Unlocking the Trade Potential of the Palestinian Economy : Immediate Measures and a Long-Term Vision to Improve Palestinian Trade and Economic Outcomes
The Palestinian economy is severelyhampered by trade-related restrictions, high logisticscosts, cumbersome procedures and institutionalinefficiencies. Operating within an uneven customs unionarrangement with Israel, the Palestinian economy hasaccumulated an enormous trade deficit and overdependence onIsrael’s economy and has neither could develop dynamicexport-oriented sectors nor to tap into larger and morecompetitive third markets. Over the years, this situationhas contributed to slow growth, high unemployment, andstubborn persistence of poverty in the Palestinian economy.A bold reform agenda is urgently required to improve thePalestinian economy’s trade outcomes. Immediate steps shouldbe taken to reduce the burden of existing trade-relatedrestrictions and transaction costs. The Palestinian economyshould also begin the transition toward an autonomous traderegime, and can exercise control over its own customsterritory, in line with its long-term economic interest. Itshould retain an open trade regime and develop its linkswith overseas markets. The economic relationship with Israelshould be recast in a manner that is comprehensive andexploits the large synergies that exist between the twoeconomies. Such a course will provide the PalestinianAuthority with some of the tools and incentives to undertakefar-reaching structural reforms. The reform agenda willneither be a simple endeavor nor will it alone determine thesuccess or failure of the Palestinian economy. This noteproposes ideas that could, in the fullness of time, and withthe assistance of international donors help overcomeexisting dysfunctions and improve trade-related economicoutcomes in the Palestinian economy.
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