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last updated Feb. 17, 2009 2:33 PM (EST+7)
Industry (Palestinian)
Read more: 
industry, Palestinian industry, economy, services, tourism, agriculture, gross domestic product, GDP, economics, development, private sector, investment

With an expanding service industry that comprised 65 percent of the gross domestic product and employment in 2008, finances, insurance, engineering, accounting, communications and information have experienced remarkable progress since 1994. According to the Palestinian Central Bureau of Statistics, 57 percent of all establishments in the occupied Palestinian territories operate in the field of internal trade. Information and communication technology is another important sector experiencing an average growth rate 25 to 30 percent since 2000.

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With intricate ties to biblical history, tourism in the occupied West Bank and Gaza Strip constitutes an important source of revenue. However, Palestinians have not been able to fully realize tourism potential because of movement restrictions posed by Israeli checkpoints and the Wall. Additionally, violence and instability that started with the Intifada in 2000 and military incursions in towns like Bethlehem and Nablus that have continued even after end of the uprising has driven away international tourists. Although conditions have improved over the year, cities like Bethlehem that mainly rely on tourism and hospitality industries look like ghosts towns for a majority of the year.

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An expanding service industry led by finances, insurance, engineering, accounting, communications and information comprises 65 percent of the gross domestic product and employment. It is the leading sector in terms of growth and expansion since 1994. According to the Palestinian Central Bureau of Statistics, 57 percent of all establishments in the occupied Palestinian territories operate in the field of internal trade. Information and communication technology is an expanding sector has experienced an average growth rate 25 to 30 percent since 2000.


Tourism is an important industry for the different governorates in the occupied territories with religious ties embedded in Christianity, Islam and Judaism. Despite restricted movement and security concerns since 2000, tourism numbers in 2008 denoted renewed enthusiasm among pilgrims and visitors. In the first quarter of 2008 approximately 86,700 guests visited the occupied territories, a number that surpassed those of the years before the outbreak of the al-Aqsa Intifada. Tourism as an industry is expected to grow substantially is the event of a successful peace settlement.


With abundant harvests of fruit, vegetables and olives, revenue from agricultural production and imports constitutes eight percent of the GDP. According to the Palestinian Central Bureau of Statistics, the value added to the economy by harvest and imports increased by 35.6 percent in 2006, bringing the total value to $557 million in 2006. The total value contributed by the agricultural sector in 2006 is estimated at over $1 billion. This number includes livestock production valued at $464 million.


Palestinian firms are characterized by their small size. Enterprises employing fewer than five people have traditionally dominated the Palestinian economy, comprising a consistent 90 percent plus of the total number of registered economic establishments operating in the Palestinian Territories in the years 1994, 1997 and 2004.

Most of these businesses are even smaller, with 68 percent having only one or two workers . Moreover, around 55,000 enterprises were found to be operating in the Palestinian informal sector in the 2003 census, compared to 85,000 in the formal economy. Informal sector enterprises and household economic activities engaged approximately 180,000 persons in the same year, equal to about 30 percent of the number of Palestinians employed in the formal sector.


The Palestinian Authority is currently attempting to stimulate development, with the private sector singled out in the recent Palestine Reform and Development Plan (PRDP 2008-2010) as “the engine of sustainable economic growth”. Policies have been geared towards creating an environment that enables investment generates longe term employment. There has also been emphasis on moving towards producing higher value-added goods and services which can compete in the global market despite the custom union with Israel.

Income and corporation taxes have been reduced to a maximum of 12 percent and 15 percent respectively, the banking system has been streamlined, and generous incentives are in place for investors. In May 2008 an investment conference was held in Bethlehem, and donors (who pledged $7.7 billion to support the PRDP) are presently looking to stimulate exports and support small and medium-sized enterprises.

However, confiscation of fertile agricultural land due to construction of the Wall, the presence of over 600 checkpoints and barriers preventing the movement of people and goods within the West Bank and the ongoing siege of the Gaza Strip have together reduced the prospects of the Palestinian economy overcoming its structural deformities. Given these ground realities, the chances of the occupied territories fulfilling their considerably high economic potential are slim.

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World Bank report - investment climate assessment (pdf)
PCBS - preliminary estimates of national accounts
World Bank report - Long term policy options for the Palestinian economy (pdf)
Structure and Characteristics of the Palestinian Informal Economic Sector - PCBS
Socio-economic fact sheet - OCHA
PCBS establishment census

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