Palestinian Economy Research Articles

Political Economy of Aid in Conflict: An Analysis of Pre- and Post-Intifada Donor Behaviour in the Occupied Palestinian Territories

Despite conflict-affected economies being among the largest recipients of aid worldwide, the theoretical frameworks and the political inclinations of donors make it very unlikely for their assistance programmes to have a lasting developmental impact in conflict zones. This paper highlights the key shortcomings in donors’ theoretical frameworks, policies and approaches when dealing with a situation of conflict – suggesting that such shortcomings in some cases could even contribute towards a prolonging of the conflict itself. A pre- and post-Intifada analysis of donor activities in the occupied Palestinian territories is presented in order to demonstrate the stark shifts in donor funding in response to the rise of conflict: from development spending to institution building and governance reforms. It is argued that this shift was not only out of tune with the emerging needs of the Palestinian economy, but also, in some cases, helped worsen the impact of the conflict on the Palestinian economy – yet, nevertheless, it helped to justify the donors’ continued presence in one of the most politically-charged conflicts in the world.

The Impact of the West Bank Wall on the Palestinian Labour Market

Since June 2002, the Israeli government has been constructing a wall in and around the West Bank as part of its security strategy. This paper provides an estimate of the impact of the wall on the West Bank economy by analysing various labour market variables, and their gendered outcomes, on the basis of annual data at the regional (governorate) level. Surprisingly, the effects of the wall on unemployment rates are negative and statistically significant for men, suggesting that the construction of the wall may have increased men’s labour demand enough in the short-run to outweigh all other negative impacts. Aside from potential employment opportunities, these results may also point towards the relatively quick adjustment of the labour market to circumvent the direct and indirect costs of the wall and the relatively less costly impact of the wall compared to other elements of the Israeli closure regime, for example checkpoints, gates, and permit restrictions. Furthermore, the study shows that the impact of the wall is not gender neutral, as women’s economic participation declined significantly and more noticeably than men’s. Additionally, the agricultural sector has suffered considerably from the construction of the wall, undoubtedly as a result of the higher transaction costs, the reduced access of some communities to their agricultural land and/or workplace, and the destruction and confiscation of agricultural assets. The impact of the wall on the informal sector and trade are also examined but provide a more mixed set of results, probably due to the large and unquantifiable informal Palestinian economy.

Managing of treasury in the banking system within a multi currency economy: evidence from Palestine

The Palestinian economy has no national currency which led to having three currencies in use for deposits, saving, wealth measurement and trade transactions. The non-national currency status leads to various problems and add additional risk aspect, due to the fact that the changes in the exchange rates between the used major currencies are so significant. Thus, it leads to make challenges to the management of banking treasury activities and following balances of each single currency. Therefore, this research aimed to target this issue using three research instruments, including examining the related laws, imposed by the Palestinian Monetary Authority (PMA) on banks working in Palestinian economy, structured interviews with banks’ treasurers, and a relevant questionnaire which was directed to a selected sample of treasury staff and employees regarding closeting of foreign currency positions. The study found that management of banks working in the Palestinian economy imposed more strict levels than that imposed by PMA regarding balances of the related currencies. The closing of surplus of currencies available in the Banks treasury, occur in the last hour of working day. The study recommended to relaxing the maximum ratio of each single currency to be hold, reducing the restrictions on investments outside Palestine, permitting trading in options and future transactions.

The Impact of the Global Financial Crisis on the Debt, Liquidity, Growth, and Volume of Companies in Palestine Stock Exchange

This study examines the magnitude of the potential impact of the global financial crisis on the companies listed in Palestine stock exchange and its effects on the Palestinian economy. And that mainly by knowing, if the period after the crisis debt ,liquidity ,growth ,turnover ratios is not significantly differing from pre-crisis era. To achieve the objectives of the study, a sample of 23 Palestinians companies listed at Palestine stock exchange was studied. The study covered the period from the period before the global financial crisis (2006, 2007) and the period after the global financial crisis (2009, 2010). T-Tests and Mann-Whitney-U Tests were used to test the ninth hypotheses of the study. It was concluded that the impact of the global financial crisis is limited. Which means there are no differences after the financial crisis compared to the pre- financial crisis variables.

A Response to Elie Wiesel

"A Response to Elie Wiesel." Journal of Palestine Studies, 44(1), pp. 133–134 Additional informationNotes on contributorsSara RoySara Roy is a senior research scholar at the Center for Middle Eastern Studies (CMES) at Harvard University specializing in the Palestinian economy, Palestinian Islamism, and the Israeli-Palestinian conflict. Dr. Roy is a member of the board of directors of the Gaza Community Mental Health Program-U.S. branch and co-chair of the Middle East Seminar, jointly sponsored by the Weatherhead Center for International Affairs and CMES. The third, updated edition of Roy's seminal book, The Gaza Strip: The Political Economy of De-Development, is forthcoming from the Institute for Palestine Studies in early 2015.

Palestine: Children Laboring

Palestine: Children Laboring

Devaluation and Output Growth in Palestine: Evidence from a CGE model

Whether exchange rate devaluation supports economic growth or not is an open question empirically. This paper analyzes the impacts of the devaluation on the Palestinian economy using a computable general equilibrium model. We investigate the effect of a 15% devaluation of the exchange rate on output growth of Palestine. By using latest data (a 2012 social accounting matrix for Palestine) and CGE modeling, this paper finds that devaluation is contractionary in Palestine. A 15% devaluation of the exchange rate results on lower real gross domestic product, the simulation results show that GDP will decrease by 1.99 %. Import and export will decline by 20.61% and 52.67% respectably. Also, a 15 percent devaluation will reduce the level of private consumption by 6.31 % and inflation (CPI) will increase by 4.7 from the base line.

The Role of Water Sector in the Palestinian Economy

This research discussed the role of the water sector within the Palestinian economy, in order to point out the significant contribution of water sector in the various economic activities. The water sector may be classified into two groups; first one is related to agricultural purposes, and mainly operated by the private sector, which owns about 2243 wells and the rights to access for 60 water springs. The second group is related to supplying water for householders and other economic sectors. This part is operated under local governments and two quasi government authorities. Based on the findings of this study, and according to the official statistical date, it may be concluded that the water supply is provided to about 378,254 householders, and plays a critical rule in the production of inputs for five economic sectors in the Palestinian economy.

Total quality management practices, competitive strategies and financial performance: the case of the Palestinian industrial SMEs

The purpose of this paper is to examine the relationship between total quality management (TQM) practices, competitive strategies – cost leadership and differentiation – and firm performance in the Palestinian economy. Within this study, TQM has been conceptualised as soft and hard practices, in congruence with the literature. An empirical analysis based upon an extensive validation process was applied to refine TQM, competitive strategies and financial performance scales. Data were collected through surveying 202 Palestinian industrial small and medium enterprises. Structural equation modelling was carried out to test the anticipated relationships. Results derived from this study show that TQM practices have an indirect, positive and significant relationship with financial performance through competitive strategies. In addition, a direct, positive and significant relationship between competitive strategies and financial performance was observed. Results derived from this study might help managers to implement TQM practices in order to effectively allocate resources and improve financial performance.

The Effects of Organizational Culture on Business Management Performance in Palestine

Organizational Culture is the set of shared values, beliefs and norms that influence the way employees think, feel and behave in the workplace. An organization's culture can have a pivotal impact on organizational management performance. This paper analyses the concept of organization's culture in manufacturing environment during the second Palestinian uprising (September 2000 – November 2004) against Israeli occupation. Israeli Defense Force (IDF) erected 648 check points that restrict Palestinians interlinks and the movement of their goods for security reasons. Palestinian economy was therefore in recession and businesses were feeling the pinch of reduced revenues. This empirical study draws upon a survey of 32 ISO 9000 certified manufacturing companies, which were asked to complete a questionnaire that focused on the means of encompassing aspects of organizational culture to guide employees' actions into emphasis on teamwork and sociality to foster loyalty and sense of tradition for business survival. This study has found that organizational clan (collaborate) culture type distinguishes the unique status of Palestinian organizations and in effect it places a premium on cohesion of teamwork participation and consensus. Clan culture has been effectively compatible with Palestinian organizational strategic objectives; it showed a strong source of motivation and behavioural control towards collective ends in economic crisis.

تحليل الكثافة العمالية للنمو في الاقتصاد الفلسطيني للفترة 2001-2010

The main objective of this study is to analyze the labor-intensity of economic growth for the Palestinian economy at both the macro and sectoral levels for the period 2001-2010 and to examine whether the economic growth is jobless or job creating one. For this purpose the researcher used descriptive - analytical method for the real GDP data and employment data issued by the Palestinian Central Bureau of Statistics. The analysis of the employment elasticities relative to the real GDP for the period 2001-2010 showed the existence of a positive but low effect for the growth of real GDP on employment in the local economy, where the employment elasticity was 0.37 however, the analysis showed a clear difference in employment elasticities in the different years of the study, as well as the existence of a difference in the elasticities of employment between sectors of the economy for the same year, and a variation in the elasticities of employment from year to year in the same economic sector. This study showed also that the growth rates of real output in some years associated with the decline in rates of employment growth which is known as jobless growth phenomenon .Also found that rates of positive growth in real GDP is associated with positive growth rates in employment But in the presence of high rates of unemployment which is known as Growth Paradox phenomenon. هدفت هذه الدراسة بصفة رئيسية إلى تحليل الكثافة العمالية للنمو في الاقتصاد الفلسطيني، وعلى مستوى الاقتصاد الكلي والقطاعات الاقتصادية للفترة 2001-2010. وفحص فيما إذا كان نمو الاقتصاد الفلسطيني من النوع المولد للعمالة، أم أنه نمو بلا فرص عمل؟ ولهذا الغرض استخدم الباحث المنهج الوصفي التحليلي لبيانات الناتج المحلي الإجمالي الحقيقي وبيانات العمالة الصادرة عن الجهاز المركزي للإحصاء الفلسطيني، وتم تحليل مرونات العمالة بالنسبة للناتج المحلي الإجمالي الحقيقي بطريقة المتوسطات. على مستوى الاقتصاد الكلي أظهر تحليل مرونات العمالة للناتج المحلي الإجمالي الحقيقي للفترة 2001-2010 وجود أثر إيجابي لنمو الناتج المحلي الإجمالي الحقيقي على العمالة في الاقتصاد المحلي حيث بلغت مرونة العمالة الكلية 0.37 لكن تعتبر هذه المرونة منخفضة مما يتطلب تحقيق معدل نمو اقتصادي مرتفع (2.7%) لزيادة العمالة بنسبة (1%) في الاقتصاد ككل. كما أظهر التحليل وجود تباين واضح في مرونات العمالة الكلية في السنوات المختلفة في الفترة محل الدراسة، وكذلك وجود تباين في مرونات العمالة القطاعية وتباين المرونات من سنة لأخرى في نفس القطاع الاقتصادي الواحد. تبين أن معدلات النمو الاقتصادي الحقيقي لم تكن تترافق مع معدلات نمو مماثلة أو موازية في العمالة ففي بعض السنوات ترافقت الزيادات في الناتج الحقيقي مع معدلات نمو سالبة في العمالة وهو ما يعرف بظاهرة النمو بلا وظائف Jobless Growth وترافقت معدلات النمو الاقتصادي الموجبة مع معدلات نمو موجبة في العمالة لكن مع وجود معدلات بطالة مرتفعة مما يعكس ظاهرة متناقضة النمو Growth Paradox.

The Making of a Void Sovereignty: Political Implications of the Military Checkpoints in the West Bank

Research on the Israeli checkpoints in the West Bank has emphasized not only that these checkpoints have dire implications for the Palestinians living there, at the personal, familial, and communal levels, and devastating effects on the Palestinian economy, but also that they have far-reaching consequences for the ability of the Palestinians to establish an independent political entity. At the same time, analysis of the Israeli forms of domination over the Palestinians has also stressed the role of a Palestinian governing authority in sustaining the Israeli rule, since the former relieves the latter of its responsibility to care for the occupied Palestinian population. This paper aims to address this apparent contradiction claiming that a comprehensive analysis of Israeli forms of domination requires a spatial examination of the operation of sovereignty with an assessment of governmentalizing arrays. This combined analysis suggests that a Palestinian sovereignty, but one which is emptied of its actual ruling power, is construed at the checkpoints as an epiphenomenon of Israeli apparatuses of control.

The Impact of Employment in Israel on the Palestinian Labor Force

This study provides circumstantial evidence for the impact of permits for employment in Israel on the Palestinian labor force in the West Bank during the late Intifada period and its aftermath (2005-2008). The study utilizes a unique dataset that merges data from the Palestinian Labor Force Survey with Israeli administrative data on permits for employment in Israel. The study quantifies the increase in Palestinian employment in the Israeli and Palestinian economies and the decrease in Palestinian unemployment, as well as the drop in the return to schooling which coincided with an increase in the number of permits issued. These results reflect the short-run benefits for the un-skilled Palestinian labor force as well as the adverse long-run effects of Palestinian employment in Israel on human capital accumulation.

The Impact of Employment in Israel on the Palestinian Labor Force

AbstractThis study provides circumstantial evidence for the impact of permits for employment in Israel on the Palestinian labor force in the West Bank during the late Intifada period and its aftermath (2005–2008). The study utilizes a unique dataset that merges data from the Palestinian Labor Force Survey with Israeli administrative data on permits for employment in Israel. The study quantifies the increase in Palestinian employment in the Israeli and Palestinian economies and the decrease in Palestinian unemployment, as well as the drop in the return to schooling in a West Bank governorate, which coincided with an increase in the number of permits issued for residents of that governorate. These results reflect the short-run benefits for the un-skilled Palestinian labor force as well as the adverse long-run effects of Palestinian employment in Israel on human capital accumulation.

Managing of Treasury in the Banking System within a Multi Currency Economy

The Palestinian economy has no national currency which led to having three currencies in use for deposits, saving, wealth measurement and trade transactions. Thus leads to make challenges to the management of banking treasury activities and balances of each single currency in the Palestinian economy. Therefore, this research aimed to target this issue, using three research instruments. Three research instruments were used including: Examining the related laws, imposed by the PMA on banks working in Palestinian economy as well as individual banking regulations, structures interviews with banks treasurers, and a relevant questionnaires was directed to a selected samples of treasury staff and employees regarding challenges to the management of banking treasury and closeting of foreign currency positions. The study found that management of the banks working in the Palestinian economy imposed more strict levels then that imposed by PMA and decreased it to 1% to 3%, of the total owner equity instead of 5%, while others (42%) reduced the maximum permitted surplus of a currency to a value ranged between 200,000 US$ and 500,000 US$. For closing the surplus of currencies, the majority of banks close it in the last hour of working day. The majority of treasuries' staff strongly agreed that there is a need for additional legislation to cover all related transactions to facilitate the work of the treasury. The study recommended to relaxing the maximum ratio of 5% imposed on each single currency to be hold more than blatancies, keeping the 20% level from owner equity to the total of currencies, extending the time of work including Fridays, reducing the restrictions on investments outside Palestine, permitting trading in options and future transactions including duke deposits and margins.

Selection of Saving Currency in the Palestinian Banking System

The Palestinian economy belongs to emerging economies with GDP of 6.5 billion USD. It has unique conditions as a service economy, with a significant role in public sector contribution, including the Palestinian National Authority budget, the UNRWA budget and many NGOs financed by international aids.. Finally, the most unique aspect of this economy, is that it has no national currency, but three official currencies are in use instead, including JD, US$, and NIS. Therefore this research aims to examine how clients move from one currency to another in case of saving, and conducting business transactions. The study used multi research instruments including: analyzing the related data to examine the relationship between changes in the value of banking deposits of each of the used currencies and their respected interest rates, also using quarterly data analysis for the last ten years. In addition, structured interviews and relevant questionnaires were articulated and conducted to selected samples of bankers and banks’ clients from 12 banks. The study found that the interest rate is not a critical factor in selecting a currency for savings and deposits in banks, as reported by the clients and banking staff, as well as found by the financial analysis, which shows week or no correlation between changes in interest rates and changes in values of deposits in banks.

Internet Banking and ATMs Applications: In Context of Multi Currencies Economy

This research aims to point out to what extent internet-banking, ATMs and other electronic money instruments are used in the Palestinian economy based on multi currencies. It used multi research instruments including: Examining the related laws, rules and regulations regarding the issue, structured interviews and relevant questionnaires were articulated and conducted to selected samples of bankers and banks’ clients from 12 banks. The study found that all Palestinian banks have ATM machines, which deals with three currencies including JD, NIS, and USD with various transactions, while about a half of the banks issue credit cards to their clients, and offer internet inquires and internet transactions. With the exception of ATM, the majority of the banking clients don’t know about the existing possibilities of E- banking channels available in their banks and/ or how to use it. The banking directors and staff do not see much increase in using the E- banking transactions by their clients, in spite of the new adopted electronic instruments by the majority of banks in the last decade.

A Post-Keynesian Model of the Palestinian Economy: The Economics of an Investment-Constrained Economy

The 60-year-old Israeli-Palestinian conflict has deeply influenced the evolution of the Palestinian economy. In the last two decades political instability and the Israeli closure policy have generated protracted economic stagnation and poor capital formation. The paper describes the consequences on the Palestinian economy of existing high transaction costs and market fragmentation. We propose a simple one-sector Post-Keynesian model that describes Palestine as a demand-driven economy. We show that high transaction costs and market fragmentation discourage investment by curtailing expected profitability, reducing the size of the market and depressing entrepreneurs' animal spirits. In the short run, these two factors induce low levels of capacity utilization and low rates of capital accumulation. The situation is even more worrying in the long run when entrepreneurs can revise their expectations. Depressed animal spirits and low levels of capacity use give rise to a low-growth trap from which Palestine can hardly escape. We also highlight the possible positive impact of the removal of high transaction costs and of market fragmentation, and the ensuing beneficial effects on the long-run equilibrium values of capital accumulation and capacity use. The conclusions place these analytical results into the historical situation of the Palestinian economy, and consider what is needed, politically and economically, in order to establish a sustained development process. The division of labour is limited by the extent of the market. (Adam Smith, Wealth of Nations, Book I, chapter III)

The Profitability of Palestinian Municipal Water Projects

This study aims to discuss the profitability and performance of the water sector in the Palestinian economy. The water utility provided for the Palestinians through two channels, either through special departments within local municipalities and village councils, or through independent specialized public authorities. The study used two research instruments to accomplish the stated purposes including financial analysis for various aspects of cost, revenues, ratio of lost, collection ratio for existing water projects. In addition a special questionnaire to get the perceptions of the related stakeholders including citizens regarding the major issues related to providing water supply, such as the price, quality of services and about the concept of private sector participation of running the water project sector in the Palestinian economy.The study found that water projects provide about one quarter of the total revenues for local governments including municipalities and village councils, In addition almost all water projects which offer water supply to Palestinian citizens in West Banks produced revenues at district level, with profit ratio ranged between 15% up to up to 37% annually. The price of water is varied in the Palestinian municipalities and districts, it ranged from 6.66 NIS in Ramallah district (almost 2 $) to 1.23 NIS (30 cents) in Qalqilia municipality. This is due to various reasons including the cost of production and distribution; administrative cost and the ratio of water lose. Thus, the margin contribution of water m3 is also varied for individual water projects, but the majority has positive return. The output of water projects will be more profitable if the water lost ratio reduced and the collection ratio of account receivable improved.

Comparative Essay on Returns to Education in Palestine and Turkey

This study exposes a comparative treatment of the private returns to education in Palestine and Turkey over the period 2004-2008. Comparable data, similar definitions and same methodology are used in the estimations. The estimates are provided first for average returns to education second for returns at different levels of schooling and finally for returns by different sectors of employment. The results suggest that returns to schooling are higher for Turkey at the various levels of education for Females and males and for both years 2004 and 2008. It is believed that the relative size of the Palestinian economy the uniqueness of subjugation to military occupation contribute greatly to this result. In 2008, returns are lower than 2004 levels for all levels of education; the pattern is less obvious for Turkey across the various levels. However, the 2008 crisis seems to have influenced the more educated more severely (MA and above) in both countries. Female returns to education are higher for women than men in both countries; the gender gap has worsened in 2008, but more so for Palestine. The median ratio of male to female return is 0.55 (university) in 2004 and decreased to 0.17 (high school) in 2008 in Palestine. The corresponding figures for Turkey are 0.79 and .082 (both for high school).Finally, it was found that the selectivity corrected return estimates are lower than the OLS estimates in Palestine while they are higher than the OLS estimates in Turkey.