The Spatial Pattern of Arab Industrial Markets in Israel

Abstract

This paper examines the structure of industrial linkages of Israeli-Arab entrepreneurs, members of an ethnic community at the periphery of contemporary Israel. This case study delineates some of the challenges that ethnic peripheral minorities have to face in their attempts to integrate into late capitalist economies. It begins with the simultaneous construction of the pattern of sales linkages on micro- and macrolevels. In the first stage, based on a GIS application, we decompose the overall pattern of industrial linkages into a number of significant subpatterns, each corresponding to a specific market. In the second stage, we explore the planar representation of a graph of the plants' participation in each of the hypothesized markets. Investigation of this graph discloses the routes of expansion into or withdrawal from the different markets. This methodology provides a basis for studying the relative impact of peripherality and ethnicity on market formation and, thus, on economic development. Our investigation reveals the pattern of operation of a sector that is still highly disadvantaged and distanced from opportunities and resources. Despite these circumstances, Arab industry in Israel has been undergoing a restructuring process since the 1970s. In the course of restructuring, Israeli-Arab entrepreneurs have abandoned their traditional mimicking strategy and begun to show considerable willingness to take greater risks in exploiting any narrow window of opportunity. In their search for markets, Arab entrepreneurs have channeled sales to a wide range of more distant markets, crossing ethnic and regional boundaries. Moreover, even smaller enterprises have shown notable flexibility in choosing markets, and have displayed a remarkable ability to overcome barriers. Arab entrepreneurs, however, have had only limited success in overcoming the barrier of monopolistic strategies exercised by Jewish corporations; moreover, their status as ethnic minority has not helped them in their effort to mobilize government support on their behalf.