higher fees. Moreover, this dependency limited the ability of Palestinian operators to negotiate directly with international providers, thereby constraining their strategic options and flexibility in managing international telecommunications traffic. The imposition of these restrictions contributed to notable delays in the provision and rollout of mobile broadband services within the Palestinian territories. Despite growing demand for high-speed internet and mobile connectivity, Palestinian consumers experienced slower access to advanced mobile broadband technologies such as 3G and 4G networks. The delays were attributed to the combined effects of limited access to necessary infrastructure, import restrictions, and the regulatory environment shaped by Israeli control. As a result, the digital divide between Palestinian territories and neighboring regions widened, impacting economic development, education, and access to information. The absence of an independent regulatory authority for the telecommunications sector in the Palestinian territories further impeded the sector’s development. Unlike many countries where telecommunications are overseen by autonomous regulatory bodies that establish policies, allocate frequencies, and ensure fair competition, the Palestinian telecommunications sector lacked such an institution. The failure to establish an independent regulator created challenges in coordinating sector development, enforcing standards, and fostering a competitive market environment. This regulatory vacuum limited the ability of Palestinian authorities to effectively manage the sector, address technical and commercial disputes, and attract investment. Complicating the regulatory landscape was the continued operation of Israeli telecommunication companies within the Palestinian market without obtaining appropriate authorizations from Palestinian authorities. Israeli operators maintained a presence in the Palestinian territories, providing services that competed with Palestinian companies but without being subject to Palestinian regulatory oversight. This situation created an uneven playing field, undermining market fairness and complicating efforts to enforce local regulations. The presence of unauthorized Israeli operators also raised concerns regarding the sovereignty of Palestinian telecommunications governance and the ability of Palestinian institutions to assert control over their own communications infrastructure. Together, these factors illustrate the complex and constrained environment in which the Palestinian telecommunications sector has operated. The combination of territorial restrictions, import limitations, dependence on Israeli infrastructure, regulatory gaps, and unauthorized competition has significantly hindered the sector’s growth and modernization. These challenges have not only limited the availability and quality of telecommunications services for Palestinians but have also contributed to broader economic and social impacts, underscoring the critical importance of addressing these issues for the future development of the Palestinian economy.

In 2007, the economy of the West Bank exhibited signs of gradual improvement, marked by an economic growth rate estimated between 4 and 5 percent. This period also witnessed a notable reduction in unemployment, which decreased by approximately 3 percent, reflecting a modest recovery in labor market conditions. The improvements in economic indicators during this time suggested an emerging resilience within the West Bank’s economy despite ongoing political and infrastructural challenges. These developments laid the groundwork for further economic expansion in subsequent years. Data from Israeli sources revealed that wages in the West Bank experienced a substantial increase in 2008, rising by more than 20 percent. This wage growth was accompanied by a significant expansion in trade volume, which surged by approximately 35 percent during the same year. The increase in trade activity indicated a strengthening of commercial ties and a boost in economic transactions, which contributed to the improved economic environment. Together, these factors underscored a period of enhanced economic vitality and greater integration with regional markets. Tourism, a critical sector for the West Bank’s economy, demonstrated remarkable growth in 2008. In Bethlehem, the number of tourists doubled compared to previous levels, signaling a resurgence in the city’s appeal as a destination for religious and cultural tourism. Similarly, Jericho experienced a 50 percent increase in tourist arrivals, reflecting broader regional interest and improved access to key historical and archaeological sites. The expansion of tourism not only generated direct economic benefits through increased spending but also stimulated related sectors such as hospitality, retail, and transportation. Life expectancy in the Palestinian territories was recorded at 73.4 years, positioning it 77th globally in terms of longevity. This figure compared favorably with neighboring countries, exceeding the life expectancy in Jordan, which stood at 72.5 years, and Turkey, at 71.8 years. However, it remained below the life expectancy in Israel, which was significantly higher at 80.7 years. These statistics highlighted the relative progress made in health and social services within the Palestinian territories, while also underscoring disparities in healthcare outcomes between the West Bank and Israel. Consumer confidence and purchasing power in the West Bank showed marked improvement in 2008, as evidenced by the doubling of car sales compared to the previous year. This surge in automobile purchases indicated increased disposable income and a growing middle class capable of acquiring durable goods. The rise in car sales also reflected greater mobility and economic activity, which are essential components of a dynamic economy. This trend was indicative of broader consumer market expansion and improved economic conditions. The International Monetary Fund (IMF) projected a robust economic growth rate of 7 percent for the West Bank in 2009, signaling optimism about the territory’s economic prospects. This forecast was based on anticipated improvements in investment, trade, and domestic consumption, as well as ongoing institutional reforms. The IMF’s projection underscored the potential for accelerated economic development, contingent upon political stability and effective governance. In early 2008, the Bethlehem Small Enterprise Center was inaugurated with funding from Germany, representing a targeted effort to bolster the capabilities of local entrepreneurs. The center’s mission focused on enhancing computer literacy and marketing skills among small business owners, thereby improving their competitiveness and capacity for growth. By providing training and resources, the center aimed to empower the local business community and stimulate economic diversification within Bethlehem and its environs. The year 2009 saw intensified efforts to build and strengthen Palestinian local institutions and governance structures. Key figures such as Tony Blair, the Quartet Representative, and US General Keith Dayton played significant roles in these initiatives, which sought to establish viable institutions capable of promoting local peace and stability. These efforts were part of a broader strategy to enhance institutional capacity, improve public administration, and foster conditions conducive to sustainable economic development. In August 2009, a state-of-the-art web-based system was launched to track goods entering and exiting the West Bank through Palestinian customs. This system was developed in collaboration with the United Nations Conference on Trade and Development (UNCTAD) and represented a significant advancement in customs management and trade facilitation. By improving transparency and efficiency in the movement of goods, the system aimed to reduce delays, curb smuggling, and enhance revenue collection, thereby supporting economic growth and integration into global markets. The year 2009 marked the onset of an economic “boom” in the West Bank, with growth reaching an impressive 8 percent. This rate surpassed the growth figures recorded in Israel and many Western countries during the same period, highlighting the West Bank’s rapid economic expansion. The boom was driven by increased investment, rising consumer demand, and improvements in infrastructure and institutional frameworks. However, despite the nominal growth, inflation in 2009 was approximately 9.9 percent, which eroded purchasing power and resulted in negative real economic growth. This inflationary pressure tempered the benefits of economic expansion and posed challenges for maintaining living standards. Tourism continued its upward trajectory in 2009, with the number of visitors to Bethlehem increasing from 1 million in 2008 to nearly 1.5 million. This surge reflected the city’s growing reputation as a key destination for pilgrims and tourists interested in its religious and cultural heritage. The influx of tourists contributed significantly to the local economy through spending on accommodation, food, transportation, and souvenirs, thereby supporting employment and business development in the hospitality sector. New car imports in 2009 rose by 44 percent, further evidencing heightened consumer demand and increased purchasing power within the West Bank. This growth in vehicle imports was consistent with the earlier trend of rising car sales and indicated sustained confidence among consumers and businesses alike. The expansion of the automotive market also suggested improvements in infrastructure and accessibility, facilitating greater mobility for residents and commercial activities. Retail sector expansion was also evident in 2009 with the opening of new shopping malls in the cities of Jenin and Nablus. These developments signaled a diversification of the local economy and an enhancement of consumer services, providing residents with increased access to goods and modern retail environments. The establishment of such commercial centers reflected growing urbanization and the emergence of a consumer culture within the West Bank’s urban areas. Following the Palestine Investment Conference, Palestinian developers announced ambitious plans to construct Rawabi, the first modern Palestinian city. This project represented a landmark initiative aimed at creating a new urban center with contemporary infrastructure, housing, and commercial facilities. Rawabi was envisioned as a symbol of economic progress and self-sufficiency, designed to attract investment, generate employment, and improve living standards for Palestinians. In 2010, Ramallah emerged as a central hub of economic activity within the West Bank, attributed to several key factors including improved security conditions, successful anti-corruption measures, and the presence of a large consumer base. The city’s role as an administrative and commercial center attracted businesses, investors, and government institutions, fostering an environment conducive to economic growth. Ramallah’s development underscored the importance of governance reforms and stability in driving economic dynamism. By 2011, the Palestinian Planning Minister projected optimistic GDP growth rates, estimating 9 percent growth for that year, with further increases to 10 percent in 2012 and 12 percent in 2013. These projections reflected confidence in the trajectory of the West Bank’s economy, supported by ongoing reforms, investment inflows, and expanding sectors such as construction, services, and manufacturing. The anticipated growth rates suggested a sustained period of economic expansion, contingent upon continued political stability and effective policy implementation.

East Jerusalem historically functioned as the primary business and shopping center of the West Bank, serving as a vital commercial hub for the Palestinian population across the region. Its markets, retail establishments, and service industries attracted consumers and traders from various parts of the West Bank, fostering a vibrant economic environment that linked East Jerusalem closely with surrounding Palestinian towns and villages. This interconnectedness not only supported local businesses but also facilitated the flow of goods, labor, and capital, making East Jerusalem a focal point for economic activity and social interaction within the Palestinian territories. However, over the past several decades, the economic landscape of East Jerusalem underwent profound changes, largely due to the establishment of Israeli security checkpoints and the construction of the separation barrier, which began more than ten years ago. These measures physically and administratively isolated East Jerusalem from its traditional customer base in the West Bank, severely restricting the movement of Palestinians who had previously frequented the city’s commercial centers. The checkpoints and barrier disrupted supply chains, limited access to markets, and curtailed the freedom of movement essential for economic vitality, leading to a marked decline in business activity. This isolation not only diminished the city’s role as a regional commercial hub but also contributed to a broader economic downturn that affected livelihoods and community well-being. Hanna Siniora, a prominent figure representing the Palestinian-American Chamber of Commerce, identified the year 1993 as a critical turning point in East Jerusalem’s economic trajectory. According to Siniora, this year marked the effective transformation of East Jerusalem into a closed city, as it became increasingly isolated from the rest of the West Bank. The political developments of the early 1990s, including the Oslo Accords and subsequent Israeli security policies, contributed to the imposition of restrictions that curtailed the free flow of people and goods. This closure had immediate and long-lasting repercussions on the city’s economy, severing its traditional commercial ties and undermining its status as a central marketplace for Palestinians. Between 1993 and 2001, East Jerusalem experienced a dramatic reduction in business activity, with reports indicating a 50% decline directly linked to its growing isolation. This sharp contraction in economic engagement reflected the compounded effects of restricted access, movement limitations, and heightened security measures. Businesses that once thrived on the patronage of West Bank residents faced dwindling customer bases, leading to closures, layoffs, and reduced investment. The economic downturn during this period underscored the vulnerability of East Jerusalem’s commercial sector to political and physical barriers, highlighting the interdependence between regional connectivity and economic health. The economic challenges faced by East Jerusalem persisted into the following decade, culminating in a 2012 report by the Association for Civil Rights in Israel (ACRI) that provided a comprehensive analysis of the city’s deteriorating economic and social conditions. Supplemented by interviews conducted by the Forward, the report revealed that the prolonged economic downturn had precipitated unprecedented levels of poverty among the Palestinian population. The findings painted a stark picture of hardship, with many families struggling to meet basic needs amid a shrinking economic base. The report emphasized that the economic decline was not merely a consequence of market forces but was deeply intertwined with the political and administrative realities imposed on East Jerusalem. According to the 2012 ACRI report, approximately 80% of the Palestinian population in East Jerusalem lived below the poverty line, a statistic that underscored the severity of the economic crisis confronting the community. This high poverty rate reflected the cumulative impact of restricted economic opportunities, limited access to employment, and inadequate social services. The report highlighted how the economic marginalization of Palestinians in East Jerusalem was both a cause and effect of broader social challenges, including housing shortages, educational deficits, and health disparities. The widespread poverty also signaled a deepening divide between the Palestinian residents of East Jerusalem and the broader Israeli economy, exacerbating tensions and undermining prospects for coexistence. The primary cause of this economic and social decline was attributed to the political and physical barriers that separated East Jerusalem from the rest of the West Bank. The separation barrier, checkpoints, and administrative restrictions collectively created an environment in which economic activity was severely constrained. These barriers not only limited the movement of people and goods but also fostered a sense of isolation and exclusion that hindered investment and development. The fragmentation of Palestinian communities and markets disrupted traditional economic networks, leaving East Jerusalem increasingly marginalized within the regional economy. The ACRI report specifically cited “the cumulative effects of annexation, neglect, rights violations and the completion of the separation barrier” as key factors exacerbating the economic crisis in East Jerusalem. Annexation policies, which sought to extend Israeli jurisdiction over East Jerusalem, were accompanied by administrative neglect of Palestinian neighborhoods, including underinvestment in infrastructure and public services. Rights violations, including restrictions on residency status and access to municipal resources, further undermined the ability of Palestinians to participate fully in the city’s economic life. The completion of the separation barrier solidified these trends by physically severing East Jerusalem from its hinterland, thereby entrenching economic and social disparities. Another significant factor contributing to the economic decline was the housing situation in East Jerusalem, where the Israeli government promoted extensive construction for Israeli settler neighborhoods. These developments not only altered the demographic balance of the city but also redirected resources and planning priorities toward the expansion of Israeli communities. The construction of new settler housing projects often occurred on land that Palestinians claimed or used, leading to disputes and tensions that further complicated the economic environment. The focus on settler development contrasted sharply with the conditions faced by the Palestinian population, contributing to spatial segregation and economic marginalization. Conversely, Israeli authorities imposed severe restrictions on development and building permits for the Palestinian population in East Jerusalem, further limiting economic growth and exacerbating poverty. Palestinians seeking to build or renovate homes frequently encountered bureaucratic obstacles, permit denials, and demolitions of structures deemed unauthorized. These restrictions not only constrained the availability of adequate housing but also impeded the expansion of commercial and industrial facilities necessary for economic development. The resulting housing shortages and overcrowding intensified social pressures and economic hardships, reinforcing a cycle of poverty and underdevelopment within the Palestinian community. Together, these factors created a complex and challenging economic landscape in East Jerusalem, shaped by political decisions, spatial policies, and ongoing conflict.

The economy of Gaza City experienced significant challenges following the intensification of Israel’s closure policy after Hamas assumed administrative control in 2007. According to the CIA’s The World Factbook, this policy severely restricted the movement of people and goods, leading to elevated levels of poverty and unemployment across the city. The private sector, which had previously relied heavily on export markets to sustain its operations, suffered a marked decline as access to external markets was curtailed. This economic contraction was compounded by the limited availability of raw materials and inputs, which further hampered industrial and commercial activities within Gaza. Israel justified the enforcement of the closure policy by citing security concerns related to Hamas, which it held responsible for actions that necessitated such restrictions. The Israeli government argued that the measures were essential to prevent the smuggling of weapons and to curb militant activities originating from the Gaza Strip. Consequently, the closure policy was framed as a necessary response to the perceived threats posed by Hamas, leading to stringent controls on the flow of goods and people into and out of Gaza. As a result of these restrictions, a substantial portion of Gaza City’s population became reliant on humanitarian assistance to meet basic needs. United Nations agencies, particularly the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), played a critical role in providing food aid, healthcare, and other essential services to vulnerable communities. This reliance underscored the fragility of Gaza’s economic situation and the limited capacity of local institutions to sustain livelihoods without external support. In 2010, a partial easing of Israel’s closure policy brought about some improvements in Gaza City’s economic indicators. The relaxation of certain restrictions allowed for increased movement of goods and people, which in turn facilitated modest growth in commercial activity. Despite these gains, regular exports from the Gaza Strip remained prohibited, preventing local producers from fully capitalizing on external markets and limiting the potential for sustained economic recovery. The continued embargo on exports maintained a significant barrier to the revitalization of Gaza’s private sector. The Israeli Defense Forces reported that the Gaza Strip’s economy showed signs of improvement in 2011, as reflected by a decline in unemployment rates and an increase in Gross Domestic Product (GDP). This positive trend was attributed to several factors, including a resurgence in local economic activity and increased availability of goods and services. The reduction in unemployment suggested that more individuals were able to find work, while the growth in GDP indicated an overall expansion of economic output within the territory. Economic development during 2011 was characterized by the emergence of new commercial infrastructure and increased consumer activity. Notably, new shopping malls opened in Gaza City, signaling a revival of retail and service sectors. Local industries experienced growth, benefiting from improved access to raw materials and markets. Additionally, the construction sector saw heightened activity, with the building of hotels catering to both local residents and visitors. The rise in car imports further illustrated an increase in disposable income and consumer demand among Gaza’s population. This broad-based economic development was largely facilitated by the relatively unhindered movement of goods into Gaza through the Kerem Shalom Crossing, a key commercial entry point controlled by Israel. Alongside this official crossing, tunnels connecting the Gaza Strip with Egypt played a crucial role in supplementing the flow of goods, enabling the importation of commodities that were otherwise restricted. The combined effect of these channels allowed for a more consistent supply of construction materials, consumer products, and industrial inputs, which supported the expansion of various economic sectors. Currently, the volume of trucks entering Gaza through the Kerem Shalom Crossing averages approximately 250 trucks per day. However, this number is subject to fluctuation depending on the level of interference with goods brought in via the tunnels from Egypt. Periodic closures or restrictions imposed by either Israeli or Egyptian authorities can disrupt the flow of supplies, creating volatility in the availability of essential items and impacting economic stability. The interplay between official crossings and tunnel networks thus remains a critical factor in determining the overall health of Gaza’s economy. The surge in construction activity driven by increased availability of materials and investment has led to a shortage of skilled construction workers in Gaza City. The rapid pace of building projects outstripped the local labor market’s capacity to supply adequately trained personnel, creating a gap between demand and supply in the construction trades. This shortage posed challenges for sustaining the momentum of development and meeting the needs of ongoing and planned infrastructure projects. To address the deficit in skilled labor, initiatives were undertaken to train young people from Gaza in construction trades abroad. Turkey emerged as a key destination for such vocational training programs, offering opportunities for Gazan youth to acquire technical skills and expertise in various aspects of construction work. These training efforts aimed to enhance the local workforce’s capabilities, enabling them to contribute effectively to Gaza’s reconstruction and economic growth once they returned. The investment in human capital through overseas training represented a strategic approach to overcoming labor shortages and fostering sustainable development within the Gaza Strip.

Under the terms established by the Protocol on Economic Relations, commonly known as the Paris Protocol, Palestinians were explicitly prohibited from independently introducing a separate national currency. This agreement, signed in 1994 as part of the Oslo Accords framework, effectively placed restrictions on the Palestinian Authority’s monetary sovereignty, thereby limiting its ability to issue currency or conduct autonomous monetary policy. As a result, the Palestinian economy has remained monetarily dependent on external currencies, primarily those circulating within the region, which has had profound implications for economic management and financial stability within the Palestinian territories. The Israeli new shekel (ILS) has emerged as the primary currency used throughout the Palestinian territories, including both the West Bank and the Gaza Strip. This widespread adoption is due in large part to the economic interdependence between Israel and the Palestinian territories, as well as the restrictions imposed by the Paris Protocol. The new shekel is the dominant medium of exchange for everyday transactions, particularly in retail markets, where it facilitates the purchase of goods and services. Its prevalence in daily commerce underscores the integration of the Palestinian economy with that of Israel, despite the political complexities and territorial divisions. In the West Bank, the monetary landscape is further complicated by the concurrent circulation of the Jordanian dinar (JOD) alongside the Israeli new shekel. The Jordanian dinar has historical roots in the region, having been the official currency of the West Bank prior to the Israeli occupation in 1967 and continuing to circulate due to longstanding economic ties with Jordan. While the new shekel is the preferred currency for most transactional activities, the Jordanian dinar retains a significant role, particularly in the context of savings and the purchase of durable goods such as vehicles, real estate, and large appliances. This dual-currency system reflects the complex economic affiliations and historical legacies that shape the Palestinian financial environment. The Israeli new shekel dominates the retail sector in the Palestinian territories, serving as the principal currency for the majority of daily transactions. Its widespread use in markets, shops, and service providers facilitates a relatively seamless flow of commerce within and across Palestinian communities. The shekel’s stability and acceptance in the region make it the currency of choice for consumers and businesses alike, ensuring liquidity and ease of exchange. This predominance also reflects the practical realities of economic integration with Israel, where many Palestinians work and trade, necessitating the use of the shekel for income and expenditure. Conversely, the Jordanian dinar is primarily utilized for savings and transactions involving durable goods in the West Bank. Its relative stability and historical acceptance make it a preferred vehicle for preserving wealth and conducting high-value purchases. Many Palestinians favor the dinar for these purposes because it is perceived as less volatile than other currencies and is often used in transactions requiring a stable store of value. This preference highlights the nuanced monetary behavior within the Palestinian economy, where different currencies serve distinct functions based on their perceived reliability and historical usage. The United States dollar (USD) also plays a role, albeit more limited, within the Palestinian monetary system. It is occasionally used for savings and for purchasing foreign goods, particularly those imported from outside the immediate region. The dollar’s status as a global reserve currency and its widespread acceptance in international trade make it a practical choice for certain transactions, especially those involving foreign suppliers or international financial dealings. However, its use remains secondary compared to the Israeli new shekel and the Jordanian dinar, reflecting the localized nature of most Palestinian economic activities. The Palestinian Monetary Authority (PMA), which functions as the de facto central bank for the Palestinian territories, oversees a range of financial transactions and regulatory activities. Notably, the overwhelming majority of transactions managed by the PMA are conducted in United States dollars. This reliance on the dollar for official financial operations, including government transactions, foreign aid disbursement, and banking activities, underscores the currency’s importance in the Palestinian financial system. Despite this, these dollar-denominated transactions represent only a fraction of the total economic activity conducted in Palestine or by Palestinians, as the bulk of everyday commerce occurs in the Israeli new shekel and, to a lesser extent, the Jordanian dinar. This disparity highlights the fragmented and complex nature of the Palestinian monetary environment. In the Gaza Strip, the Israeli new shekel similarly serves as the main currency in circulation. However, the availability of shekels in Gaza has been severely constrained due to the blockade imposed by the Palestinian Authority, Israel, and Egypt. This blockade, which restricts the movement of goods, people, and capital, has led to a shortage of physical currency in the enclave, complicating economic transactions and exacerbating financial instability. The scarcity of shekels has hindered the ability of residents and businesses in Gaza to conduct routine commercial activities, contributing to the broader humanitarian and economic challenges faced by the population. The Palestinian Monetary Authority’s inability to issue its own currency significantly limits its capacity to pursue an independent and effective monetary policy. Without control over currency issuance, the PMA cannot adjust money supply, influence interest rates, or implement measures to stabilize prices and support economic growth. This constraint leaves the Palestinian economy vulnerable to external monetary policies dictated by the central banks of Israel, Jordan, and the United States, over whose currencies the PMA has no influence. Consequently, the Palestinian territories lack a critical tool for managing economic cycles, controlling inflation, and responding to financial crises. The use of multiple currencies within the Palestinian territories introduces additional complexities and inefficiencies into the economy. The coexistence of the Israeli new shekel, Jordanian dinar, and United States dollar increases transaction costs due to the need for currency exchange and the associated fees. Moreover, fluctuating exchange rates between these currencies create uncertainty and inconvenience for consumers and businesses, complicating pricing, accounting, and financial planning. This multi-currency environment hampers economic integration and efficiency, as market participants must continuously navigate the challenges posed by currency volatility and conversion costs. These factors collectively contribute to the broader economic difficulties faced by the Palestinian territories in achieving monetary stability and sustainable development.

Taxation in the Palestinian territories operates within a multifaceted framework that necessitates payments to both the Palestinian Authority (PA) and the Israeli government, reflecting the complex political and economic relationship between the two entities. This dual system arises from agreements and arrangements that govern fiscal matters, including the collection and transfer of various taxes and tariffs, which are critical to the financial functioning of the Palestinian Authority. The PA administers internal taxation within the territories under its control, while Israel collects customs duties and value added taxes (VAT) on goods and services that cross the borders or originate from Israeli sources but are consumed by Palestinians. In 2005, the Palestinian Authority was responsible for collecting approximately $34 million per month from a combination of taxes and other charges levied within the Palestinian territories. These internal revenues included income taxes, property taxes, business taxes, and other forms of direct and indirect taxation that the PA imposed on individuals and enterprises operating under its jurisdiction. This figure represented the PA’s efforts to generate revenue independently to fund public services, administrative functions, and infrastructure development in the West Bank and Gaza Strip. However, this amount was only part of the total fiscal resources available to the PA, as a significant portion of its revenue was derived from funds collected by Israel on its behalf. During the same period, Israel collected about $75 million per month in tariffs on foreign imports destined for the Palestinian territories, as well as value added taxes on Israeli goods and services consumed by Palestinians. These collections were made under the terms of the Paris Protocol, an economic agreement signed in 1994 as part of the Oslo Accords, which established a customs union between Israel and the Palestinian territories. Under this arrangement, Israel retained control over external borders and customs operations, thereby collecting import duties and VAT on behalf of the PA. The system was designed to facilitate trade and economic integration while providing the PA with a steady stream of revenue without the need to establish its own customs infrastructure. Of the $75 million collected monthly by Israel, it retained on average about $15 million to cover the payment of water and power bills for Palestinians. This deduction was made to offset the costs incurred by Israeli utilities and service providers in supplying essential resources to Palestinian consumers. Water and electricity infrastructure in the Palestinian territories often depended on Israeli companies and networks, and the PA’s inability to independently manage these utilities necessitated such arrangements. The retention of funds by Israel for these purposes was a significant aspect of the fiscal relationship, as it directly linked the collection of tax revenues to the provision of basic services within the territories. The remaining $60 million collected by Israel each month was forwarded to the Palestinian Authority as part of its revenue. This transfer constituted a vital source of funding for the PA, enabling it to meet its budgetary obligations, pay public sector salaries, and finance governmental operations. The monthly remittance of these funds was a key feature of the economic interdependence between Israel and the Palestinian territories, underscoring the PA’s reliance on Israeli-collected revenues for its financial stability. The timely transfer of these funds was critical to maintaining the PA’s administrative functionality and public service delivery. Funds collected by Israel on behalf of the Palestinian Authority constituted roughly two-thirds of the PA’s self-generated revenue, highlighting the extent to which the PA depended on these externally collected funds. This dependency underscored the limitations of the PA’s fiscal autonomy and the constraints imposed by the broader political and security context. The reliance on Israeli-collected revenues meant that the PA’s financial health was vulnerable to political developments and decisions made by the Israeli government, which could affect the flow of funds and, consequently, the PA’s ability to govern effectively. According to a Reuters report, the Palestinian Authority’s self-generated revenue was approximately $100 million as of December 2012. This figure encompassed both the internally collected taxes and the funds transferred by Israel, reflecting the total revenue available to the PA for its budgetary needs. The report illustrated the scale of the PA’s fiscal operations and the importance of both domestic tax collection and external transfers in sustaining the Palestinian economy and governance structures. The $100 million figure also provided a benchmark for understanding the PA’s financial capacity at that time, particularly in light of ongoing political and economic challenges. Since the 2006 Palestinian legislative election and the subsequent formation of a Hamas government within the Palestinian Authority, Israel has regularly withheld the tax revenues it owes to the PA. This withholding became a recurrent tool of political pressure and economic leverage employed by Israel in response to the change in governance and the ensuing tensions between the two parties. The suspension or delay of tax transfers significantly impacted the PA’s fiscal situation, exacerbating budgetary shortfalls and undermining the PA’s ability to fulfill its obligations. The withholding of revenues underscored the fragility of the fiscal arrangements and the extent to which political developments directly influenced economic and administrative realities in the Palestinian territories.

The agricultural sector in Palestine holds a complex and multifaceted role within the broader employment landscape, characterized by a stark contrast between formal and informal labor participation. According to data from the Council for European Palestinian Relations, approximately 13.4% of the Palestinian population is formally employed in agriculture. This formal employment encompasses individuals engaged in recognized agricultural activities, often involving structured work arrangements, official contracts, and some degree of regulatory oversight. However, this figure significantly underrepresents the true scale of agricultural labor, as informal employment within the sector is far more pervasive. Informal employment in agriculture accounts for an estimated 90% of the Palestinian population, highlighting a substantial reliance on unregulated, often precarious labor arrangements. Informal agricultural workers typically lack formal contracts, social security benefits, and legal protections, which contributes to their vulnerability and economic insecurity. This widespread informal employment reflects the fragmented nature of the Palestinian economy and the limited availability of formal job opportunities, especially in rural areas where agriculture remains a primary source of livelihood. The predominance of informal labor also underscores challenges related to labor rights, income stability, and access to social services for a majority of those involved in agricultural production. Over the past decade, the employment situation in Palestine has deteriorated markedly, with rising unemployment rates signaling increasingly difficult economic conditions. Various factors have contributed to this trend, including political instability, restrictions on movement and access, limited investment, and the broader impacts of regional conflicts. The worsening employment environment has had profound implications for the Palestinian workforce, particularly affecting sectors that traditionally absorb large numbers of workers, such as agriculture. As unemployment rates climbed, the agricultural sector emerged as the most impoverished segment of the Palestinian economy, reflecting both its structural vulnerabilities and the broader economic hardships faced by the population. The impoverishment of the agricultural sector during this period is attributable to several interrelated dynamics. Reduced access to land, water, and markets, compounded by movement restrictions and periodic escalations of conflict, have constrained agricultural productivity and profitability. These challenges have diminished the sector’s capacity to provide stable employment and adequate incomes, thereby exacerbating poverty among rural communities that depend heavily on farming and related activities. The decline in agricultural livelihoods has also had ripple effects on food security and rural development, further entrenching socio-economic disparities within Palestinian society. Unemployment rates in Palestine reached a critical peak in 2008, with the Gaza Strip experiencing the most acute levels of joblessness. During that year, unemployment in Gaza soared to 41%, reflecting the severe economic and humanitarian crisis that the region faced. This unprecedented level of unemployment was driven by a combination of factors, including the blockade imposed on Gaza, recurrent military conflicts, and the collapse of many local industries. The high unemployment rate not only underscored the fragility of Gaza’s economy but also highlighted the broader challenges confronting Palestinian employment as a whole. The 2008 peak served as a stark indicator of the urgent need for sustainable economic development and effective employment policies to address the deepening crisis. In summary, the employment landscape in Palestine is marked by a significant dependence on the agricultural sector, with a vast majority of workers engaged informally. The past decade has witnessed a deterioration in employment conditions, with rising unemployment rates and increasing poverty within agriculture. The peak unemployment in 2008, particularly in the Gaza Strip, exemplified the severe economic challenges facing the Palestinian workforce and underscored the critical importance of addressing structural barriers to employment and economic growth.

High unemployment rates within the Palestinian economy have compelled a significant number of Palestinians to seek employment opportunities beyond the borders of the Palestinian territories, particularly in Israel. Approximately 100,000 Palestinians have historically traveled to Israel for work, driven by the scarcity of jobs and limited economic prospects in the West Bank and Gaza Strip. This labor migration reflects the intertwined nature of the Israeli and Palestinian economies, despite the political and territorial complexities that characterize their relationship. Employment in Israel offers Palestinians access to higher wages and more stable job opportunities than those typically available in their home regions. By March 2014, the Israeli authorities had issued around 45,000 work permits to Palestinians, allowing them to legally engage in employment within Israel proper. In addition to these permits, approximately 25,000 work permits were granted for Palestinians to work in Israeli settlements located in the West Bank. These permits are crucial for regulating the flow of Palestinian labor into Israeli-controlled areas and for managing security concerns. The issuance of permits is subject to Israeli government quotas and administrative procedures, which have fluctuated over time in response to political developments and security considerations. The permits enable Palestinian workers to cross checkpoints and enter Israel or settlements legally, facilitating their participation in the Israeli labor market. Despite the formal permit system, it is estimated that about 35,000 Palestinians work in Israel through unauthorized or illegal channels, without obtaining the necessary permits. This informal labor migration occurs due to the limited number of permits available and the high demand for employment among Palestinians. Working without permits exposes these individuals to legal risks, including arrest or deportation, and often results in precarious working conditions. The phenomenon of illegal labor underscores the challenges faced by both Israeli authorities and Palestinian workers in balancing economic needs with security and regulatory frameworks. In recent years, the Israeli government has responded to labor market demands by increasing the quota for Palestinian work permits. Alongside this expansion, the minimum age required to obtain a work permit was lowered from 26 to 24 years old, thereby allowing younger Palestinians to access employment opportunities in Israel and settlements. This policy adjustment aimed to alleviate unemployment pressures within the Palestinian territories and to provide a broader segment of the Palestinian workforce with access to higher-paying jobs. The relaxation of age restrictions also reflects an acknowledgment of the economic interdependence between Israelis and Palestinians, as well as the need to accommodate demographic trends within the Palestinian population. Palestinians employed in Israel and Israeli settlements are engaged across a diverse range of economic sectors. Construction represents a significant area of employment, with many Palestinians working on building projects in both Israel and the settlements. Manufacturing industries also employ Palestinian workers, including factories producing textiles, electronics, and other goods. Commerce, encompassing retail and service-oriented jobs, provides additional employment opportunities for Palestinians, while agriculture remains a traditional sector where Palestinians contribute labor, particularly in harvesting and farming activities. This sectoral diversity illustrates the multifaceted role Palestinian workers play within the Israeli economy, often filling labor shortages in industries requiring manual and semi-skilled labor. As of 2013, the wage disparity between Palestinians working in Israel and those employed within the Palestinian territories was pronounced. Average daily wages for Palestinians employed in Israel and Israeli settlements were nearly 2.2 times higher than wages earned in the private sector in the West Bank. When compared to wages in Gaza, Palestinian workers in Israel earned over four times as much. This significant wage differential highlights the economic incentives driving Palestinian labor migration to Israel, despite the associated challenges and restrictions. The higher earnings contribute not only to individual livelihoods but also to the broader Palestinian economy through remittances and increased household incomes. By 2022, the Palestinian monthly minimum wage was set at ₪1,450, which constituted approximately one-quarter of the Israeli minimum wage, which stood at ₪5,300. This stark contrast in minimum wage levels reflects the broader economic disparities between the Palestinian territories and Israel. The lower Palestinian minimum wage underscores the limited purchasing power and economic challenges faced by Palestinian workers who remain employed within the Palestinian economy. Conversely, the higher Israeli minimum wage serves as a strong pull factor for Palestinians seeking employment in Israel, where wages and labor protections are comparatively more robust. In the West Bank, the application of Israeli labor laws is complex due to the political and legal status of the territory. Israeli labor laws are partially applied through military enactments that govern aspects of employment within the West Bank. A landmark ruling by the Supreme Court of Israel in 2007 mandated the application of Israeli labor law for work performed inside Israeli settlements. This decision aimed to extend legal protections to Palestinian workers employed in settlements, ensuring they receive the same labor rights as Israeli workers in those areas. The ruling represents an important legal recognition of the need to safeguard Palestinian workers’ rights despite the contested status of the settlements under international law. Despite the existence of legal protections under Israeli labor law, there have been documented instances where Israeli employers failed to meet their legal obligations toward Palestinian workers. Some employers have refused to provide paychecks or have concealed actual work hours to circumvent labor laws, including minimum wage requirements and social security benefits. These violations undermine the legal framework designed to protect workers and highlight ongoing challenges in enforcing labor rights for Palestinians employed in Israel and settlements. Such practices contribute to precarious working conditions and economic insecurity among Palestinian laborers, despite the formal legal protections in place. In 2014, an article published in Al-Hayat Al-Jadida, the official daily newspaper of the Palestinian Authority, praised the treatment of Palestinian workers by Israelis. The article emphasized that Palestinians employed by Israeli employers often receive additional benefits beyond wages, including transportation to and from work sites, medical care, and pension contributions. These benefits create incentives for Palestinian workers to seek employment with Israeli employers rather than with Palestinian ones whenever possible. The article’s positive portrayal reflects a recognition of the relative advantages Palestinian workers experience in the Israeli labor market, despite the broader political tensions and economic difficulties that characterize the region. Safety regulations for Palestinian workers employed in Israel are strictly enforced by the Israeli Workers’ Union, which oversees labor conditions and advocates for workers’ rights. Medical physical examinations are conducted by licensed doctors to ensure that Palestinian workers meet health and safety standards required for their employment. These measures aim to protect Palestinian laborers from occupational hazards and to maintain workplace safety in accordance with Israeli regulations. The involvement of the Israeli Workers’ Union and medical professionals represents an institutional framework designed to uphold labor standards and safeguard the well-being of Palestinian workers within Israel. While the Palestinian Authority has enacted labor laws intended to regulate employment conditions within the Palestinian territories, enforcement of these regulations remains weak. The Palestinian Authority does not effectively enforce key labor standards, including minimum wage laws, provisions for annual vacations, sick leave, or overtime pay. This enforcement gap contributes to substandard working conditions for many Palestinian workers employed locally. The lack of robust regulatory oversight contrasts with the relatively stronger enforcement mechanisms present in Israel, further incentivizing Palestinian workers to seek employment in Israel where labor protections and wage levels are higher. The disparity in enforcement capacity underscores the structural challenges facing the Palestinian labor market and the broader economy.

In 2008, the economies of the West Bank and Gaza Strip exhibited a pronounced reliance on foreign aid, which totaled approximately US$1.8 billion for that year. This substantial influx of external financial assistance constituted roughly 30% of the Palestinian Gross Domestic Product (GDP), underscoring the critical role aid played in sustaining the Palestinian economy. When considered on a per capita basis, this translated to an average of US$487 annually for each Palestinian, reflecting the degree to which foreign aid permeated the economic fabric of Palestinian society. The aid was pivotal not only in economic terms but also in maintaining social stability and public services within the territories. The significance of foreign aid in 2008 extended beyond mere economic statistics, as it was instrumental in providing essential public services to nearly half of the Palestinian population. These services included healthcare, education, infrastructure maintenance, and social welfare programs, all of which were heavily dependent on external funding sources. Furthermore, foreign aid enabled the Palestinian Authority (PA) to sustain its administrative functions and governance structures. One of the most critical aspects of this support was the PA’s ability to remunerate its workforce, which at the time was estimated to comprise approximately 140,000 employees. This payroll represented a significant portion of the PA’s expenditures and was vital for maintaining public sector operations and social order. By 2010, the landscape of foreign aid to the Palestinian Authority experienced notable shifts, particularly with respect to contributions from Arab states. During that year, several Arab countries reduced their financial aid commitments to the PA, resulting in a diminished share of budgetary support from the Arab world. By August 2010, the PA had received a total of US$583.5 million in budget support; however, only 22% of this amount originated from Arab countries. This decline in Arab aid underscored a changing dynamic in the sources of Palestinian financial assistance and placed greater emphasis on other international donors. Consequently, the bulk of the Palestinian Authority’s budget support in 2010 was provided by international donors outside the Arab region. Prominent among these were the European Union and the United States, both of which played leading roles in sustaining the PA’s financial viability. The European Union, through its various aid mechanisms, contributed significant funds aimed at supporting governance, development, and humanitarian needs. Simultaneously, the United States maintained a substantial aid program focused on economic development, institution-building, and security cooperation. This international donor reliance highlighted the geopolitical importance attributed to the Palestinian territories and the broader Israeli-Palestinian peace process. Amidst these developments, Salah Rafat, a member of the Palestine Liberation Organization (PLO) Executive Committee, publicly urged Arab countries to honor their financial commitments to the Palestinian Authority. Rafat’s appeal reflected concerns within Palestinian leadership about the sustainability of the PA’s fiscal position and the potential consequences of declining Arab aid. His call for renewed Arab support underscored the expectation that Arab states should continue to play a central role in backing the Palestinian cause, both politically and financially, especially given the historical and cultural ties between the Palestinians and the Arab world. In April 2011, Palestinian Prime Minister Salam Fayyad engaged directly with Western donors during a high-profile meeting held in Brussels. At this gathering, Fayyad formally requested US$5 billion in aid intended to bolster the Palestinian economy. This substantial funding appeal was framed within the context of efforts to promote economic development, improve infrastructure, and enhance institutional capacity in the Palestinian territories. The meeting in Brussels was emblematic of the PA’s strategy to secure international support as a means of underpinning its governance and economic viability amid ongoing political challenges. Two years later, in 2013, United States Secretary of State John Kerry introduced a US$4 billion private investment plan designed to stimulate economic growth in the West Bank. This initiative was part of a broader diplomatic effort to encourage progress in peace talks between Israelis and Palestinians. The investment plan aimed to attract private sector capital to key economic sectors, thereby creating jobs, fostering entrepreneurship, and enhancing the overall economic environment. Kerry’s proposal was presented as a complementary measure to political negotiations, intended to demonstrate the tangible benefits of peace and economic cooperation. Despite the ambitious scale of the 2013 investment plan, it was characterized by a lack of detailed information regarding specific projects, potential investors, or the precise modifications needed to Israeli restrictions on the West Bank. While the plan was described as having significant potential to catalyze economic growth, the absence of concrete operational details raised questions about its feasibility and implementation timeline. The effectiveness of the proposal was inherently linked to resolving political and security constraints that affected movement, access, and investment in the West Bank, factors that remained subject to Israeli control. The 2013 investment initiative was coordinated with the Quartet on the Middle East, a multilateral peacemaking group comprising the United States, Russia, the European Union, and the United Nations. The Quartet played a central role in mediating the Israeli-Palestinian conflict and facilitating diplomatic efforts toward a negotiated settlement. Former United Kingdom Prime Minister Tony Blair served as the Quartet’s envoy during this period, providing leadership and diplomatic engagement aimed at advancing both political dialogue and economic development initiatives. The involvement of the Quartet underscored the international community’s commitment to linking economic progress with the peace process. The Palestinian Authority’s response to the 2013 investment proposal was cautious yet measured. While affirming that it would not compromise its political objectives in exchange for economic assistance, the PA expressed reassurance that the investment plan was intended to complement, rather than supplant, ongoing peace negotiations. This stance reflected the PA’s insistence on maintaining the primacy of political rights and statehood aspirations, even as it welcomed economic initiatives that could improve living conditions and build institutional capacity. The PA’s position highlighted the complex interplay between economic development and political sovereignty in the context of the Israeli-Palestinian conflict. Ultimately, the peace talks associated with the 2013 investment plan failed to achieve a breakthrough, for reasons unrelated to the economic proposal itself. The collapse of negotiations meant that the envisioned US$4 billion investment initiative was never implemented. The failure of the peace process underscored the persistent challenges facing efforts to resolve the conflict and demonstrated the limitations of economic incentives in the absence of political agreement. The unfulfilled investment plan remains a notable example of the intersection between foreign aid, economic development, and diplomacy in the Palestinian context.

The Olives of Peace initiative represents a unique joint Israeli–Palestinian business venture centered on the production and sale of olive oil. This collaborative enterprise involves coordinated training sessions and strategic planning efforts between Israeli and Palestinian participants, fostering cooperation and mutual understanding through shared economic activities. The olive oil produced under this partnership is marketed under the brand name “Olives of Peace,” symbolizing the endeavor’s commitment to promoting peace and economic interdependence through a product deeply rooted in the cultural and agricultural traditions of both communities. The initiative not only serves commercial purposes but also acts as a platform for dialogue and joint enterprise, highlighting the potential for economic collaboration amid ongoing political complexities. In addition to such ventures, plans have been proposed for the establishment of a joint industrial zone that would physically bridge the Israeli-Palestinian border. This industrial zone aims to facilitate the production of locally-made Palestinian handicrafts, which would then be marketed and sold internationally through Israeli channels, specifically via the Gilboa region. The envisioned zone is designed to capitalize on the complementary economic strengths of both sides, providing Palestinians with access to broader markets while leveraging Israeli logistical and commercial infrastructure. By integrating Palestinian artisanal production with Israeli export networks, this project seeks to enhance economic integration and create sustainable income sources for Palestinian artisans, thereby contributing to local economic development and cross-border cooperation. Another proposed initiative involves the creation of a joint language center dedicated to fostering mutual understanding through linguistic and cultural exchange. This center would offer courses in Arabic and Hebrew, enabling Israelis and Palestinians to learn each other’s languages and thereby facilitate improved communication and interpersonal relations. Beyond language instruction, the center would serve as a venue for sharing aspects of the respective cultural heritages of both peoples, promoting cultural awareness and respect. Such a project underscores the recognition that language and culture are vital components of economic and social interaction, and that fostering these ties can contribute to reducing barriers and building trust between communities. Bilateral trade between Israel and the Palestinian-ruled areas has demonstrated significant growth over the years. In 2011, the total volume of trade between the two entities reached $4.3 billion. Israeli exports to the Palestinian Authority (PA) accounted for approximately $3.5 billion of this total, reflecting the PA’s reliance on Israeli goods for various sectors including construction, consumer products, and industrial inputs. Conversely, Palestinian exports to Israel amounted to $816 million, encompassing agricultural products, textiles, and other locally produced goods. This trade dynamic illustrates a substantial economic interdependence, with Israel serving as a key market for Palestinian products while simultaneously supplying essential goods to the Palestinian economy. Nader Tamimi, who served as the chair of the Association of Traditional Industries in the Palestinian Authority, has noted that there are regular interactions between Palestinian and Israeli businessmen. These interactions indicate ongoing commercial cooperation despite the broader political tensions that characterize the region. The continual engagement between business communities suggests that economic pragmatism often transcends political divisions, with entrepreneurs on both sides recognizing the mutual benefits of trade and collaboration. Such exchanges occur in various sectors and often involve negotiations, joint ventures, and shared initiatives aimed at expanding market access and improving economic outcomes. In 2012, efforts to enhance cross-border business relations were further institutionalized through a conference hosted by the Faculty of Business and Management at Ben-Gurion University of the Negev. This conference brought together Israeli and Palestinian trade experts to deliberate on strategies for improving economic cooperation and overcoming obstacles to bilateral commerce. The gathering provided a forum for exchanging ideas, sharing best practices, and identifying policy recommendations to facilitate smoother trade flows and joint ventures. The involvement of academic institutions in these discussions highlights the role of knowledge exchange and research in supporting practical economic collaboration and fostering an environment conducive to business growth. By 2013, the volume of commercial trade between Israel and the Palestinian Authority had escalated significantly, reaching an estimated value of approximately US$20 billion annually. This marked increase reflected a deepening of economic ties and an expansion of trade activities across multiple sectors. The surge in trade volume underscored the growing complexity and scale of economic interdependence between the two economies, with goods and services flowing in both directions to meet the demands of consumers and industries. This growth also highlighted the potential for economic cooperation to serve as a stabilizing factor in the region, providing incentives for peaceful engagement through shared commercial interests. The expansion of trade relations contributed to the establishment of the Jerusalem Arbitration Center (JAC), a joint Palestinian and Israeli initiative designed to address disputes arising from business transactions between the two parties. The JAC functions as an independent institution specializing in business arbitration, offering a neutral forum for resolving commercial conflicts without resorting to protracted legal battles. The creation of the JAC reflects recognition of the need for effective dispute resolution mechanisms to support cross-border trade and investment, thereby enhancing confidence among business actors. By providing impartial arbitration services, the center aims to facilitate smoother commercial interactions and reduce the risks associated with economic cooperation in a politically sensitive environment. Despite these positive developments in commerce, the Palestinian economy has faced significant challenges, particularly related to public finances. According to a 2019 report by the World Bank, the Palestinian economy suffered severe impacts due to a clearance revenue crisis with Israel, which resulted in a fiscal shock following a period of stagnation with no real economic growth observed in 2018. Clearance revenues, which consist of taxes and customs duties collected by Israel on behalf of the Palestinian Authority, constitute a substantial portion of the PA’s budget. The disruption of these transfers created a critical financial shortfall, undermining the PA’s ability to fund public services and maintain fiscal stability. Anna Bjerde, who served as the World Bank Acting Country Director for West Bank and Gaza, emphasized the gravity of the fiscal shock experienced by the Palestinian economy as a consequence of the standoff over clearance revenue transfers between Israel and the PA. She highlighted that the impasse had profound implications for the PA’s fiscal health, exacerbating existing economic vulnerabilities and complicating efforts to achieve sustainable development. The standoff underscored the fragility of the Palestinian fiscal system, which is highly dependent on external revenue streams and vulnerable to political disputes that disrupt financial flows. The 2019 standoff originated when Israel unilaterally deducted US$138 million from the PA’s clearance revenues. This deduction was intended to offset estimated payments made by the Palestinian Authority to the families of Palestinian martyrs and prisoners, a practice that Israel opposed and sought to penalize financially. The unilateral withholding of funds intensified the economic difficulties faced by the PA, particularly in the context of declining international aid flows. The reduction in clearance revenues significantly constrained the PA’s fiscal space, limiting its capacity to meet public expenditure obligations and invest in economic development. This episode illustrated the complex interplay between political decisions and economic outcomes in the Israeli-Palestinian context, with direct consequences for commerce and public finance.

The political division between the two major Palestinian factions, Fatah and Hamas, in 2006 had profound repercussions on the Palestinian economy, effectively fracturing its previously more unified structure. This internal split led Israel to sever direct economic ties between the West Bank and the Gaza Strip, creating two distinct and isolated economic zones. Prior to this division, the Palestinian economy had functioned with some degree of integration between these territories, but the political schism disrupted trade, labor movement, and the flow of goods and services, exacerbating economic difficulties on both sides. The severance of economic connections by Israel was a strategic response to the political developments and significantly hindered economic coordination and growth within the Palestinian territories. The Gaza Strip suffered particularly severe economic devastation during the 2008–2009 conflict, often referred to as the Gaza War or Operation Cast Lead. This military confrontation resulted in widespread destruction of Gaza’s already fragile economic infrastructure, including industrial facilities, commercial establishments, and public utilities. The extensive damage left most economic activities in Gaza at a standstill, effectively paralyzing the local economy. In the aftermath, the Gaza Strip faced a staggering debt burden estimated at $1.4 billion, reflecting the immense cost of reconstruction and the collapse of productive capacity. The destruction not only impaired immediate economic output but also undermined long-term prospects for recovery and development in the region. The Oslo Accords, signed in 1993 between Israel and the Palestine Liberation Organization (PLO), were designed in part to prevent economic fragmentation and instability within Palestinian territories. These agreements sought to establish a framework for economic cooperation and gradual Palestinian self-governance, with the hope of fostering economic development and stability. However, despite these intentions, the accords ultimately failed to stabilize the Palestinian economy. Instead, the economy continued to experience significant fluctuations, influenced by political instability, restrictions imposed by Israel, and internal governance challenges. The envisioned economic integration and growth under the Oslo framework were hindered by ongoing conflict and the lack of full sovereignty, which limited the Palestinian Authority’s ability to control economic policy and resources effectively. Currently, the Palestinian economy remains heavily dependent on foreign aid and the customs revenue collected through arrangements between Israel and the Palestinian Authority. This reliance on external financial support underscores the economy’s vulnerability and limited capacity for self-sustained growth. Foreign aid constitutes a substantial portion of the Palestinian Authority’s budget, funding public services and infrastructure projects that would otherwise be unaffordable. Additionally, customs revenue, which Israel collects on behalf of the Palestinian Authority under the Paris Protocol, forms a critical source of income. However, this system also subjects the Palestinian economy to Israeli control and political leverage, as delays or withholding of customs transfers have been used as political tools, further complicating economic stability. Israeli-imposed restrictions continue to impede and fragment the Palestinian economy by severely limiting the movement of people, goods, and access to natural resources. These restrictions include checkpoints, roadblocks, and barriers that disrupt trade routes and hinder the free flow of commerce between Palestinian areas and external markets. The limitations on movement not only increase transportation costs and delays but also restrict Palestinian producers’ access to raw materials and export opportunities. Access to land and water resources is also constrained, affecting agricultural productivity and industrial development. Collectively, these measures exacerbate the economic challenges faced by Palestinians, contributing to high unemployment, reduced investment, and stunted economic growth. By 2008, unemployment in the Gaza Strip had reached a critical level of 71%, reflecting the severe economic distress and paucity of employment opportunities in the territory. This extraordinarily high unemployment rate was indicative of the broader economic collapse resulting from the blockade, repeated conflicts, and infrastructure destruction. The lack of jobs contributed to widespread poverty and social hardship, with many families dependent on humanitarian assistance. The labor market in Gaza was unable to absorb the growing workforce, particularly young people, leading to increased social tensions and diminished prospects for economic recovery. Border restrictions and the ongoing Israeli control over both the West Bank and Gaza have had a detrimental impact on Palestine’s import and export activities. These controls have weakened key economic sectors such as industry and agriculture, which rely heavily on the ability to access markets and resources. Restrictions on the movement of goods have led to delays, increased costs, and reduced competitiveness for Palestinian products. Agricultural exports, in particular, have suffered due to limitations on access to land, water, and export routes. Industrial production has also been constrained by difficulties in importing necessary inputs and exporting finished goods. The cumulative effect of these restrictions has been to stifle economic diversification and growth, leaving the Palestinian economy heavily dependent on a narrow range of activities and external financial support. The removal of Israeli restrictions on Palestinian land is widely identified by economists and development experts as a necessary condition for the Palestinian economy to achieve sustainable growth and prosperity. These restrictions, which include limitations on access to agricultural land, natural resources, and development zones, inhibit the expansion of productive sectors and the creation of employment opportunities. Lifting such constraints would enable increased investment, improved infrastructure development, and greater integration into regional and global markets. Many analyses suggest that economic progress in Palestine is intrinsically linked to political developments that would allow for greater autonomy over land and resources, facilitating a more dynamic and self-reliant economy. According to reports by The Guardian and the World Bank, Israeli restrictions in the West Bank have caused the Palestinian economy to lose approximately $3.4 billion annually, a figure equivalent to about 35% of the Palestinian GDP. This substantial economic loss reflects the cumulative impact of movement restrictions, trade barriers, and limitations on resource access. The financial cost includes reduced productivity, lost export revenues, and increased transaction costs, all of which undermine economic performance. These findings highlight the significant economic consequences of the political and security measures imposed by Israel and underscore the challenges faced by the Palestinian economy in achieving sustainable development under such constraints. Unemployment rates in the Gaza Strip and the West Bank fluctuated significantly between 2000 and 2008, reflecting the volatile economic and political environment during this period. In 2000, the unemployment rate stood at 12.5%, but it rose sharply to 21% in 2001 and further increased to 32% in 2002, coinciding with the intensification of the Second Intifada and associated disruptions. The rate then decreased somewhat to 26% in 2003 but fluctuated around the mid-20s in subsequent years: 27.5% in 2004, 24.5% in 2005, 23% in 2006, and 21.5% in 2007. However, by 2008, unemployment began rising again, reaching 26.5%. These fluctuations illustrate the sensitivity of the Palestinian labor market to political instability, security conditions, and economic restrictions, with persistent high unemployment posing a major challenge to social and economic development.

The macroeconomic indicators for Palestine from 1994 to 2023 reveal a complex and evolving economic landscape characterized by periods of growth, contraction, and recovery, as well as persistent challenges including high unemployment and rising government debt. The data encompass key variables such as gross domestic product (GDP) measured in both purchasing power parity (PPP) and nominal terms, GDP per capita, real GDP growth rates, inflation, unemployment rates, and government debt expressed as a percentage of GDP. In 1994, the Palestinian economy registered a GDP of 5.85 billion US dollars in PPP terms, accompanied by a GDP per capita of 2,524 US dollars PPP. The nominal GDP stood at 2.84 billion US dollars, with a nominal GDP per capita of 1,227 US dollars. At that time, the unemployment rate was relatively high at 18.6%. Data on inflation and government debt were not available for this initial year of recorded statistics. These figures set a baseline for understanding the economic trajectory of Palestine in the years following the Oslo Accords and the establishment of the Palestinian Authority. Between 1995 and 1999, the Palestinian economy experienced steady growth. GDP in PPP terms rose from 6.40 billion US dollars in 1995 to 9.76 billion US dollars by 1999. Correspondingly, GDP per capita increased from 2,575 to 3,295 US dollars PPP, reflecting improvements in average economic output per person. Nominal GDP also expanded from 3.28 billion US dollars to 4.27 billion US dollars, with nominal GDP per capita rising from 1,322 to 1,442 US dollars. This period saw a notable decline in unemployment, which fell from 18.7% in 1995 to 11.8% in 1999, indicating an improving labor market. Inflation rates during these years fluctuated between 5.5% and 7.6%, suggesting moderate price increases. However, government debt data remained unavailable, limiting insight into fiscal conditions. The year 2000 marked a turning point as the Palestinian economy faced a slight contraction. GDP in PPP terms decreased to 9.13 billion US dollars, with GDP per capita falling to 2,990 US dollars PPP. Nominal GDP was recorded at 4.31 billion US dollars, and nominal GDP per capita at 1,413 US dollars. Real GDP growth was negative at −8.6%, signaling a significant economic downturn. Inflation moderated to 2.8%, while unemployment rose to 14.3%, reflecting deteriorating labor market conditions. Government debt was documented for the first time at 20.0% of GDP, indicating emerging fiscal pressures. From 2001 to 2003, the Palestinian economy experienced continued contraction before partial recovery. GDP fell from 8.47 billion US dollars PPP in 2001 to 7.52 billion US dollars PPP in 2002, before rebounding to 8.75 billion US dollars PPP in 2003. GDP per capita mirrored this trend, decreasing from 2,697 US dollars PPP in 2001 to 2,333 US dollars PPP in 2002, then rising to 2,639 US dollars PPP in 2003. Nominal GDP declined from 4.00 billion US dollars in 2001 to 3.56 billion US dollars in 2002, followed by a recovery to 3.97 billion US dollars in 2003. Real GDP growth was negative in 2001 (−9.3%) and 2002 (−12.5%), reflecting severe economic contraction, but turned positive in 2003 with a robust 14.0% growth rate. Inflation rates during this period varied from 1.2% to 5.7%, while unemployment peaked at 31.2% in 2002, the highest recorded in the dataset, before decreasing to 25.5% in 2003. Government debt remained relatively stable, fluctuating between 20.7% and 22.2% of GDP, indicating a consistent fiscal burden despite economic volatility. The period from 2004 to 2008 was characterized by robust economic growth. GDP in PPP terms increased significantly from 10.95 billion US dollars in 2004 to 14.97 billion US dollars in 2008. GDP per capita rose from 3,214 to 3,919 US dollars PPP, reflecting improvements in living standards. Nominal GDP nearly doubled, growing from 4.60 billion US dollars to 7.31 billion US dollars, while nominal GDP per capita increased from 1,351 to 1,913 US dollars. Real GDP growth rates were strong throughout this period, peaking at an exceptional 21.9% in 2004 and maintaining positive growth through 2008. Inflation rates fluctuated between 1.9% and 9.9%, with the highest inflation recorded in 2008. Unemployment rates ranged from 20.1% to 26.6%, remaining elevated despite economic expansion. Government debt as a percentage of GDP hovered between 21.1% and 23.7%, indicating manageable but persistent fiscal obligations. Between 2009 and 2013, the Palestinian economy continued its upward trajectory. GDP in PPP terms grew from 16.36 billion US dollars in 2009 to 22.55 billion US dollars in 2013, with GDP per capita rising from 4,171 to 5,210 US dollars PPP. Nominal GDP increased from 8.09 billion US dollars to 13.52 billion US dollars, and nominal GDP per capita grew from 2,062 to 3,123 US dollars. Real GDP growth remained positive throughout this period, ranging from 4.7% to 9.6%, signaling steady economic expansion. Inflation rates were relatively low, between 1.7% and 4.4%, contributing to price stability. Unemployment rates stayed relatively stable, fluctuating between 23.0% and 30.2%, reflecting ongoing labor market challenges. Government debt increased from 24.0% to 30.2% of GDP, suggesting a gradual rise in fiscal pressures. In 2014 and 2015, the Palestinian economy exhibited mixed signals. GDP in PPP terms was approximately 22.91 billion US dollars in 2014 and 23.98 billion US dollars in 2015, with GDP per capita around 5,171 and 5,293 US dollars PPP, respectively. Nominal GDP hovered near 14.0 billion US dollars in 2014 and slightly decreased to 13.97 billion US dollars in 2015. Nominal GDP per capita was approximately 3,159 US dollars in 2014 and 3,084 US dollars in 2015. Real GDP growth was slightly negative in 2014 at −0.2%, indicating a minor contraction, but rebounded to 3.7% growth in 2015. Inflation remained low at 1.4%, contributing to economic stability. Unemployment increased to 26.9% in 2014 before slightly declining to 25.9% in 2015. Government debt rose from 34.0% of GDP in 2014 to 37.1% in 2015, reflecting growing fiscal challenges. From 2016 to 2019, the Palestinian economy expanded steadily. GDP in PPP terms grew from 26.35 billion US dollars in 2016 to 30.49 billion US dollars in 2019. GDP per capita increased from 5,689 to 6,127 US dollars PPP. Nominal GDP rose from 15.41 billion US dollars to 17.13 billion US dollars, while nominal GDP per capita increased from 3,326 to 3,443 US dollars. Real GDP growth was strong in 2016, peaking at 8.9%, but stabilized around 1.2% to 1.4% in subsequent years, indicating moderate but sustained growth. Inflation rates were low or slightly negative, ranging from −0.2% to 1.6%, reflecting relative price stability or mild deflationary pressures. Unemployment remained high, fluctuating between 25.4% and 33.1%, underscoring persistent labor market difficulties. Government debt increased from 31.0% of GDP in 2016 to 34.5% in 2019, indicating a gradual rise in fiscal obligations. The year 2020 was marked by a significant economic contraction due to external shocks, including the global COVID-19 pandemic and related disruptions. GDP in PPP terms fell to 28.61 billion US dollars, with GDP per capita decreasing to 5,608 US dollars PPP. Nominal GDP dropped to 15.53 billion US dollars, and nominal GDP per capita declined to 3,045 US dollars. Real GDP growth was sharply negative at −11.3%, reflecting the severe economic impact of the crisis. Inflation was negative at −0.7%, indicating deflationary pressures. Unemployment remained high at 25.9%, highlighting continued labor market stress. Government debt surged to 47.1% of GDP, reflecting increased fiscal burdens amid the economic downturn. In 2021, the Palestinian economy showed signs of partial recovery. GDP in PPP terms increased to 27.88 billion US dollars, with GDP per capita at 5,333 US dollars PPP. Nominal GDP rose to 18.11 billion US dollars, and nominal GDP per capita increased to 3,464 US dollars. Real GDP growth rebounded to 7.0%, signaling a strong economic rebound. Inflation was moderate at 1.2%, contributing to price stability. Unemployment slightly increased to 26.4%, indicating ongoing labor market challenges. Government debt rose further to 50.2% of GDP, reaching the highest recorded level in the dataset and underscoring mounting fiscal pressures. For 2022, GDP in PPP terms reached 31.09 billion US dollars, with GDP per capita at 5,805 US dollars PPP. Nominal GDP was 19.17 billion US dollars, and nominal GDP per capita stood at 3,579 US dollars. Real GDP growth slowed to 4.1%, indicating continued but moderated expansion. Inflation increased to 3.7%, reflecting rising price pressures. Unemployment decreased to 24.4%, suggesting some improvement in the labor market. Government debt remained high at 47.1% of GDP, maintaining significant fiscal constraints. In 2023, GDP in PPP terms slightly declined to 30.46 billion US dollars, with GDP per capita at 5,562 US dollars PPP. Nominal GDP dropped to 17.42 billion US dollars, and nominal GDP per capita decreased to 3,181 US dollars. Real GDP growth was negative at −5.4%, indicating economic contraction. Inflation rose to 5.9%, marking one of the higher inflation rates in the period under review. Unemployment data for 2023 were not available. Government debt increased to 49.7% of GDP, reflecting sustained fiscal challenges. Throughout the period from 1994 to 2023, inflation rates in Palestine were generally moderate, with most years exhibiting rates below 5%, as highlighted in the original data presentation. Exceptions to this pattern occurred in 1997, when inflation reached 7.6%, in 1998 at 5.6%, in 2002 at 5.7%, in 2008 at 9.9%, and in 2023 at 5.9%. These elevated inflation years corresponded with periods of economic stress or rapid growth, underscoring the volatility of price levels in the Palestinian economy. Unemployment rates fluctuated significantly over the nearly three-decade span, with a peak of 31.2% recorded in 2002, reflecting the severe economic contraction during the Second Intifada. The lowest unemployment rate observed was around 20.1% in 1997, during a period of relative economic expansion. Despite some fluctuations, unemployment generally remained high, exceeding 20% in most years, highlighting persistent structural challenges in the Palestinian labor market. Government debt as a percentage of GDP was not reported before 2000, but from that year onward, it showed a clear upward trend. Debt levels ranged from a low of 19.3% in 2006 to a high of 50.2% in 2021. This increase indicates growing fiscal pressures faced by the Palestinian Authority, exacerbated by economic contractions, political instability, and external shocks. The rising debt burden reflects the challenges of maintaining fiscal sustainability amid constrained economic growth and high unemployment. Overall, the macroeconomic data for Palestine from 1994 to 2023 illustrate a dynamic but fragile economy, marked by periods of growth and contraction influenced by internal and external factors. The persistent high unemployment, fluctuating inflation, and increasing government debt underscore ongoing economic vulnerabilities that continue to shape the Palestinian economic environment.

In 2012, the gross primary school enrollment rate in Palestine reached 94%, a figure that underscored the widespread accessibility of primary education across the territory. This high enrollment rate reflected the efforts made by the Palestinian Authority and various educational institutions to ensure that children of primary school age were able to attend school. Such a rate suggested that nearly all children in the appropriate age group were registered in primary education programs, pointing to a strong emphasis on foundational learning despite the challenges posed by political and economic instability. The commitment to education was further evidenced by ongoing investments in school infrastructure, teacher training, and curriculum development aimed at improving literacy and educational outcomes. Environmental considerations in Palestine during the early 2010s were characterized by relatively low levels of carbon dioxide emissions per capita. In 2010, the emissions stood at 0.6 metric tons per person, a figure that was significantly lower than global averages and indicative of the limited industrial activity within the region. This low emission rate was largely attributable to the predominantly agrarian and service-oriented economy, with minimal heavy manufacturing or large-scale fossil fuel consumption. Additionally, the restricted access to energy resources and the impact of geopolitical constraints on industrial expansion contributed to the modest environmental footprint. Nevertheless, this level of emissions also highlighted the potential for sustainable development initiatives that could balance economic growth with environmental preservation. The socioeconomic landscape of Palestine in 2011 was marked by a poverty rate of 25.8%, revealing that over one-quarter of the population lived below the poverty line during that year. This statistic illuminated the significant challenges faced by many Palestinian families in securing adequate income to meet basic needs such as food, shelter, and healthcare. The persistence of poverty was influenced by factors including high unemployment rates, restrictions on movement and trade, and limited access to resources and markets. International aid and development programs sought to address these issues by promoting economic opportunities, social safety nets, and community development projects aimed at alleviating poverty and fostering resilience among vulnerable populations. Access to improved water sources in rural areas of Palestine showed notable progress by 2012, with 82% of the rural population having access to safe drinking water. This development was a crucial indicator of rural infrastructure advancement, reflecting investments in water supply systems, sanitation facilities, and community health initiatives. Improved water access was essential for reducing waterborne diseases, enhancing agricultural productivity, and improving overall quality of life in rural communities. However, challenges remained due to water scarcity, uneven distribution, and the impact of political and environmental factors on water resource management. Continued efforts were necessary to expand coverage and ensure sustainable water provision for all rural inhabitants. Life expectancy at birth in Palestine stood at 73 years in 2012, a figure that demonstrated the average expected lifespan of individuals born during that period. This life expectancy was indicative of the healthcare system’s capacity to manage communicable and non-communicable diseases, maternal and child health, as well as the general living conditions affecting health outcomes. Improvements in medical infrastructure, vaccination programs, and public health campaigns contributed to increased longevity despite ongoing challenges posed by conflict, economic hardship, and limited access to specialized healthcare services. The life expectancy measure also reflected broader social determinants of health, including education, nutrition, and environmental factors. The Gross National Income (GNI) per capita in Palestine, expressed in current US dollars, amounted to $2,810 in 2012. This figure represented the average income earned per person and provided an economic benchmark for assessing the standard of living and economic productivity within the territory. The GNI per capita was influenced by the structure of the Palestinian economy, which comprised agriculture, manufacturing, services, and remittances from abroad. Despite constraints such as restricted access to natural resources, trade barriers, and political instability, the income level indicated moderate economic activity and the potential for growth. Comparisons with regional and global averages highlighted the need for continued economic development and diversification to improve living standards. Demographically, the total population of Palestine was recorded at 4,169,509 individuals in 2013, offering a comprehensive snapshot of the territory’s human resources at that time. This population figure encompassed both the West Bank and Gaza Strip, reflecting the combined demographic trends of natural population growth, migration, and urbanization. The population size had implications for economic planning, social services provision, and infrastructure development, as well as for addressing challenges related to employment, education, and health care. Understanding the population dynamics was essential for policymakers and international organizations working to support sustainable development and improve the welfare of Palestinian residents.