Area C and the Future of the Palestinian EconomyThis is the first report to systematically evaluate and quantify the economic potential of Area C, which constitutes approximately 61 percent of the West Bank. The report reveals that lifting the restrictions on economic activity in Area C could have a large positive impact on Palestinian GDP, public finances, and employment prospects. Among other things, access to economic activity in Area C is expected to be a key prerequisite for building a sustainable Palestinian economy. However, full potential of the Area C could be materialized only if other restrictions on free movement of goods, labor and capital are removed and the overall business environment in Palestinian territories has become more attractive. The economic significance of Area C lies in that it is the only contiguous territory in the West Bank, which renders it indispensable to connective infrastructure development across the West Bank, and a relative abundance of natural resources situated therein. Area C offers large potential for the development of several sectors of the Palestinian economy: agriculture, stone and mineral processing, cosmetics, construction, tourism, and telecommunications. The report shows that access to economic activity in Area C could increase the Palestinian GDP by as much as 35 percent, the majority of this impact would stem from agriculture and Dead Sea minerals processing industries, as well as the multiplier effect, which has been estimated at 1.5. Although the importance of building connective infrastructure through Area C is discussed in the report, the quantification of this impact is beyond the scope of this report. An increase in GDP of 35 percent, although thought to be a conservative estimate, would be expected to result in at least $800 million increase in tax revenues for the Palestinian authority, which would drastically reduce its dependence on donor aid for financing chronic budget deficits. |
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additional agriculture annual Area C restrictions Area dunum average Bank and Gaza Bank staff calculations Beit Fajjar benefits Bezeq bromine cost CP CP CP cropping currently customers in Areas Dead Sea minerals Dead Sea shore Dead Sea tourism dunum USD employment exports figure Gaza Strip growth housing prices impact inability infrastructure in Area Interim Agreement intermediary inputs investment Israel and Jordan Israeli companies Israeli firms Israeli restrictions Israeli settlements Israeli side land in Area landline located in Area million movement and access Nablus ofthe operate in Area output Palestinian Authority Palestinian Central Bureau Palestinian economy Palestinian GDP Palestinian mobile operators Palestinian side Palestinian territories Palestinian Water PCBS percent of 2011 permits potash sales Potential revenues lost potential value added Qalqiliya rain-fed Ramallah Rawabi Salfit second intifada serving customers Source Table telecommunications tion Tulkarm Value per dunum West Bank World Tourism Organization