Resource information
It is the purpose of this Investment
Climate Assessment (ICA) to look at what hinders the move of
the Palestinians to new markets and what can be done to
encourage it. The ICA reveals that shrinking market access
and the lack of free movement are the main constraints to
growth for Palestinian enterprises. Relative to other
countries in the region, the Palestinian investment climate
is good: petty corruption is low, the bureaucracy is
relatively efficient and financial markets are well
developed. Despite this, Palestinian enterprises have not
invested enough to maintain their international
competitiveness. However, the report points out that the
growing settlements and movement restrictions imposed by
Israeli authorities for security reasons overshadow all
other elements of the investment climate. The restrictions
close off markets, raise transaction costs and prevent
producers from guaranteeing delivery dates. The closures
also serve to keep firms small and prevent them from
attaining minimum efficient scale. The ICA policy
recommendations fall into three broad categories: movement
and access, the investment climate, and enterprise
capabilities. For the Palestinian private sector to fulfill
its potential and create the jobs required by the rapidly
expanding population, all three of these areas must be
addressed. However, re-establishing free movement and
access, while maintaining Israeli security, is the sine qua
non for a viable Palestinian economy. Without a concerted
political effort to re-open markets and lower transaction
costs the Palestinian private sector is bound to fail.
