The Palestinian economy: 1967-1994

Published: 
1 Jan 2011

From the start of the occupation until the beginning of implementation of the Oslo Accords, in 1994, Israel's economic policy was to partially integrate the Occupied Territories' economy in Israel's economy, perpetuating the weak and underdeveloped Palestinian economy and increasing its dependence on Israel's economy. The main features of Israel's policy were:

  • Delaying, obstructing, and failing to encourage investment in the Occupied Territories, using the Civil Administration bureaucracy and military legislation for this purpose;
  • Creating a "captive market" for Israeli goods by blocking imports to the Occupied Territories from other countries;
  • Encouraging mass entry of Palestinians into the Israeli labor market, particularly in construction, agriculture, and services;
  • Failing to invest in development of physical infrastructure in the Occupied Territories, and channeling some tax revenues collected from Palestinians to the Israeli treasury, rather than investing them in the Occupied Territories;
  • Damaging agriculture, a main component of the Palestinian economy, by dispossessing Palestinians of their land, limiting the water quota, and restricting export of agricultural products to Israel.

Some basic figures from 1992 (the year before the Oslo process began) illustrate the Palestinian economy's dependence on Israel. One-third of the Palestinian work force was employed in Israel; approximately 90 percent of the imports were of Israeli origin; and some 80 percent of exports were sold in Israel or passed through its ports.

The undeveloped Palestinian economy, illustrated by the absence of a modern industrial sector and high rates of unemployment and poverty, largely results from Israeli policy over some 27 years of occupation and Israel's direct control over the Occupied Territories.