Palestine faces significant economic challenges, including endemic poverty, a shrinking fiscal space, declining foreign aid, and a lack of monetary and fiscal space for effective policy response to shocks. The loss of land and natural resources to Israeli settlements, coupled with the political situation and the occupation, have created obstacles in imports and exports, leading to a lopsided dependence on Israel. The Palestine economy’s forced dependency on Israel, excessive production and transaction costs, and barriers to trade with the rest of the world have led to a lopsided dependence on Israel. The fundamentals of the investment environment are weak, and consumption is low due to the unstable political situation. The ability of citizens to buy is very low, making investment difficult.
Despite these challenges, investment opportunities exist in Palestine, particularly in information technology, stone and marble, real estate development, light manufacturing, agriculture, and agro-industry. The Palestinian Authority has enacted laws that provide attractive incentives for domestic and foreign investment in various sectors, including the energy sector. The government has actively sought to attract foreign investment and promote entrepreneurship, leveraging its strategic geographic location, trade openness, and world-class infrastructure. However, Palestinians continue to invest and do business abroad, especially since the investment laws in the Palestinian territories aren’t as they should be, and they can easily be changed and manipulated. The economic system in Palestine doesn’t encourage investment, and the political situation and the occupation have created obstacles in imports and exports.
The Palestine Authority has limited governance in the West Bank, and the government’s mission is to promote resistance-based resilience. The government has some policy tools at its disposal, including employment generation schemes that could be used to target priority sectors. However, binding external constraints and the harsh realities on the ground tend to be discounted, and the evolving Palestinian State is often burdened with ambitious plans. The accumulated impact of prolonged occupation, denied sovereignty, and nearly six years of war-like conditions have combined in a process of “de-development.” The Palestine people’s ability to withstand the widespread economic crisis, let alone forge ahead, is limited. Donors come with their own agendas, and the Palestinian Authority has its priorities, making alignment difficult to achieve.
