Can it grow in the absence of peace?

Executive Summary

The Palestinian economy in the West Bank and Gaza is weighed down by a lack of modern infrastructure, Israeli restrictions on the flow of goods and people and internal political conflict. The result is weak economic growth and high unemployment, especially among younger Palestinians. The consequences of this economic stagnation could include increased regional instability and a greater risk of violence. The key to progress ultimately lies in finding a political solution to the decades-old conflict between Palestinians and Israel, which could make it easier to attract investment. But the peace process is stalled, and the Trump administration’s decision to move the U.S. embassy to Jerusalem has undermined the chances that the United States can broker a deal between Israeli and Palestinian leaders.

Key takeaways include:

  • Palestinian GDP, adjusted for inflation, is about the same as in 1999.

  • The little economic growth that has occurred in recent years was fueled mainly by international aid money, which is declining as countries around the world change their budget priorities.

  • The Palestinian economy depends mostly on the production of building materials, information technology, agriculture, tourism and banking.

  • Click here to listen to an interview with author Sara Toth Stub or click here for the transcript.

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Resources for Further Study



Niksic, Orhan, Nur Nasser Eddin and Massimiliano Cali, “Area C and the Future of the Palestinian Economy,” The World Bank, 2014. The World Bank analyzes the impact of Israeli restrictions on Palestinian economic development in a region that constitutes 60 percent of the West Bank.

Turner, Mandy, and Omar Shweiki, eds., “Decolonizing Palestinian Political Economy: De-development and Beyond,” Palgrave Macmillan, 2015. Two scholars bring together essays on several aspects of Palestinian economic life.


Gal, Yitzhak, “The Palestinian Economy, Gaza Reconstruction, and Israel: Crises and Possibilities,” Iqtisadi, vol. 5, no. 7, The Moshe Dayan Center for Middle Eastern and African Studies, Tel Aviv University, July 29, 2015, A detailed report by the co-chair of Tel Aviv University’s Dayan Center Middle East Economic Forum on recent developments and challenges in the Palestinian economy.

Greenwald, Diana B, “Who is Responsible for Solving Gaza’s Massive Electricity Crisis?” The Washington Post, Feb. 5, 2018, A postdoctoral research fellow at the Harvard Kennedy School’s Middle East Initiative explains the challenges facing efforts to solve Gaza’s electricity shortage.

Halbfinger, David M., “With Gaza in Financial Crisis, Fears that ‘an Explosion’s Coming,’” The New York Times, Feb. 11, 2018, The New York Times’ Jerusalem-based correspondent provides a close-up look at the economic and humanitarian crisis unfolding in Gaza.

Kaufmann, Yadin, “Start-Up Palestine | How to Spark a West Bank Tech Boom,” Foreign Affairs, July/August 2017, The founder of a venture capital firm gives an overview of the Palestinian high-tech sector and discusses its potential.

Reports and Studies

“Economic Monitoring Report to the Ad Hoc Liaison Committee,” The World Bank, Sept. 18, 2017, The most recent report gives detailed background and an outlook for the economy in the West Bank and Gaza.

“West Bank and Gaza: Report to the Ad Hoc Liaison Committee,” International Monetary Fund, Aug. 31, 2017, The IMF’s most recent report on the West Bank and Gaza details the territories’ political and economic challenges.

Arnon, Arie, and Seab Bamya, eds., “Two Further Studies: Improving the Gazan Economy and Utilizing the Economic Potential of the Jordan Valley,” The Aix Group, November 2016, Israeli and Palestinian scholars, in collaboration with the World Bank, discuss possible solutions to lack of growth in the Palestinian economy.

The Next Step

Anti-normalization Movement

“Modi visits Ramallah: to balance out Israel, Palestine relation with India,” Pakistan Today, Feb. 8, 2018, India has ended its long-standing support for anti-normalization – the movement that advocates severing all ties with Israel to avoid “normalizing” the latter’s existence – and seeks to balance its relations with Israel and the Palestinians.

Lieber, Dov, “Set your sights nearer: Forum urges Israel entrepreneurs to market to Arab world,” The Times of Israel, Jan. 24, 2017, Two Tel Aviv University students organized a forum to press Israel to pursue closer economic relations with its Arab neighbors, including Palestinians, despite the region’s history of anti-normalization.

Teicholz, Tom, “The Real Jerusalem (Nir Hasson’s Urshalim),” Forbes, Nov. 2, 2017, A Jerusalem-based reporter and author discusses the dynamics of relations between Israel and the Palestinians, including the increasing pervasiveness of the Palestinian anti-normalization drive.

Tech Industry

“Quietly, Israeli high-tech companies contract Gaza engineers,” Agence France-Presse/ The Times of Israel, Sept. 20, 2017, Israeli tech firms are hiring a growing number of Palestinian engineers in Gaza, despite the risk that Hamas, which holds power in Gaza, could kill the workers for collaborating with the enemy.

Cuen, Leigh, “Palestinian Women Are Shaking Up The Tech Industry,” International Business Times, Sept. 14, 2017, An East Jerusalem-based startup, My Pink Electronics, aims to help Palestinian women make their mark in the region’s burgeoning tech industry.

Maltz, Judy, “In Rare Public Appeal, Palestinians Woo Israeli High-tech Firms,” Haaretz, July. 13, 2017, An Israeli tech hub and a Palestinian software firm touted the mutual benefits of expanding business relations between the two parties.


Aix Group
A joint Israeli-Palestinian-French think tank registered in France that produces position papers on economic issues related to the Israeli-Palestinian conflict.

Coordination of Government Activities in the Territories (COGAT)
Foreign Relations Branch, HaKirya, Tel Aviv, Israel
+972 3 697-7957
FAX: +972 2 970 4704
Section of Israeli Defense Department that carries out humanitarian and infrastructure investment projects, publishes statistics on the movement of goods and people to and from the Palestinian Territories and works with the Palestinian Authority to oversee civilian border crossings into Israel.

Gisha - Legal Center for Freedom of Movement
42 Harakevet St., Tel Aviv-Jaffa, Israel 6777008
+972 3-6244120
FAX: +972 3-6244130
Israeli nonprofit organization that reports on and promotes freedom of movement for Palestinians in the West Bank and Gaza.

The Initiative for the Palestinian Economy
Office of the Quartet, P.O. Box 55384, Jerusalem, 95908
An initiative run by the Quartet – the United States, European Union, United Nations and Russia – that assesses sectors of the Palestinian economy most ripe for growth.

International Monetary Fund (West Bank and Gaza Office)
P.O. Box 54842, World Bank Building, Dahiet Al-Barid, Jerusalem
+972 2 236 6530
FAX: +972 2 236 6543
Provides policy support and technical assistance to the West Bank and Gaza on macroeconomic and fiscal matters.

Palestine for Development Foundation
Ramallah, Al Masyoon, Padico House, 8th Floor, West Bank, Palestine
+972 2-295 0567/8
FAX: +972 2-295 0565
Invests in efforts to boost Palestinian employment and make the Palestinian territories more self-reliant and competitive.

Palestine Investment Fund
P.O. Box 413, Amaar Building, Al-Ersal St., Ramallah, Palestine
+972 2 296 9600
FAX: +972 2 296 9617
Palestinian national sovereign fund that invests in the private sector to boost employment and help Palestinians develop an independent economy.

Palestinian Central Bureau of Statistics
P.O. Box 1647, Ein Munjed Quarter, Tokyo St., Ramallah, Palestine
+972 2-298 2700
FAX: +972 2-298 2710
Collects employment, economic growth, demographic and other statistics to aid Palestinian policymakers.

The World Bank (in the West Bank and Gaza)
P.O. Box 54842 North 91547, Jerusalem
+972 2 236 6500
Researches economic and employment trends in the Palestinian territories and operates a trust fund that provides Palestinians with funding assistance.

DOI: 10.1177/237455680410.n1