The Palestinian Economy

Palestine is a poor country mainly as the result of neglect during the time it was ruled by Israel. Combined with the virtual constant state of war that has existed the economic growth has been very slow. There is virtually no industry in the territory and they have few resources. Getting the country onto a strong footing is going to be a major challenge. Right now the country is almost totally dependent on foreign aid to keep the economy going. Ideally an arrangement will eventually be made with Israel to integrate the economy of the two countries. However given all of the tension that has existed over the years this doesn’t seem to likely in the near future.

During the years of Israeli rule there was almost no effort put into building the infrastructure in Palestine. This has left the country in a very difficult position in terms of economic growth. Almost everything is going to have to be built from scratch. There isn’t even an airport in Palestine so if you decide to travel to Palestine the only way you can get in is through Israel. Obviously this seriously limits the options for trade. Given that the country needs to import almost everything that they use this is a serious handicap.

The biggest problem that Palestine faces is that they are not even recognized by most countries. They are not part of any international trade agreements. This makes it almost impossible for them to trade with other countries. Joining the international organizations that would allow them to trade with the rest of the world is going to be a problem as long as Israel opposes their joining. In general trade for Palestine is limited to nearby Arab countries. This seriously limits the amount of trade that can be done. The lack of recognition by the world community also makes it nearly impossible for Palestine to attract foreign investors. This limits the amount of money that they have available to grow the economy.

Another part of the problem facing Palestine is that the people are poorly educated and lack the necessary skills that are required for economic development. Again this goes back to the years of Israeli rule. Virtually no money was spent educating Palestinians and they have lagged far behind the Israelis in that area. It is going to require a large investment on the part of the government to get this fixed.

The one area where progress has been made in Palestine is in the banking sector. A number of new banks have been created and they are operating to international standards. This has made it much easier for Palestinians to borrow money. This has helped to encourage the founding of a number of small businesses. Nevertheless the Palestinian economy is almost completely dependent on foreign aid. This is likely to continue for a long time to come as it is going to take years to build up the economy.